Revitalization

Needed: A Champion for Our Downtown

By Jason Leach
Published February 14, 2009

(this blog entry has been updated)

Watching the recent goings-on at City Hall, I'm more convinced than ever that we have a Council who either loves boarded-up neighbourhoods full of crack houses, prostitutes and empty storefronts, or seriously needs to go on a field trip to see what sorts of innovative ways other cities are using to breathe life back into their oldest, often neglected, neighbourhoods.

Terry Cooke wrote a fabulous piece in today's Spectator about the ongoing Pearl Company saga in Lansdale. Living downtown, I see the prostitutes, 'social' clubs and druggies on these streets every day of the week.

The folks at the Pearl Company are trying to do something. They've invested money into a neighbourhood ignored for decades by the city (other than blindly stamping zoning application after application for more halfway houses and social service facilities) and builders.

This is exactly the sort of thing that other, more progressive cities try to encourage. It's how King West in Toronto went from run-down, empty warehouses to the fabulous neighbourhood we see today.

On the other side of downtown we have Hess Village. Council heard from Hamilton Police last week about the incredible violence in Hess Village. I think it was something like 34 assaults in an entire year with tens of thousands of people patronizing the area. Hardly skid row.

There are one or two establishments in the village that should be made to clean up their act a little, no doubt. But Council voted to fight a patio expansion of Smooth Hermans, attempting to add 50 seats to their patio. The previously applied to add close to 200 seats, but lowered the number upon request from Council.

Anyone who has frequented the Village knows that Herman's is probably the last place in the district that we need to worry about.

But that's the Hamilton way:

Perhaps Council is hell-bent on making everywhere in Hamilton look like Barton East or Parkdale. It seems they can't wrap their head around the fact that their relatively minor investment into Hess Village a few years ago has been such a smashing success.

It's as if they say to themselves, "But this is Hamilton. People aren't supposed to flock here from all over southern Ontario to enjoy anything in our downtown. Let's shut 'er down!"

The Pearl Company and Art Bus have brought tourists from the Burlington-Toronto corridor in great numbers over the past few years into a neighbourhood that most Hamiltonians avoid.

Give your head a shake, city Council. Cities like Portland and Boston have theatres operating in homes, breweries in empty buildings, residents in industrial districts, restaurants underneath major highway overpasses, and so on.

Existing, old urban areas require flexibility and broad zoning. This isn't Markham or the Meadowlands. It's downtown Hamilton and you are standing in the way of its rebirth.

I urge someone on Council to stand up and become the champion for our downtown. We need it now, more than ever.

Update - This blog entry originally included the line, "I've yet to see an arrest or hear council try to do a single thing to combat this problem." On re-reading it, I realize that's not a fair statement. I don't think Council is focusing enough on the right things, but I can't truly say that they've done nothing. You can jump to the changed paragraph. -- Jason

Jason Leach was born and raised in the Hammer and currently lives downtown with his wife and children. You can follow him on twitter.

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By bob Bratina (anonymous) | Posted February 15, 2009 at 12:59:07

Jason,
I take personal affront to your suggestion.
You could become one of our champions, but it would require to move Downtown and live among us. In fact I have stridently opposed the Police position that a development freeze be brought to the Hess Village area. On March 2nd a new GO train will be added to the morning Hamilton to Toronto schedule, departing at 7:17 a.m. The Metrolinx Final report ensures that a James Street North Gateway Station will commence service within 5 years. A new 6,000 square foot Beasley Community Centre will be built in conjucntion with a new Dr. Davey School at Wilson and Ferguson. We have had over $350,000 dollars accessed in our Lead Service Replacement Loans program that allows owners of modest older homes to get the work done and pay back on their water bill over ten years, thus making it affordable, and sustainable. Since it's a loans program the original fund is constantly replenished. We just saw completion of the once totally derelict Victoria Hall and MacKay buildings...nationally designated heritage once given up for dead. The units are now almost fully rented, and the Chinese investors are now looking for new opportunities Downtown. The buses will be leaving Gore Park soon, to a "hybrid" terminal design...some to Hunter Street Go Station for better connectivity, some to a redesigned MacNab. This was all my initiative, and saves $10 million or more on what had been proposed by staff. I could go on, but I'm saddened that you are unaware of what I have been championing. It does however follow the kind of smugness that typically appears in these kinds of blog sites.

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By jason (registered) | Posted February 15, 2009 at 14:26:05

Hey Bob, thanks for the reply. I heard you speak about the Hess Village issue and thought you brought the most common sense to the table on the issue. I'm not sure how long you've followed RTH, but I am well aware of all the great things happening downtown and have regularly praised you and fellow council/staff on some of the great work being done on various streetscaping projects, new hotels, new transit terminal, possible LRT, market/library, condo projects etc.... In fact, some commentators on here have accused me of blindly praising downtown too much. I guess I can't win! Lol.

Unlike some other local media sources, RTH strives to stick to the issues and our guiding principles of sustainable, vibrant urban development for our city. I make no bones about the fact that I think you and McHattie are the two brightest spots on council. I live near Victoria Park and do all my living/buying downtown. I voted for Brian last election and will happily do so again the next. I just happen to disagree with him on this issue. Not the end of the world. In fact, it's one of the things that is great about RTH. We don't have our favourites or our villains like some other unmentioned local media do.

All in all, I think you're the best councillor downtown and hope you can keep up the great work and momentum.

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By Moseby (registered) | Posted February 15, 2009 at 16:45:56

The HSR buses are going to be moved from Gore Park?? That's great news! Call me crazy, but I've always felt that Gore should be used as a park, not a bus terminal.

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By peter (anonymous) | Posted February 16, 2009 at 00:23:30

love you bob but geez, a little defensive, aren't we? just be thankful people are concerned about downtown at all. sure, a few good things are happening but it's almost as though you're suggesting that all is well. this city council [you and perhaps just one other councillor aside] needs to go bye-byes. we need a serious upgrade in that department - this past term has been an absolute embarrassment. anyway, how about addressing the Pearl Street issue.

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By SamIam (anonymous) | Posted February 16, 2009 at 08:33:28

As others have maintained Jason is out of touch and should be fired.

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By A Smith (anonymous) | Posted February 16, 2009 at 13:46:20

Councillor Bratina, what about tax cuts? All successful cities have vibrant private sectors and that is exactly what our downtown is missing. Therefore, instead of trying to "stimulate" the neighbourhood with public goods, wouldn't it be easier to just let people keep more of their money in the first place.

Hamilton government has a long history of tinkering around with the local economy and it has resulted in what we see today, a lack of private sector investment, such as restaurants, small shops and anything else that is linked with private consumption. Instead, downtown Hamilton is filled with government buildings. I don't know about you, but when I think about a good place to live, it is a place dominated by good food, cool shops and an overall dynamic, diverse feel to it. Furthermore, the only way to produce this type of city, is to let private individuals allocate most of the capital and not government.

If I gave you the option of spending $2000 dollars for yourself, or having me spend it for you, which would you choose? Unless you're crazy, you would choose to spend it yourself. This would be the rational choice and it would also result in better spending decisions. If you let me spend it, I would have to read you mind and would likely end up wasting much of the money on purchases you didn't want.

