OTTAWA—Canadian cities straining under the weight of greater demand for improved public services without adequate support from senior levels of government should be given another option: local income taxes, says a new report by the Canadian Centre for Policy Alternatives (CCPA).
Click here to read the full report online.
In A Modest Proposal: A plan to give municipalities access to personal income taxes, CCPA Senior Economist David Macdonald shows that if the federal government directed the Canada Revenue Agency (CRA) to collect municipal personal income taxes, cities could decide to implement a local income tax. A one per cent tax on the richest, for example, could raise tens of millions of dollars to pay for public services and infrastructure.
“A municipal personal income tax would enable cities to raise significant levels of revenue, which could immediately go toward building more social and affordable housing and child care spaces, tackle homelessness, improve and expand public transit and other infrastructure, and so much more,” says Macdonald.
The report estimates how much 34 city governments (not Census Metropolitan Areas) could raise if they changed any of the top four federal income tax brackets. For example, if cities imposed a one per cent municipal tax on incomes over $246,000, these are examples of the amounts of revenue that could be raised for specific city governments in 2025:
- The City of Vancouver could raise $48 million
- The City of Calgary could raise $67 million
- The City of Winnipeg could raise $16 million
If cities broadened the tax base by imposing a one per cent additional tax on personal income over $56,000 in 2025, these are examples of the amounts they could raise:
- The City of Toronto could raise $340 million
- The City of Québec could raise $60 million
- The City of Halifax could raise 45 million
If this mechanism was already in place between 2019 and 2022, cities would have seen local income tax revenue grow at three to seven times faster than property tax revenue.
“Canada’s big cities would get far more bang for their buck from local income taxes than property taxes,” says Macdonald. “Seven cities are now larger than the smallest territorial government, making them important economic actors in Canada. Municipalities should be treated as such, with new revenue tools based on autonomy and responsibility.”
For more information and interviews please contact Amanda Klang, CCPA Senior Communications Specialist (Media & PR) at [email protected]