Big Idea 2011: Tax Extensions
Could the solution to urban sprawl be adding extra costs to living in the suburbs?
Illustration by Graham Roumieu
Environmentalists have tried to play the guilt card on SUV drivers, while health-food proponents have played it on fast-food chains. But, if you look at the number of SUVs at a drive-thru every lunch hour, you’ll see that guilt campaigns don’t often work.
It’s the same when it comes to development. Talk all you want about the benefits of a walkable community, about the need to revitalize downtown, but lip service doesn’t get people to act.
PolicyLink Research and Consulting’s David Thompson says consumers aren’t to blame for sprawl. If a house west of 178th Street costs less than one closer to the core, people will want it.
“There are no bad people, only bad incentives,” says Thompson. “I don’t understand why some people think that other people are at fault [for living in the suburbs]. It’s the structure that we created.”
He adds, “We do the same things over and over, and somehow we expect to see different results.”
Thompson argues that, in a city that has a widespread road network and the needs to build schools and transit 200 blocks from downtown, the incentives for living in certain areas will have to change – and taxes will play a big part.
“What people need to understand are the coming costs,” says Thompson. “How much taxation will be needed to maintain and replace the infrastructure we have in the suburbs? So what is going to result is a significant increase in taxes, if we come to terms with it. I can see taxes having to double – not just a five-per-cent increase, year after year. And the longer we put it off, the more expensive it’s going to be.”
He continues, “You know, we get it at the grocery store, that this produce was brought in from New Zealand, so it’s more expensive. But we don’t get that when we think about where we choose to live.”
Kerry Diotte, the fiscal conservative on Edmonton’s city council, agrees that a crunch is coming. But, at the same time, he doesn’t believe council should restrict the free market.
Instead, what he thinks the city needs to do is change the expectations of those who want to live in the suburbs – and make them realize that they may not get the same services those who live closer to the core enjoy.
“Some cities have put a ring around themselves and said you can’t develop outside of it,” says Diotte, “but I believe in free enterprise, and I don’t think it’s right to force people not to use land that’s available. But, I think you need to let the homebuyers know that the city won’t be able to provide the same level of service to these new communities. We won’t be able to build the $200-million rec centre or provide transit where the buses come every 10 minutes.”
Because land is available in nearby communities, from Leduc to St. Albert, Diotte says if the city tried the stick rather than the carrot, the developers would take their business elsewhere.
On top of taxing new subdivision residents, Thompson also thinks it’s time for the City to look at tax breaks or reforms to benefit those who live closer to the centre.
Taxes are based on property values and mill rates. A $300,000 downtown condo, even though it is much smaller than a $300,000 home on the south side, is subject to a higher rate of taxation. Mill rates dictate that larger buildings with four or more units will experience a 15 per cent higher rate of taxation than a single family dwelling of the same value. So, downtown apartment dwellers pay more per square foot than someone living in a home in Lewis Estates.
“Right now, [taxes make it] more expensive to live in an apartment than a single-family dwelling. That’s ludicrous. If you make living downtown an affordable option, they understand that,” says Thompson. “You know, when sin taxes boosted the cost of cigarettes to $12 a pack, the number of young smokers dropped – couldn’t afford it. We put sin taxes on liquor and cigarettes, yet we don’t use the sin taxes on the urban form.”
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