Frankly Speaking with Frank Likely
It is not often that Italy is used as an example to solve government fiscal issues. After all, the country is now on its 40th Prime Minister since World War Two; it has an inflation rate hovering around 3 per cent and real growth is less than one half per cent. It is one of the EUs basket cases.
But the current government has recently taken steps that could well be followed by municipalities in our area. The government has abolished property taxes, and will replace them with a service tax. While the details are still to be worked out, it will apparently work like this: a region will determine the cost of providing services to its citizens and assess those costs on the basis of population. That Simple!
Municipalities across our country have been struggling with the problem of a fair system of taxation to support their services. But most agree it is not the current property tax system. Under the present system, a disproportionate share of the costs is borne by businesses and assessments often have no relationship to the true value or sale value of a property.
In Nova Scotia there is an increasing call for a move from property taxes to a municipal assessment on our income taxes. But that may just be exchanging one bad system for another. Assessments based on income often lead to folks being house rich but cash poor, owning more house than they can afford. It also has the problem of having no relationship between taxation and servicing.
The Italian solution seems to address both these inefficiencies well. Taxation is based on the actual costs of services. And it is applied fairly to all citizens. It doesn’t matter how much or how little your property is worth. It doesn’t matter how much or how little you earn. All citizens are treated equally and fairly in the assessment of the costs of living in a community.
Just as you have one voice by your vote in municipal elections, you will have responsibility for one share of the costs of that municipality.
It all sounds just so fair and reasonable. It’s almost too sane and rational to work.
Frank Likely is a retired Anglican minister and a past president of the Springhill and Area Chamber of Commerce. His commentaries appear on 107.9 CFTA.