This exactly what government does with taxpayers money. It spends it on things it "thinks" people want and it reduces the percentage of money that gets spent on things people "know" they want, like a good meal, or a new pair of shoes, or a new T.V.. Over time, by limiting the percentage of spending decisions made by individuals, you end up with a less dynamic economy, with more capital invested in big, highly visible projects and much less in the way of small shops, stores and cultural spots that actually appeal to the marketplace.

If Hamilton is ever going to be a great, fun place to live, it must reduce the role of government in the economy. Individuals are the strength of any community, so why not let them direct where the capital is put to work. This way, Hamilton will produce real destinations that consumers want to visit and not just stadiums that get filled up a few dozen times a year.

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By A-idiot (registered) - website | Posted February 16, 2009 at 22:05:16

blah blah lower taxes blah no government blah blah free market

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By A Smith (anonymous) | Posted February 17, 2009 at 01:18:36

A-idiot, you're special. In fact, you typify the a small breed of animals known as businesshatinggovernmentlovinghamiltonians. These creatures have been bred for generations to hate the private sector and will attack any ideas or people that even mention it.

In fact, even when presented with overwhelming evidence that shows their hatred as being detrimental to their long term evolutionary success, they will keep on attacking.

However, as the world changes and new pressures emerge, creatures like yourself will find it much harder to make it in the world. Whereas in the past, you could sponge off larger brained, more successful animals for food and shelter, these social conditions are beginning to change. In the future, only animals that are willing to help others be successful will be successful themselves.

The beginnings of this phenomenon can already be seen in Hamilton in the form of vacant buildings and depressing streetscapes and this will only get more pronounced unless this lowly creature can adapt to the new reality it is facing. If it doesn't, it will be replaced by animals that can. At that point, Hamilton will once again transform into the city it used to be. One where risk taking capitalists can make lots of money and in the process, employ thousands of people in high paying jobs.

With your current bad attitude, I'm not sure you will do that well. For your sake, I really hope you can see the light my sorry little friend, because that day is coming sooner than you think.

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By Amy Kenny (registered) | Posted February 17, 2009 at 07:44:06

You pass a pretty detailed judgement based on a single sentence. If only we all had your keen powers of deduction!

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By Frank (registered) | Posted February 17, 2009 at 08:29:54

ASmith, please, pretty please go find a home somewhere else. Your one horse act is getting really tiring.

Jason, perhaps including statements about those councillors who are doing exceptional jobs as they're supposed to might've eased the pain for Bob... All in all, the majority of council doesn't seem to care about the downtown and I agree with the statements you made. I did hear an interview on the radio with the police chief about Hess where he stated that some officers refuse to take shifts in Hess because there's a high likelihood that they'd have to work for their money...at least I think it was something like that lol.

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By A-idiot (registered) - website | Posted February 17, 2009 at 09:02:37

blah blah blah capitalism will save the world blah blah

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By Grassroots are the way forward (registered) | Posted February 17, 2009 at 09:30:20

By A idiot: That is a very funny picture, you made my day.

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By Mr. Meister (anonymous) | Posted February 17, 2009 at 11:02:31

A Smith is a fanatic, plain and simple. There is no thought process, rationale, common sense or reality in his arguments. Just like dealing with a hardcore Miami Dolphins, Toronto Maple Leafs, New York Yankees, communism or any other fanatic, truth and reality or facts have no place. Whatever they are "crazy" about is the best. Fanatics simply choose to ignore whatever does not please them. Ever see a Leaf fan and a Habs fan go at it? They,like all fanatics, are truly crazy. Whenever anybody goes to an extreme it is a really good sign something is wrong. Look at A Smith's postings, something is definitely horribly wrong.

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By jason (registered) | Posted February 17, 2009 at 11:32:12

To clarify my comments (not that anyone cares anymore now that yet another thread has been hijacked), I've been consistent in my praise of Bratina and McHattie as the two bright lights on council during this term. I don't think I should have to include that sentence in every single article I write. Anyone who has read RTH knows my stance and passion for downtown and knows my views on those two councillors.
If we had a council chamber full of folks like them, downtown would be light years ahead of where it is today. Sadly, we don't.

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By JonC (registered) | Posted February 17, 2009 at 12:10:30

As for the vacant buildings, we already covered that they pay less tax than other cities and thus corporations can sit around on them paying peanuts in taxation, since the sites have no value as is.

The simplistic thoughts that there is one solution to every problem that exists is concerning. Clearly, billions of people around the world are complete imbeciles. I wish such a well schooled economist as A Smith could provide the numbers from his years of study that indicate the ideal level of property taxation. And saying as low as [insert city name] doesn't cut it, because some other wiz-kid libertarian living in [previously inserted city] would say, but if our taxes are .0001% less than Hamilton's we will be the obvious choice for all businesses to locate, and so on. It must be a horrible strain having a first year economics course under your belt and a head full of Ron Paul.

Please stay on topic when you post, pretty please.

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By A Smith (anonymous) | Posted February 17, 2009 at 13:52:37

Frank, >> Your one horse act is getting really tiring

Right back at ya. Does every article and comment have to look to government and politicians to fix Hamilton's poverty problem?

Mr.Meister, >> A Smith is a fanatic, plain and simple. There is no thought process, rationale, common sense or reality in his arguments.

The rationale is quite simple. When you lower the cost of owning property (by decreasing tax rates), you increase the demand for property. When you increase demand, you increase the price people are willing to pay for property, which increases the nominal price.

Both Burlington and Oakville charge lower "tax rates" on property and surprise, surprise, their property is in higher demand, as reflected in the higher market prices people are willing to pay.

Do you get it yet? When you give people a better deal on tax rates, it increases the amount of people who will want to buy property in the community. Keeping tax rates 50-100% higher than neighbouring communities will do the exact opposite. It also explains why buildings sit empty, a sure sign of lack of demand.

JonC >> As for the vacant buildings, we already covered that they pay less tax than other cities and thus corporations can sit around on them paying peanuts in taxation, since the sites have no value as is.

Oakville charges a tax rate of 2.34% on commercial properties and a reduced figure of 1.64% on vacant commercial properties. Hamilton charges 4.57% on commercial properties and a reduced 3.2% on vacant. Furthermore, Burlington charges 2.5% on commercial properties.

As you can see, Hamilton charges businesses twice what Oakville and Burlington does, not less.

>> I wish such a well schooled economist as A Smith could provide the numbers from his years of study that indicate the ideal level of property taxation

A good start would be to match Oakville and Burlington. They have already proven that a community can raise adequate revenues for public services by using lower tax rates, so we don't have to reinvent the wheel, just follow their example.

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By JonC (registered) | Posted February 17, 2009 at 15:29:25

Because all other factors between the cities are equal. Just imagine someone else was saying the answer to every single post was to raise the taxes to generate additional tax revenue and imagine how annoying that would sound. Your grasp of economics is basic at best.

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By Lenin (anonymous) | Posted February 17, 2009 at 16:48:17

Nationalize everything...workers unite; capitalism is bad; make the rich pay; the proletariat will overcome; four legs are better than 2; free food for everyone; kill jobs because jobs kill workers; get rid of cars....blah blah blah...there are 2 idiots on this thread...p.s....the other one is the real one!

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By A Smith (anonymous) | Posted February 18, 2009 at 00:00:45

JonC >> Just imagine someone else was saying the answer to every single post was to raise the taxes to generate additional tax revenue and imagine how annoying that would sound.

