Winnipeg Free Press - PRINT EDITION

Ottawa must make good on its taxes

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The Harper government is showing bad faith in its negotiations with, and obligations to municipalities, including Winnipeg, over payments it makes to cover what would otherwise be paid in property and education taxes on Crown owned and operated assets and buildings. Museums, other cultural and arm's-length institutions and agencies should not have to lay off staff or trim their operations simply to pay a bill that is clearly Ottawa's to shoulder.

The dispute over the assessment of property values has reached across Canada and now is held in high relief in Winnipeg, with an outstanding bill -- an estimate of $6 million -- owed in total to the city for the as-yet-unopened Canadian Museum for Human Rights, and for the Canadian Centre for Human and Animal Health on Arlington Street. (The bill includes taxes on property for education.)

The federal government's tack has been to low ball, dramatically, the estimates for assessed value, initially for the CMHR land and now for the building itself, and for the federal lab. It has done the same with federal assets across the country, including the Citadel Hill national park in Halifax, the Canadian Museum of History in Gatineau and the Port of Montreal.

In the case of Citadel Hill and the museum land at The Forks, Ottawa set the value of the lands at ridiculously low levels, $10 and $1 respectively. Because the federal government could use the land at The Forks only for a museum (as per its land transfer agreement), Ottawa argued it could not be assessed like usual valuations -- and if it were to turn over the museum to another operator, as has happened with airports, the fee would be nominal only. Aside from being an entirely unworkable valuation for the purpose of property tax substitution, the federal argument ignores the fact the city and the Forks Renewal Corporation would reassume ownership of the land if no museum were built or operated there.

Such foggy thinking has seen the federal government cut down by a resolution panel called in to settle the fight -- in both the Citadel and The Forks conflicts Ottawa was called "unreasonable."

That is pulling punches. The Harper government has a duty to make good on its obligations to municipalities that supply services, including protection from fire and crime. But having a deficit to slay, the tack appears to be to fight to get bills for payment in lieu of taxes cut, and failing that, it forces Crown agencies to shoulder the added expense.

This is no way to manage national cultural or economic assets. In all, the CMHR is looking at an outstanding bill of more than $4 million -- out of its operating budget of $21 million -- now that the advisory panel has rendered an assessment for the museum's land that came close to the city's original $6.9 million valuation.

It would be crippling for the museum to shoulder the cost of the federal government's error. The Canadian Museum of History laid off staff following a similar struggle between Gatineau and the Harper government.

Public Works and Government Services Minister Diane Finley now has the panel's decision, which is advice only. Ms. Finley should make good on the tax bill. The fact Ottawa has been repeatedly rebuffed by its own advisory panel is instructive to its approach to negotiation over payment in lieu of taxes.

Taxpayers expect the federal government to be a good steward of their money, but to do that in the national interest, with careful management of national assets. That interest is why the legislation that guides payment in lieu of taxes says that must be done in a "fair and equitable" way.

The department should heed the lessons of the decision and settle fairly with Winnipeg over the CMHR, which is looking at outstanding assessment bills since 2011. This is money the city has had to do without for years, and it should not be taken from the budget of a museum still striving to find its legs.

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

Republished from the Winnipeg Free Press print edition July 7, 2014 A8

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