Winnipeg Free Press - PRINT EDITION

Proposed house tax unjustified

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A civic proposal for a hefty tax on new homes is fundamentally wrong and unfair because it is based on the false premise that new housing developments are costing the city more than it gets back in growth taxes.

It's nothing more than a tax grab, which the city believes it can pull off because few people will protest.

Homeowners in new subdivisions already pay 100 per cent of the cost of all infrastructure within the development, including parks and fully equipped playgrounds, as well as 50 per cent of the cost of adjacent regional roads.

Mayor Sam Katz, however, says taxpayers have to cover the costs of community clubs, libraries, firefighting, police and transit, so the city wants to levy a $10,000 to $12,000 fee for those services and amenities.

In fact, there are no libraries or community centres in the city's new developments, but Mayor Katz says residents will demand them eventually. That's why he wants to build a war chest so that, when the time comes to build a library in Waverley West, the city will have the money in hand, even though the city has no plans on the books to build libraries and recreation centres.

Homeowners in places such as Waverley West and Sage Creek have been paying municipal taxes in the range of $3,000 to $4,000 and more for several years. They are also paying frontage levies and water and sewer fees that are also redirected to other areas of the city.

A study in 2004 showed the net present value of Waverley West to the city was $212 million after all civic costs, including emergency services, snow clearing, garbage collection, libraries and more, were calculated, and nearly $900 million spread out over 80 years.

Residents in these new neighbourhoods are subsidizing older parts of the city, not the other way round, as some councillors claim.

If the city anticipated building a library or community centre in Waverley West in 10 or 15 years, then it should have banked a portion of the taxes it is raising from residents.

In 2012, 1,852 new homes were built in Winnipeg, earning the city $7.4 million in property taxes. During the last nine years, $52 million has been earned from 13,000 new homes. That would have been enough to build a dozen libraries and community centres if the city had been banking the money from subdivisions.

A sudden tax on new homes will also distort the market by raising the price for a home that is nearly identical to another house that was built before the tax was imposed.

Police and firefighters are rarely called to these new developments, but they are heavily engaged in the inner city, yet the mayor and councillors who support the tax are trying to sell the preposterous notion that Waverley West is consuming more in tax dollars than older parts of the city.

The infrastructure in these new developments will last at least 50 years and probably longer, while the taxes earned over that time will be invested elsewhere.

The province, fortunately, has said it will not support the tax, but it's a little rich for the Selinger government to be standing tough against new taxes after it raised the price of every house when the PST was increased by one percentage point.

The province could help, however, by turning over the PST increase to municipalities, or allowing them other means of raising revenues that are fair and transparent.

The province's refusal also illustrates once again how the province is in a conflict of interest because it is a developer for most of the Waverley West lands. Naturally, it wants to protect its investment, but it should not be in a position of being both developer and regulator.

The city, meanwhile, should meet with developers to determine if new development parameters are warranted. It might find the current deal is a golden goose that favours civic taxpayers in older areas of the city far more than those who live in new neighbourhoods.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien and Paul Samyn.

Republished from the Winnipeg Free Press print edition November 7, 2013 A14

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