When tax rates are eventually lowered and Hamilton property values start to resemble Burlington and Oakville, will you be annoyed then, or will you just feel stupid?

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By JonC (registered) | Posted February 18, 2009 at 10:09:25

I suppose that would depend on what services we lose or if the city has to declare bankruptcy. Programs are scheduled years in advance and we have old bills to pay. If you're going to reduce the income in you need to reduce the expenses out. You don't know anything about the city's financial status or fiscal plans, which is what I keep telling you. There is a reason that every city sets tax rates at a certain level. It's not like the city of Hamilton is greedy.

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By A Smith (anonymous) | Posted February 18, 2009 at 11:21:18

JonC >> If you're going to reduce the income in you need to reduce the expenses out.

In 1999, corporate tax rates at the federal level were 27%, today they are 19%. In that time period, total corporate tax revenue (all of Canada) has increased 96%, from 33.62B to 65,99B. In 1999, top federal marginal rates on income were 29% and today they are still at 29%. However, from 1999 to 2008, income tax revenue has only gone up 51%, from 127.7B in 1999 to 193.5B.

In fact, if you compare the ratio of corporate tax revenue to income tax revenue, it has gone from 26.3% in 1999 to 34.1% in 2008.

Therefore, rather than getting less money from corporations as a result of cutting their tax rate, the country has gotten more.

>> There is a reason that every city sets tax rates at a certain level. It's not like the city of Hamilton is greedy.

Are you telling me that if tax rates were brought down to 1% and then capped, the city couldn't pay its bills? That is ridiculous. It simply would mean that politicians would have to limit their spending to the basics and budget accordingly, like all private citizens have to. Average people don't have the luxury of simply demanding more money from their bosses, they have to decrease their costs in harder times. The same should be true of government, in good times, set up reserve funds and use those to even out slower periods.

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By zookeeper (registered) | Posted February 18, 2009 at 11:47:23

JonC, please don't feed the troll. You only encourage him.

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By A-idiot (registered) - website | Posted February 18, 2009 at 12:02:03

If taxes were .01%, I would be able to afford to fix up my house. This would raise my property value!

The city would have less money, but that's ok because they would only have to fund the bare necessities (aka the things that I use, such as streets and sewers).

Any and all projects that are frivolous should be funded only by the people who will use them directly. So, only people who go to the park should pay for parks. Only the people who ride a bike should pay for bike lanes. Only the people who walk should pay for sidewalks. Only the people who ride the buses should pay for the HSR. Only the people who drink should pay for water treatment, etc.

These projects, funded privately by my neighbours, and which cost me nothing (because I refuse to pay), will make the city more attractive to potential residents and business owners. This will also raise my property value.

Then I can finally cash in and move to Oakville, where they are doing everything perfectly.

I win!

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By A Smith (anonymous) | Posted February 18, 2009 at 13:10:47

idiot, >> The city would have less money, but that's ok because they would only have to fund the bare necessities (aka the things that *I* use, such as streets and sewers).

Why not address the actual statistics I referenced in my previous post? If cutting tax rates (to levels found in richer, yet functioning communities) hurts government revenue, than why has corporate tax revenue gone up as rates have come down? How do you explain that, idiot?

>> Any and all projects that are frivolous should be funded only by the people who will use them directly.

Any money the city spends on maintaining parks, bike lanes, etc, is money not spent on other things. Furthermore, because city goods are either free or heavily subsidized, we don't know how in demand they are relative to other items that are priced by the marketplace.

As an example, if the city started running the parks system based simply on market demand and didn't use tax funds, would these parks bring in enough revenue to cover the costs of maintaining them? Would the population of Hamilton vote with their dollars and keep the parks in business, or would they choose to spend their limited capital elsewhere? If they decided that they would rather spend their money elsewhere, that means we are currently wasting limited capital on goods that people don't want. A very bad idea if you want to increase the quality of life in the city.

Lastly, if the goods and services the city offers are so useful, why not put a price on them. If the demand is there, consumers will gladly buy them, just as they do when they go to the mall.
The reason is because politicians have no clue as to whether or not their spending either increases or decreases wealth. They are an investment black hole. When businesses lose money, that is a sign they are misallocating capital and the market puts them out of business. When a company uses capital wisely, it increases overall wealth and it gets rewarded by having more capital to invest.

In effect, the free market gives more responsibility to those who can best allocate capital. However, because government is not disciplined by the potential of limited capital, we never know if they are creating wealth or not? At least not directly. However, if you compare our downtown with that of Burlington or Oakville, it's pretty clear our government has not been investing our limited capital very wisely. Therefore, the only solution is to take away their ability to waste any more. Capping tax rates at 1% would be a great start.

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By A-idiot (registered) - website | Posted February 18, 2009 at 13:30:01

Down with parks! Down with roads! Down with sewers! Down with tax rates!

For example, why would I pay for sewers when I can just go in my back yard!?

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By zookeeper (registered) | Posted February 18, 2009 at 13:38:21

Don't. Feed. The. Troll.

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By A Smith (anonymous) | Posted February 18, 2009 at 14:24:02

Idiot, I don't know about you, but I think most people with an ounce of class would gladly pay a fee to be hooked up to the sewer system, just as people pay for cable T.V, phone service and internet access.

However, judging by your portrait, it makes sense that you would opt out. You have no class. Your family must be proud.

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By seancb (registered) - website | Posted February 18, 2009 at 14:53:10

A.S.:

Burlington and Oakville hardly have "downtowns". Most of what Oakville and Burlington have done right is to be just close enough to toronto in order to cash in on their enormous CBD (and well designed downtown core) - in addition to building disposable sprawl housing and business parks with little or no future in a less energy-rich world.

The problem with letting the free market dictate everything is that investors have a very hard time seeing beyond the next few financial quarters, and they ignore the external effects of their actions. If we operated only under the free market, we'd have filled our lakes with toxic sludge and cut down all of our trees by now. Even with the minimal regulations in place, we have come close to this already in some regions.

We live in a society. We are all connected. The every-entity-for-itself games does not work in the long run. The free market encourages crapping on your neighbour if it increases your own bottom line. This works fine as long as your neighbours never crap back.

Your lack of understanding of the problems with the blind free market is tiring. None of us are defending the current government as being 100% efficient. We are not calling for higher taxes or more spending. We are calling for the city to think harder about how it spends the taxes it's already collecting.

Our financial system can only exist if we assume an endlessly growing energy input. It is based on endless growth. This has been a short term reality for us that is coming to an abrupt end.

The short term vision of the free market works well when you only need to see as far as the ass of the lemming in front of you. Unfortunately it does you no service when it blinds you to the cliff that you are quickly approaching.

Your dream of close-to-zero taxes is a nice one, however your free market economy has put us in an unfortunate situation: every year that goes by, it becomes harder to keep up with current debt let alone finance new ventures.

Based upon previous responses from you, I am going to assume that when you read this, you will respond directly to none of it. Because it's easier than reading, here is a video that explains how your sacred financial system is one of the main causes for higher taxes (since our money is worth less and less each passing day): http://www.youtube.com/watch?v=FT1OIKYwL...

If you think Hamilton is doing such a terrible job, and if you believe that Oakville and Burlington's tax rates will result in endless property value growth there, then your best bet is to cut your losses now and move to one of those towns.

