In Marilla Stephenson’s Feb. 27 column on the idea of municipal income tax, her comment that those in the middle will be the biggest losers has no basis in economic terms. With the progressive income tax system that has been in place for some time, paying according to your income means the more one earns, the more one pays. There is widespread agreement that paying for any public service by way of an income tax model can only reduce the burden for low income earners.

Economists generally agree on the criteria of a “good tax” as being: equity, efficiency, accountability, transparency, stability, predictability and ease of administration. Most economists also agree that municipal property taxation in its current form does not meet any of those standards of good taxation. Municipal income surtaxes have been in use in most of Europe for some time. The Economist magazine devoted considerable space to the Scandinavian success in January and cited the pragmatic replacement of local property taxes by a municipal income tax model as one of the reasons for success.

Second, the failed 2009 HRM study on taxation reform died because they were still in the 19th-century paradigm of cost recovery by way of property values, and so could not reconcile how changes would affect high property assessment versus low assessments. This is because, as the N.S. Chambers of Commerce executive director recently said, “Property taxation is like paying for gasoline based on the value of your vehicle.”

Third, the AIMS report did indicate that property values had doubled over the last 10 years while incomes had not, a clear reason to look at other means for municipalities to recover affordable costs. While rates do affect the final taxation outcome, one can easily see that residential rates have been essentially flat and that in HRM, they are lower than almost every town in the province, yet revenue and spending continue to grow.

Stephenson states an income tax model would drive people out of the province. If that were the case, most of Europe would be depopulated by now. Such an assertion, assuming only one outcome (a growing tax burden), also ignores the savings to be had from the reduction or potential elimination of the property tax

Retaining a $17-million property assessment system makes no sense. The residential assessment cap only further distorts the variance between homeowners on the same street when properties change hands.

We believe that global experience with an income-based model, coupled with hundreds of years of frustration with the property-based approach, should be enough for the provincial government to direct the departments of Finance and Service Nova Scotia and Municipal Relations to begin a serious study of this not-so-novel concept. Those departments possess the data needed for an informed debate about the wide range of choices available to decision-makers.

Doing the same thing, with a tinker here or a tweak there, in perpetuity will not yield better results, nor will favouring one taxpayer over another attract the new immigrants and businesses we all say we want here. The municipal system needs to be changed, the sooner the better.

Submitted by Michael Bradfield, research associate, Canadian Centre for Policy Alternatives; Charles Cirtwill, president, Atlantic Institute for Market Studies; and Wayne Fiander, executive director, Nova Scotia Chambers of Commerce.