Tuesday, 28 February 2012

Tax Plans vs Winging it with Tax Hikes

Well, good ol' Sam Katz harshly criticized the Judy campaign last city election - with robocalls - over property tax increases. The country club conservative of Tuxedo just oozed compassion for how poor homeowners would be affected - what, with the threat of losing their homes if Judy's 2% tax increase per year for four years was enacted. 

So, what's happened now? Well, after hurting poor transit users and hiking frontage taxes (which are pretty similar to property taxes), the Katz mayoralty is now going to hike property taxes by 3.5%. Katz is blaming other levels of government for not giving him money. Because, as we all know, sound financial planning is based on assuming you'll get money that nobody's promised you and you're not entitled to.

So, in hindsight, it looks like the 2010 mayoral election was between two candidates - one who had an understanding of the city's finances and well thought-out tax plan and one who was just winging it. Judy's tax plan - told well in advance - would have contributed to an environment of certainty. Katz's flip-flops and on the fly decisions contribute to an uncertain climate for businesses and consumers in Winnipeg.

8 comments:

  1. Except that Judy wanted to use her 2% tax increases each year to leverage additional borrowing, which means her 2% tax increase goes to debt service charges.

    A tax increase is overdue, but increasing your borrowing so that more taxes go to debt services charges is irresponsible.

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    1. @ bgilchrist - Don't you pay back your loans?

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  3. Where did you get the information that she'd use the tax increase for debt-servicing so as to borrow more? The only thing news reports said is that it would be earmarked to infrastructure, parks, and police.

    http://www.winnipegfreepress.com/breakingnews/Wasylycia-Leis-promises-2-yearly-tax-hikes-103154844.html

    Given the $3.8 Billion infrastructure deficit this city has, even if it were true that Judy would be using the hikes to pay off debt servicing so as to enable debt financing of public investments that add long-term value to the city, I wouldn't see it as a bad thing. \

    http://www.winnipegfreepress.com/breakingnews/Citys-plan-for-infrastructure-122949608.html

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  4. I also don't recall Judy WL's plan calling for increased borrowing as a direct function of a property tax increase. While I could be mistaken about that, the tenor of the debate over property taxes was definitely centred on the clash between Sam Katz, champion of the tax freeze vs. Judy WL and her tax hikes.

    I don't think anyone paying attention expected the tax freeze to last much longer regardless of who won, but then not all voters pay particularly close attention.

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  5. What?! Who would've thought that tax rates frozen at a nominal rate - which were falling in real terms due to inflation - would have be raised sooner or later!

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    1. It's actually that reason that I thought Judy's proposal lacked merit. It doesn't make sense to effectively peg tax increases to inflation while simultaneously promising that the supposed 'extra money' could be used for all sorts of additional perks. Given that she knew that this was the case, it was downright dishonest on her part. -AB

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    2. It was somewhat misleading, but she didn't verify how much improvements in city services she'd make. The dearth of specific proposals was one reason see she lost.

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