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By A Smith (anonymous) | Posted February 18, 2009 at 17:31:34

Seancb, first of all, thanks for the thoughtful response.

>> Burlington and Oakville hardly have "downtowns".

That is more a function of Hamilton's history than anything it is currently doing correctly. However, even if Hamilton's downtown is larger in scale than Burlington/Oakville, the market is telling us that less people want to live there.

>> Most of what Oakville and Burlington have done right is to be just close enough to Toronto

All the more reason to cut the tax rate. If you are arguing that demand for property is influenced by incentives (shorter commute) and disincentives (longer commute), than unless Hamilton can create a worm hole, we should create incentives elsewhere, like leaving more disposable income in people's pockets. Furthermore, just to be accurate, Hamilton's downtown is 46 minutes from Toronto, while Burlington's is 39 minutes, which doesn't explain the amount of vacant and run down buildings that we see here.

>> If we operated only under the free market, we'd have filled our lakes with toxic sludge and cut down all of our trees by now.

If lakes were owned privately, there would be less chance of water pollution than there is today. Just compare a private home to a public housing building and you can see why that is. When individuals own an asset, they benefit proportionally to the effort they expend to protect it. For a public good, because the government retains ownership and individual effort is not rewarded proportionally, the incentive is to extract as much value from the resource as fast as possible. The same goes for forestry, if private interests sell raw lumber, how does it serve them to not replant? It doesn't. However, if a company can simply take from public lands, you end up with firms doing just that, getting as much lumber as fast as possible.

>> The free market encourages crapping on your neighbour if it increases your own bottom line.

The great thing about the free market is that it deals in reality. In reality, if a company/individual gets a reputation for hurting others, it will be shunned by society. Conversely, if a business deals with people fairly and delivers great products at good prices, people will willingly give them money. That is why companies that are successful in the long term, such as McDonald's, Coca Cola, J&J, Tim Horton's all pay strict attention to the quality of their products and how they treat their customers.

>> We are calling for the city to think harder about how it spends the taxes it's already collecting.

The problem with this is that politicians can't judge how well they allocate capital. At least in the free market, if a company allocates capital in a poor way, the market will tell them this by slow sales figures. However, in government, things don't have prices, they are all free, which means that you never truly know how valuable they are. Only when goods and services have prices can you tell their economic value and whether or not they were a good way to spend people's limited income.

>> Your dream of close-to-zero taxes is a nice one, however your free market economy has put us in an unfortunate situation: every year that goes by, it becomes harder to keep up with current debt let alone finance new ventures.

More details please, I don't know exactly what you are referring to.

>> If you think Hamilton is doing such a terrible job, and if you believe that Oakville and Burlington's tax rates will result in endless property value growth there, then your best bet is to cut your losses now and move to one of those towns.

What I want is to make some money on my investment. I believe Hamilton is a hidden gem and all it needs is to allow the private sector to direct its future growth. The average person knows how to spend money to increase his/her happiness much more than a politician and that is all I am calling for. Allow people to spend their own money. At least at the level of our richer, more successful neighbors.

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By seancb (registered) - website | Posted February 18, 2009 at 17:32:39

ps: regarding the conversation above, do you realize you are arguing with a caricature of yourself?

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By seancb (registered) - website | Posted February 18, 2009 at 18:01:02

Regarding the reason it becomes harder to pay off debts with each passing day, watch the video that I linked to, and look up fiat currency.

In your ideal world, lakes and rivers would be privately owned? What a disaster. So one entity owns lake ontario and its entire catch basin? Good luck. You are so out of touch with reality it's actually humourous.

A quick thought experiment for you: Forestry company "A" owns 10 acres of land. Company "Z" owns 10 acres right next door. There is no regulation for public good, just free market economy. Company "A" sees that, in the long term, it is in their interest to selectively log their land so that they can continue to use it for the next 100 years. Company "Z" sees that if they clear cut, they can reap all of the benefits of their land right away. Company "Z" severely undercuts company "A" on price because it is significantly cheaper to clearcut than to selectively log. Company "A" goes under because the free market prevails. Company "Z" buys company "A" for pennies on the dollar and clearcuts their land. Continue until all future thinking companies are gone and the short sighted market driven ones are left sitting on barren desert where once there were trees, no government to bail them out, and, oh yeah, we all die since the forests are no longer there to replenish our oxygen supply. An extreme example indeed, but a good indication that the free market does not work in practice the way you think it works in theory. Because we are all sharing the same resources and the same space, whether it's trees, lakes, roads or sidewalks. Now go back to your game of monopoly and leave the rest of us in peace.

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By JonC (registered) | Posted February 18, 2009 at 22:09:08

"Are you telling me that if tax rates were brought down to 1% and then capped, the city couldn't pay its bills?"

Yes. You live in some sort of theoretical dream world. As I mentioned previously, you haven't reviewed any of Hamilton's budgetary restraints which makes your argument moot. If you think we're spending the difference between actual revenue and your dream revenue on discretionary spending, you are wrong. If the citizens wanted that it could be worked in as a long term goal (decades), but to switch the tax rate overnight would be catastrophic. That you can't fathom that is unbelievable.

Looking at corporate taxes strictly during a time of growth (1999 to last year) is also a joke. When the 2009's numbers are finalized let me know if your theory holds true (I'll give you a hint, our increase in corporate tax revenue has to do with a surge in demand for Canadian resources (extra hint, Canada has the largest percentage of exports as a portion of GDP of any country) or if it turns out that that on the cherry picked set of data from 1999 to 2009 will show that the reduction in corporate taxes ends up resulting in a loss of tax revenue (which it will). If you think that's not the case, feel free to speculate where the doubling of tax revenue came from, because I don't recall any major companies relocating their head-quarters to Canada in the last decade. But feel free to correct me. Actually doing that instead of spouting off arbitrary cherry-picked data would be a nice treat.

Comparing corporate, income and property taxes is the most ridiculous logical leap you've made yet.

That is until you later argued that the lack of downtowns in such thriving cities as Burlington and Oakville is an indicator people don't want their own downtown but then immediately argue that they love the concept of living near Toronto's downtown. I didn't realize that having an hour long drive to work and recreational activities was ideal.

If you were actually curious on our ability to keep up with our debt, here is a good place to start...

http://www.myhamilton.ca/NR/rdonlyres/8D...

And finally, if you bought property for investment on the assumption that property taxes would be lowered, you are in no position to be giving financial advice to anyone.

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By A Smith (anonymous) | Posted February 19, 2009 at 05:31:27

Seancb, >> ps: regarding the conversation above, do you realize you are arguing with a caricature of yourself?

Yes, seancb, I get it, but thanks for your concern. I think it was his name, "A Idiot" that first tipped me off.

>> Regarding the reason it becomes harder to pay off debts with each passing day, watch the video that I linked to, and look up fiat currency.

Get government out of the business of issuing currency, fantastic.

>> In your ideal world, lakes and rivers would be privately owned? What a disaster. So one entity owns lake ontario and its entire catch basin?

Why would it be a disaster? In the former U.S.S.R., where all land was owned by the "public", they actually destroyed a massive body of water (Aral Sea). Once again, when you give individuals ownership of something, they have every incentive to take not destroy it, but rather protect it.

>> An extreme example indeed, but a good indication that the free market does not work in practice the way you think it works in theory.

