Putting the burden of a significant tax increase on citizens, in this period of all-out inflation, is politically perilous. The choices that our administrations face in order to ensure the optimal functioning of our cities and meet the ever-increasing expectations—with good reason—of the population are however certainly just as difficult.
We must juggle taxpayers’ ability to pay while acting responsibly to ensure an adequate and efficient level of municipal services.
With inflation nearing 7%, raising taxes below this threshold means that we will once again restrain our spending. With the slowdown already observed in the real estate market, cities can also say goodbye to the surpluses generated by transfer duties.
Dependence on the real estate market
This is indeed the misfortune of municipal taxation: the only benefit that can be drawn from general economic growth is based on the vitality of the real estate market, counting the income linked to development and that resulting from transactions carried out. To keep pace, we must essentially fall back on increasing the tax rate.
For example, Ville de Longueuil’s revenues increased by 5.8% between the 2021 and 2022 budgets. More than half of this increase was generated by the increase in taxes and the other half, by the dynamism of the real estate market. Meanwhile, between the 2020-2021 and 2021-2022 fiscal years of the governments of Quebec and Canada, the revenues of these governments experienced a natural increase of 10.5% and 30.6%, respectively. The most wonderful thing about all of this is that these increases in income have been achieved without even raising a single percentage point in consumption taxes or taxpayers’ income taxes. People spent more, and earned more. Quite simply.
In short, the governments of Quebec and Canada do not have to carry the same odiousness as the cities when it comes time to complete a budget. Not to mention that these governments can run deficits, a maneuver prohibited to municipalities.
According to a report produced by Raymond Chabot in 2021, Longueuil was also 10e and last place among the 10 largest cities in Quebec in terms of tax revenue. What’s more, our previous policymakers made the deliberate choice of impoverishment by freezing taxes for three out of four years during the last mandate, when the economy was growing and inflation was contained. Meanwhile, other large cities, such as Gatineau, have made the responsible choice that was necessary: to keep tax rates in line with inflation.
The consequences of this unhealthy propensity to freeze taxes for public finances are enormous: the public administration of Longueuil has accumulated exercises of attrition… well before the explosion of inflation. We find ourselves today with a municipal apparatus already operating at the bare minimum, in the face of a most uncertain economic context. The delay recorded by repeated tax freezes on the growth of our revenues can never be caught up. This potential is lost ad vitam aeternam.
Necessary cuts
At the beginning of the work of our Finance Committee, the figures were impressive: to balance the budget, by renewing basic services, without fuss, we faced a shortfall of 34 million dollars, the equivalent to a tax increase of more than 10%. It is by allocating surpluses of 9 million, or almost half of our woolen stocking estimated at 21.7 million for 2022, and by reducing other expenses that we finally managed to limit it to 5.6%. , thanks to the rigor of our teams and the leadership of the Vice-Chairman of our Executive Committee, Jonathan Tabarah.
However, this result was not achieved without a hitch: fat, there is none. Among the difficult choices, let us note the cuts in several projects submitted by the public works department, as well as the renunciation of upgrades to the services of the Réseau de transport de Longueuil (RTL) and a major reduction in the means intended for our arboreal plan. These are just a few examples.
Unlike Longueuil, many cities choose to increase their fees and rates of all kinds rather than property taxes. Increases in municipal tax rates cannot therefore be compared with each other. To undertake such an exercise allowing to compare apples with apples, it would be necessary to widen to the whole of the expenses and tariffs imposed by the cities, in addition to the rates of taxation.
While municipalities are often caricatured as ever more greedy beasts, this presentation is necessary to see clearly behind the wobbly reality of the increase in the tax bill.