OPINION: Local service taxes lack justification

Columnist Andre Carrel weighs in on water and sewer user fees

Three municipal services, garbage, sewer, and water, are financed by way of “Local Services Taxes”. The remaining services are funded from the ad valorem tax.

The Solid Waste Operations Bylaw stipulates that “in relation to the use of waste disposal and recycling services,” council may impose “fees and charges.”

The Sewer Connection and Rates Bylaw empowers council to “impose charges upon owners of real property to defray the cost of laying connecting pipes, control the conditions of connection, regulate the discharge as to quantity and quality, and impose charges for the use of the sewage system.”

The Water Distribution & Sale Bylaw authorizes council to “impose charges to defray the cost of connection to the water utility facilities” and to “maintain the waterworks utility as a self-liquidating utility.”

The preambles to the sewer and water rate bylaws lead one to assume that the charges imposed to defray the cost of everything from connecting pipes to sewage discharge, and to maintain the water service as a self-liquidating utility, are set to achieve these objectives.

This is a wrong assumption as the city also has frontage tax bylaws in relation to the water and sewer services which assert that “certain costs have been incurred” in providing these services, and that “it is deemed desirable and expedient to impose and levy a frontage tax on land benefiting from such service to meet such costs.”

What are these “certain costs” that justify the imposition of a frontage tax? Why are these “certain costs” not included in the calculation of the user rates? Under what circumstances can it be “desirable and expedient” to impose any tax at any time for any purpose?

Municipalities have access to a range of taxation systems. What is unique about sewer and water services? Could a road frontage tax not also be “desirable and expedient”? Considering the assortment of streets we have in Terrace, from smooth surface pavement with sidewalk to crumbling pavement and gravel, would it not be “desirable and expedient” to levy a road frontage tax to cover “certain costs” relating to prevailing road conditions?

If council decides that some municipal services ought to be funded by way of one or more distinct levies, council’s justification needs to be more than “desirable and expedient.” Once council has adopted a policy to defray the costs of providing specific services by way of designated fees and charges rather than from the ad valorem tax, it must review these charges annually, and, if necessary, adjust them annually.

Mayor Carol Leclerc’s comment that “the lack of fee increases [is] problematic” is fitting. Leaving these levies unchanged year after year implies that costs have remained constant, which is absurd. If water and sewer service costs have increased over the past decade, as is quite likely, where did the money come from to defray these added costs? What “desirable and expedient” solution did council rely on to balance the books?

A narrow focus on taxes is to put the cart before the horse. The principle driving property taxes is: Give us your money or we’ll take your house! The amount of money taken from property owners depends wholly on the objectives and policies driving council’s spending decisions. How can council be held accountable without an understanding of the objectives and policies governing council’s spending decisions? Political accountability is a barren concept without fiscal discipline.

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