Then why haven't we used up all the oil in the world? If flooding the market with product is a good business model, then why do companies increase or decrease production based on market prices?

>> Now go back to your game of monopoly and leave the rest of us in peace

???

JonC >> but to switch the tax rate overnight would be catastrophic.

Really? So when commercial rates fell from 6% to under 4.5% from 2002 to 2006 that destroyed the city? I could have sworn it increased the amount of new developments in the city.

>> Looking at corporate taxes strictly during a time of growth (1999 to last year) is also a joke.

Wasn't there a recession in 2001? I guess looking at a decade of information is too short a time frame to make any conclusions?

>> Canada has the largest percentage of exports as a portion of GDP of any country

In the most recent quarter, exports made up 34.7% of GDP. Furthermore, according to the World Bank, Canada is about hundredth (www.nationmaster.com/graph/eco_exp_of_goo_and_ser_of_gdp-economy-exports-goods-services-gdp) on the list of exporting countries, not first.

>> Comparing corporate, income and property taxes is the most ridiculous logical leap you've made yet.

Why? The point I am making is that lowering tax rates acts as an incentive to invest. Hamilton needs more investment, so why not give investors a better deal on their investment? If the city did this, we would get more investment. Bob Bratina and the city has already admitted this works (through the use of five year tax grants) I am just taking it a step further.

How else do you expect to get people to invest in the city, by building stadiums? How does that help an auto parts company make any more money? How does it help an electronics supplier hire more people? How does it increase the amount of profit at the steel companies? It doesn't. So are you still surprised that most of the businesses have left?

>> That is until you later argued that the lack of downtowns in such thriving cities as Burlington and Oakville is an indicator people don't want their own downtown but then immediately argue that they love the concept of living near Toronto's downtown.

Show me the quotes where I said that people in Oakville/Burlington don't want their own downtown and where I said they love the concept of living near Toronto's downtown. You won't be able to, because you're making it up, just like all your other so called facts that I have had to correct for you.

>> And finally, if you bought property for investment on the assumption that property taxes would be lowered, you are in no position to be giving financial advice to anyone.

Why not? Do people who buy shares in Microsoft have no say in how the company is managed? Do people who come from other countries give up the right to speak about Canada's tax policy, simply because they came here to make more money? Are only those people who accept big government allowed to speak out about economic issues and how to increase jobs and investment?

The truth is, if Hamilton was a roaring success, then you may have a point, but it isn't, it's a dirty, tired city, that needs fresh thinking and that's where I come in. I am here to pass on my freedom loving insight to people like yourself, who are hypnotized by the cult of government and all the false promises it has given you. The first step to recovery is to admit you have a problem, so when you're ready, I will be here for you.

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By seancb (registered) - website | Posted February 19, 2009 at 07:16:21

"Get government out of the business of issuing currency, fantastic. "

This might be a good place to start before you spew off about falling back on the free market.

"Why would it be a disaster?" For exactly the reason put forth in my example: The "free market" encourages parasitic behaviour, and we all know what happens to the parasite once they kill the host... Not to mention the sheer absurdity of the logistics.

"Then why haven't we used up all the oil in the world?"

In case you haven't been paying attention to the world around you, we are well on our way to doing just that.

What you are asking for is a corporate-run society where the richest company essentially rules the country. The unchecked corporate control of government is a major reason for the government being useless at doing things right - every decision is crippled by their need to maintain a relationship with the biggest donor corporations.

If one entity (corporation? person?) owned lake ontario, then anyone wanting to use that resource (you, me) would have to pay for the right - because the owner puts profit above all else. Meanwhile, the owner is not accountable to anyone but himself and can set prices with the goal of maximizing profits? The fact that you can't see why this is a bad idea is slightly scary -- only slightly because you are banking your financial future on a distant hope for zero-percent tax, so I'm not too worried about you growing up to be the owner of Lake Ontario.

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By Ryan (registered) - website | Posted February 19, 2009 at 09:19:30

A Smith,

You go on and on and on about allocative efficiency and market incentives, but what hampers your worldview is the fact that you dogmatically ignore many of the incentives and disincentives that inform choices made in real markets.

I've talked about market failures, externalities and collective action problems before, but you just ignored them (not surprisingly). Here's another factor your model fails to address: transaction costs.

I strongly recommend that you go out and read up on the economist Ronald Coase - particularly his landmark paper "The Nature of the Firm", in which he points out that organizational structures often beat open market exchanges, despite the assumption that markets are intrinsically better at allocative efficiency.

Coase argues that this assumption fails to consider transaction costs:

  • The cost of obtaining and verifying information. If I can't trust anything anyone says and must independently confirm every business claim made by anyone (e.g. the claim by my bank that my money is safe, the claim by my grocer that every product they sell is safe), that leaves little room for anything else.

  • The cost of bargaining with others. The number of negotiations required grows geometrically in relation to the number of people involved, since everyone must negotiate with everyone else:

2 people = 1 negotiation 3 people = 3 negotiations 4 people = 6 negotiations 5 people = 10 negotiations 6 people = 15 negotiations 7 people = 21 negotiations 8 people = 28 negotiations

and so on.

  • The cost of enforcement. Assuming I manage to secure reliable information and negotiate successfully among a group of people, we must then finance some means to govern the agreement so that all parties keep their part of the bargain.

Without formal organization and governance structures, transaction costs rapidly dwarf actual production costs, and render efficient market exchanges impractical.

That's why we have regulations on product safety, on workplace safety, on openness and transparency in corporate financial records, in banking practices (Canada, with its strict and conservative banking rules, is alone among major industrialized countries in avoiding bank failures), and so on.

When you write that cyclists should raise the money themselves to pay for bike lanes or that citizens in a neighbourhood should pool their resources to pay for a park, you're doing two things:

  1. You're revealing your ignorance of the role that transaction costs play in rendering unregulated free markets impractical; and

  2. You're flat-out ignoring the fact that governance structures are a legitimate means through which citizens can pool resources and raise money to pay for valued amenities - i.e. exactly what you propose as some kind of alternative.

If the means in which a governance organization (like a local government) collects and spends money are insufficiently transparent and accountable, then the answer is not to starve the organization but to improve its transparency and accountability.

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By A-idiot (registered) - website | Posted February 19, 2009 at 09:27:20

But I want my property value to go up without my having to pay property taxes toward neighbourhood improvements. It's not fair!

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By A Smith (anonymous) | Posted February 19, 2009 at 14:41:27

Seancb >> This might be a good place to start before you spew off about falling back on the free market.

First of all seancb, I talked about this issue months ago, so while I'm glad you see the problems associated with this issue, please tone down the bad attitude.

>> The "free market" encourages parasitic behaviour, and we all know what happens to the parasite once they kill the host.

I think you are actually describing the city of Hamilton. It is a more aggressive parasite than either Burlington or Oakville, siphoning off 50-100% more in nutrients (tax rate) from the taxpayer. Unfortunately, this greed has weakened its host (the private economy of Hamilton) and now it needs nutrients from fellow parasites that live on other communities. If it stopped being so greedy, especially towards businesses, it would find itself feeding on a bigger, healthier animal and would prosper as a result.

>> In case you haven't been paying attention to the world around you, we are well on our way to doing just that.

