Municipal income tax for HRM? AIMS’ latest paper assesses the potential.

27 November 2012

HALIFAX, NS-Among the many things debated in the recent municipal election, tax reform was at the top of the agenda for many mayoral candidates. Criticisms of the municipal tax system in Halifax are routine and growing. It is becoming increasingly clear that we must consider alternatives.

In AIMS’ latest paper, This Rose, By Any Name, Stinks, the alternative of a municipal income tax combined with a system of direct user fees for luxury services is proposed by author, Juanita Spencer.

Spencer considers the proposition of a municipal income tax in light of national and international experiences and by applying Adam Smith’s four maxims on taxation: Equity, Certainty, Convenience and Efficiency.

“Spencer has demonstrated that, globally, a blend of income taxation and consumption charges is the norm. Property taxation has lost any connection either to services provided or to ability to pay, which explains why it is roundly criticized from all points along the political spectrum, and deservedly so.” says AIMS President & CEO Charles Cirtwill.

Spencer recommends that, to adhere best to the maxims of effective taxation, municipalities move to a blend of consumption and income taxes. Consumption taxes should be used to deliver “luxury” services and to act as a “a brake on free riding and rent seeking, where organized interests seek to secure a benefit for themselves at the expense of others.” Simultaneously, income taxes should replace property taxes as the principal source of local revenue. After assessing the three tax options, she found that income taxes are simpler to administer, involve less local enforcement effort, are convenient and more equitable for the tax payer.

Read the paper here


For more information please contact:

Charles Cirtwill
AIMS President & CEO
(902) 423-1143
[email protected]