According to the EIA, the number of days of supply of crude oil is currently at 24.7. This number has been trending higher since 2004, when it was at 18. This means that rather than having a shortage of oil supply, the biggest consumer of oil is actually increasing its supply. Here is a chart if you don't believe me...

tonto.eia.doe.gov/dnav/pet/hist/w_epc0_vsd_nus_daysw.htm

>> What you are asking for is a corporate-run society where the richest company essentially rules the country.

No. I just want property taxes lowered to Oakville/Burlington levels. If this makes the city better (stimulates investment, jobs and demand for area property), than we might want to keep lowering them. If by lowering property tax rates to Burl/Oak levels (for a 3-5 years) the city gets worse, then I will agree that I am wrong. However, over the past few decades, all the economic experiments have been focused on what government can do and the result is what we see today.

>> If one entity (corporation? person?) owned lake ontario, then anyone wanting to use that resource (you, me) would have to pay for the right - because the owner puts profit above all else.

So what is your point? Farmers own their land and yet people don't have a problem with that. What if all farmers decided to stop selling food. I guess everybody would starve to death. The fact is, if a private entity owned Lake Ontario and took too much supply off the market, the citizens would physically take it over. Therefore, if company owners were not suicidal, they would utilize their resource in such a way as to maximize its value to society and in so doing, maximize its profits.

Ryan, what do transaction costs have to do with allowing people to keep and spend more of their hard earned money? Be specific and don't ramble or tell me to read books, just a direct answer to a simple question.

>> You're flat-out ignoring the fact that governance structures are a legitimate means through which citizens can pool resources and raise money to pay for valued amenities

Legitimate by what standards? The standards set out by the people who will send me to jail if I don't fund what 51% of the population says I should fund? A better model of fairness is the raising of capital in the financial markets. In this scenario, people with surplus resources voluntarily give money to others to fund development projects. Yes, sometimes these projects don't work out, but nobody forces investors to keep funding them and if history is any guide, they will continue to fund them in the future. Amazon.com. Ebay, Google, etc were all built with private capital and yet nobody was forced to invest if they didn't want to. A huge difference from taking money from people who don't want to invest.

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By JonC (registered) | Posted February 19, 2009 at 15:01:31

So no examples of all these new corporations taking advantage of Canada's reduced corporate tax rates. Colour me surprised.

As for your link provides, a) I'm talking about actual physical resources, b)using the total exports is ridiculous (exports at 243% of GDP, seriously). This just goes to show how little thought you actually put into your arguments.

And thank you for continuing to ignore Hamilton's actual budget while plugging away at the same old same old and insisting that the other side is a member of a cult, in particular, after I already stated that a massive reduction is a possibility but not on a one year period. If you ever care to use actual data for the city of Hamilton to show your wisdom, that would be great as a continual spouting of theory doesn't pay the bills. Just look at our budget, figure out how much a cut in tax rate would remove from the budget and let me know where you'll take that out of the expenditures for this year, otherwise keep it to yourself.

I also enjoyed your segment in this last post in which you imply that the populous has a right to seize corporate property if it is abused.

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By A Smith (anonymous) | Posted February 19, 2009 at 15:30:04

JonC, >> So no examples of all these new corporations taking advantage of Canada's reduced corporate tax rates. Colour me surprised

If I could conjure up that information I would, but I can't. I am simply reporting what the government tax collections show, which is overall corporate revenue rising at healthy levels even after large tax rate reductions. If have to break these numbers down into little bit sized pieces for you to believe them, then I guess I won't be able to convince you.

>> As for your link provides, a) I'm talking about actual physical resources, b)using the total exports is ridiculous (exports at 243% of GDP, seriously). This just goes to show how little thought you actually put into your arguments.

This a direct quote from one of your posts..."Canada has the largest percentage of exports as a portion of GDP of any country"

This is simply not correct. Singapore and other trading nations do have exports much greater than Canada as a percentage of GDP. Since it is only the "net exports" (exports minus imports) that actually get added to GDP, a country can easily have exports at percentages higher than 100%. Those are the facts.

>> Just look at our budget, figure out how much a cut in tax rate would remove from the budget and let me know where you'll take that out of the expenditures for this year

First of all I would sell off Ivor Wynne, Hamilton Place, Chedoke Golf Club and other such buildings unrelated to the direct administration of city business. Then I would cap spending at current levels and start bringing rates down.

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By Ryan (registered) - website | Posted February 19, 2009 at 15:40:37

A Smith wrote:

Ryan, what do transaction costs have to do with allowing people to keep and spend more of their hard earned money?

Transaction costs are why people can't spontaneously decide to pay for a road, a park or a bike lane if they want one.

They're why the market alone fails to produce essential public goods.

They're why citizens decide to pool some of their money in governance structures to provide these things, since organizational structures outperform raw free-market contracts among individuals.

They're why the city can't magically continue to function if if you significantly cut its tax revenue.

Legitimate by what standards?

Legitimate by the standards of representative liberal democracy that have roots going back 2,500 years.

Amazon.com. Ebay, Google, etc were all built with private capital

Nonsense. They wouldn't exist if not for a communications network invented almost entirely through public funding and direction.

That's not to mention the fact that their business models wouldn't exist without universal public education providing enough skilled workers and internet-equipped consumers to operate and use them.

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By seancb (registered) - website | Posted February 19, 2009 at 15:56:44

"So what is your point? Farmers own their land and yet people don't have a problem with that. What if all farmers decided to stop selling food. I guess everybody would starve to death. The fact is, if a private entity owned Lake Ontario and took too much supply off the market, the citizens would physically take it over."

My point was already laid out in plain logic with my forestry example, I won't repeat it. Your vision of an unregulated, market driven, resource hoarding free-for-all - complete with false shortages and price increases - and peppered with an occasional public takeover/revolt is... interesting.

Like it or not, we live as a group in a society in which we need each others' services in order to collectively prosper. Our collective contributions (whether they be financial, labour, etc) will need to be managed at some level. As such, government is simply not going away. It might take different forms. It might get paid in ways that do not necessarily go by the name "taxes". No doubt there are more efficient forms it can take. But it is not going away.

Most of us are fighting to bring some sense to the decisions that are made in this city, so that the taxes collected are invested in our future rather than being squandered. It seems like that's what you want too - but endlessly calling for a reduction of taxes is simply not a viable "fix all" solution to every single problem. Lowering some taxes, raising others, shifting them around and overhauling the budget are probably all great ideas - but each is a small piece of a very large puzzle.

All we ask is that you stick to the topic at hand under each article so that we can discuss all of the little pieces of the puzzle and perhaps move things forward as a group of people who want the best for Hamilton.

If you want to endlessly discuss your single idea of lowering taxes across the board, once again, I suggest you write a piece on it for RTH. In the comments under your article, we can discuss it 'til the cows come home without distracting people from all of the other (equally important) issues brought up here. I am certain that if you wrote something based on fact (of course with a dose of opinion), you could have it posted, and your ideas can be put to the same test as all other RTH contributors'.

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By JonC (registered) | Posted February 19, 2009 at 15:57:43

If have to break these numbers down into little bit sized pieces for you to believe them, then I guess I won't be able to convince you.

Just one. Name one major corporation that relocated their head office to Canada in the past decade.

The quote you reference is just after I talk about natural resources. Sorry I have to spell things out for you.

So does selling those items off balance the books, or leave a surplus, a deficit. Does it harm or help long term finances. Your simplistic answers are ridiculous. I'm not saying those are necessarily bad ideas, but saying "Here, I'm done" doesn't actually mean that you've done anything.

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By A Smith (anonymous) | Posted February 19, 2009 at 17:19:53

Ryan, Sean, JonC, do we all agree that depressed property values in Hamilton are a sign of lack of interest in the city?

If we do, then however we can increase them, short of allowing people starve or freeze to death is what we need to do.

One way to do that is to look at cities with higher property values and see what they are doing. Both Burlington and Oakville have higher property values than we do, have lower tax rates then we do and also have less transit than we do. Toronto has lower tax rates than we do, but more transit. Therefore, as far as I can tell, the common denominator in these "more in demand" communities are lower tax rates and not things like transit. Furthermore, having lower tax rates does not necessarily lower government spending per capita, because reducing the costs of owning property increases its underlying value.

Therefore, a reasonable person has to assume that maybe, just maybe, having higher tax rates is hurting demand for Hamilton property. If this is a possibility, which the evidence suggests it is, why not take small incremental steps towards lowering them?

The city has already been using 5 year tax grants with much success, so there is evidence that cutting tax bills does stimulate investment and adds to city coffers. I would simply like to see these incentives broadened to all properties in the city and to make them even sweeter for would be investors in our community.

The market is what it is and it doesn't lie. What it is telling us is that Hamilton is not in demand. We have tried the high tax approach for decades, the city has seen businesses flee and yet we still charge businesses and individuals more than our richer neighbours.

Hamilton used to provide businesses with cheap electricity and many believe this was a major incentive for businesses to locate here. If this is true, then why don't we give businesses incentives again. Lower their tax rates to less than 2% and there is no doubt that we will see more investment and more good paying jobs in the city. The alternative is to keep our rates higher than other communities and watch them grow rich while we continue to rust away.

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By JonC (registered) | Posted February 19, 2009 at 17:55:35

And we've come full circle.
There is a reason taxes are where they are. I'm sure council would love to lower them. But that you have no ability to admit that life is more complex than supply and demand is frustrating to say the least.
Not to mention (once again) that if a property in Hamilton costs half as much as somewhere else(Toronto), the tax rate would have to be twice as much in order for the property taxes being levied to be equal.

I should point out that it appears Toronto is planning on raising property taxes and the readers of the Star are as excited about it as you would be (they're all moving to Oakville as well) http://toronto.ctv.ca/servlet/an/local/C...

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By JonC (registered) | Posted February 19, 2009 at 17:56:16

my apologies to the star. ctv's readers are on the move.

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By A Smith (anonymous) | Posted February 19, 2009 at 22:10:40

JonC >> If I was a councillor, I bet I would be just as bad as our current elected officials in spending taxpayers money, if not worse. Human nature is such that we all want to spend more, if for no other reason than it feels good, even when we spend it on things that don't directly benefit us, like presents for other people (new stadium).

However, because government is in the unique position of being able to demand more whenever they want and raise tax rates whenever they want, they tend to broaden their scope from what is truly necessary to what they can rationalize as necessary, or at least beneficial.

For that reason, taxpayers need to put limits on their spending. Both the cities of Boston and San Francisco did this in the early 80's ( www.careerjournal.com/article/SB122852270789884347.html) and it both of these cities are doing pretty well today.

Politicians need discipline and not just every few years or so, but all the time. Capping property taxes at 1% has been proven to work for Boston and San Francisco so there's no reason why wouldn't it work here?

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By jason (registered) | Posted February 19, 2009 at 22:39:46

yea, I'm sure people are all fleeing Toronto for Oakville. Halton Region better watch out. Oakville's 200,000 population is about to grow by a million or two. I'd happily pay a bit more in taxes to live in TO. Anyone dumb enough to leave over a few hundred bucks will soon find out that they spend that few hundred bucks driving to buy milk (and anything else they need).

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By JonC (registered) | Posted February 20, 2009 at 07:53:08

So no to the fact we pay less taxes already (despite a higher rate). It seems to counter your entire opinion. People should be flocking here based on your logic (since people pay taxes in dollars, not percentages).

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By jason (registered) | Posted February 20, 2009 at 10:20:20

thought I'd check back into this blog and find out how the discussion made it to 48 comments (I should have known). Shock of all shocks...another thread hijacked by taxes.

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By Rusty (registered) - website | Posted February 20, 2009 at 11:39:18

I'm in Toronto and I can tell you, there's not that much upset around the latest tax hike. Nobody's moving to Oakville because of it that's for sure.

The main impediment for folks moving to TO is the house prices and the ridiculous new municipal house transfer tax. I moved from Hamilton about 3 years ago (and avoided the new municipal tax). We calculated the cost of running two cars and the physical/mental toll of the commute, versus living in downtown TO. There are still family houses you can buy in downtown TO for just above 300k. Although this is a lot of money in Hamilton house terms we found that our standard of living is just a little less than it was in Hamilton and, more importantly, our quality of life has improved dramatically.

The main obstacle to staying in Hamilton was the lack of available 'good' jobs there. In the end the commute just wasn't viable in the long term. It takes too much of a toll. People will move to where the good jobs are and to where the quality of life is best. I found that most of our friends in Hamilton stayed there because that was where there roots are. I know very few people who have chosen to stay there out of choice. In the end, when you have an inferior quality of life (and no Councilor Merulla, Big Box stores do not add anything to my quality of life) and a long commute, you are not able to enjoy yourself. A nice house and a cheap mortgage can only get you so far. In the end the reason to locate somewhere comes down to a lot more than that.

Toronto has many problems too. I think many times it get's too much respect from RTH. But at least I can walk to work, avoid the soul sapping experiences of shopping at Big Box stores and save money on car costs. These things are important to me. A 2% tax hike (which is, as the CTV article correctly points out, really a cleverly disguised 10% tax hike) is not going to push me out to Oakville or anywhere else.

Cheers

Ben

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By jason (registered) | Posted February 20, 2009 at 11:49:31

the average annual cost to own a car in Canada is $8,000. It's going to take a lot more than a 2% or 10% tax hike to offset that fabulous savings gained by living in Toronto.

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By rusty (registered) - website | Posted February 20, 2009 at 12:13:29

It was when Susie (the missus) decided to go back to work that we realized we'd need to get a second car (because, of course, the transit in Hamilton is so great...:) ) When we added up all the costs, it worked out to be almost as easy to give the money to the bank instead. We're no further ahead money wise (we're a little further behind) but we do get the QoL aspects on offer in TO.

It's because of block headed Big Box thinking such as Merulla's that Hamilton councilors fail to see the value of providing real Quality of Life factors to their town. Bix Boxes may provide some revenue - i.e a moderate off-set to my taxes - some shopping convenience, and some min wage jobs but they also provide blandless and no incentive to spur further growth (as somebody already commented, no person or business is going to invest in Hamilton because of a big box store).

If Hamilton started addressing the needs of it's pedestrians and cyclists a little more, and enhanced it's unique strengths (Gore Park Plaza - a truly unique and enviable 19th/20th century European plaza), the Waterfront, Waterfalls, University etc) then investment money would flow. God knows, with Toronto's stases, Hamilton has a great opportunity to attract investment and prosper. As usual, the conundrum is always - how to get the right minds into those council chairs :)

Cheers

Ben

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By Hopeful (registered) | Posted February 20, 2009 at 13:46:32

To A Smith: I'd like to just ignore you but I can't. You are disturbing my pleasure reviewing the Raise The Hammer site. If a soapbox preacher took up residence on the public space at the edge of your property and constantly harangued your visitors with his (or her) rantings, you would likely be pissed that he (or she) devalued your real estate. That is what you're doing here. You've made you're point. Now move along or get a room please. When you have some specific constructive suggestions to make --- REGARDING THE TOPIC THAT THE ARTICLE IS ABOUT --- I will fully welcome them. There are other forums more suited to macroeconomics and its ideological divides than this.

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By A Smith (anonymous) | Posted February 22, 2009 at 05:14:14

JonC, >> So no to the fact we pay less taxes already (despite a higher rate). It seems to counter your entire opinion. People should be flocking here based on your logic (since people pay taxes in dollars, not percentages)

From fiscal 2006 (Mar 06) to fiscal 2008 (Mar 08), nominal GDP has gone up 7%, from 1,450,490M to 1,551,891M. In that same period of time, the GST was cut from 7% to 6% (May 2006) and again on Jan 1, 2008. As of fiscal 2008, GST revenue was 72,162M, while it was at 69,460M at the end of fiscal 2006. Therefore, while the economy as a whole has grown by 7%, GST revenue during that same time period only grew at 3.89%. Bad right? Not so fast.

However, if you take into consideration that the TAX RATE was only 6/7 (and 5/7 from Jan 1, 2008 to Mar 31, 2008) of what it had been previously, you see the tax cut actually stimulated more spending. Look at it this way, if we multiply the fiscal 2008 GST number by 7/6, which is equivalent to returning the GST back to 7%, we find that 72,162M becomes 84,189M. That's the theoretical GST revenue the government would have brought had it not cut the GST. When you divide 84189/69460 we get a 21.2% increase.

Therefore, even as the economy as a whole only grew at 7% (nominal), GST applicable transactions went up by 21.2%.

Even more impressive, in 1999, the ratio of GST revenue to personal income tax revenue was 37.23% (47566M/127763M). In 2008, this same ratio was 37.29% (72162M/193491M). Therefore, even after cutting the TAX RATE from 7% to 6%, GST revenue relative to personal income taxes (where rates have been flat) has gone up.

Do you get it yet? The GST tax rate was cut from 7% to 6% and yet it brought in a bigger revenue increase than did personal income taxes, NOT LESS, BUT MORE, even though income tax rates were essentially unchanged.

Just because you cut TAX RATES does not mean you decrease tax revenue. DO YOU UNDERSTAND? The GST numbers show that by cutting TAX RATES, you increase the amount of things people buy.

Similarly, if you cut property TAX RATES, you would increase the amount of demand for Hamilton property. For example, if you have a 180K home in Hamilton and the city decides to cut the tax rate from 1.65% to 1%, this makes owning property cheaper and the result is many more people wanting to own property in Hamilton. As a result, buyers will bid prices up until the total cost of owning property in Hamilton is similar to other locals. However, at this point, even though the city charges a lower TAX RATE, it makes up for it by increased demand.

Lower tax rates = greater demand for Hamilton property = increased property values = more revenue for the city, even at lower tax rate.

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By kevin (registered) | Posted February 22, 2009 at 16:43:01

Unlike some of RTH's cowardly snipers, A. Smith will defend his (her?) position to the end. Nobody inspires more responses and endures more abuse than Smitty. I'm glad A. Smith is here. It's like a train wreck without anybody getting hurt.

A. Smith, I'd like meet for a coffee or Beer and do a piece for Entertainment and Sports on the real A. Smith, RTH's anti-christ.

Let me know if you're interested. You can get in touch through this site, I think. If not, Ryan knows how.

Either way, keep it coming you crazy nut.

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By jason (registered) | Posted February 22, 2009 at 17:39:22

Thanks Kevin, encouragement is the last thing ASmith needed. LOL.

You're idea for a meet-up sometime is great though. I'd love to meet some of the other writers/commentators on here. This online stuff can only do so much. Chatting over coffee is much preferred!

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By Grassroots are the way forward (registered) | Posted February 22, 2009 at 19:07:44

I agree with the others as well, it would be interesting to meet others.

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By JonC (registered) | Posted February 22, 2009 at 20:40:26

Meeting up would certainly be an idea.

But back to A Smith....

Once again addressing your opinion that "When you lower the cost of owning property (by decreasing tax rates), you increase the demand for property.... Both Burlington and Oakville charge lower "tax rates" on property and surprise, surprise, their property is in higher demand, as reflected in the higher market prices people are willing to pay."

Taxes are paid in dollars not percentages. And you pay less dollars in Hamilton than in Toronto or Oakville, so according to your logic, those cities citizens should be clamouring to move to Hamilton. If you would care to address that minor flaw in your argument as opposed to making random arguments about the GST or corporate tax rates or anything else, that would be great. Here are some useful numbers for your consideration. While the value of a dwelling isn't the same as the assessment value, using the 2006 census data for average value of dwelling (best I could do on short notice) and the 2008 tax rates.

        avg value in 2006 tax rate  avg prop tax

toronto centre $538712 0.87 $4686.79 oakville $496772 1.05 $5216.11 burlington $335846 1.11 $3727.89 hamilton centre $189078 1.65 $3110.33

Of course, Ancaster gets the screw as they come in at ancaster $351126 1.47 $5168.57

So, people can both buy property for significantly less and pay less tax on that property, yet people aren't living there. So maybe, just maybe, a factor other than tax rate has some bearing on people's property buying decisions.
Please address this or surrender the point.

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By A Smith (anonymous) | Posted February 23, 2009 at 05:59:58

Kevin, thanks for the invite, but I think I'll just stick to making people angry from a distance, it's probably better for my health.

JonC, >> Taxes are paid in dollars not percentages. And you pay less dollars in Hamilton than in Toronto or Oakville, so according to your logic, those cities citizens should be clamouring to move to Hamilton.

Then why does government charge people a TAX RATE on their property and not just a flat rate for all? If tax rates don't matter, then the city should simply divide the number of properties by the tax levy and charge all property owners the same amount. Therefore, if we use the 195k dwelling count (forgetting about businesses to keep it simple) that the census puts out and divide that by the 602 million the city needs in tax revenue, every Hamilton property owner would owe $3087. Therefore, if you owned a big house in Ancaster valued at 1M, your tax rate would only be 0.3%.

The reason government likes a TAX RATE and not just a tax number, as you argue, is because it allows their budgets to grow right along with people's net worth. Whenever people do well and the value of their property increases, so do the wages of all public sector employees, whether or not they are actually being more productive in their duties.

By abolishing the tax rate, in favour of needs/performance based budgeting, government would have to justify all expenditures on their merit and would not be allowed to give raises, simply because they didn't have to raise our property tax rate (seen as a victory in most circles). For example, when people shop for food, they don't base the prices they pay on the percent of their income, but rather the value for what they are paying. Similarly, property owners should not be duped into paying a fixed percentage of their property value, but rather should only pay higher nominal amounts if the city delivers more goods and services. This does not include pay raises for city employees who do the same job year in and year out.

By allowing the government to siphon off a fixed percentage of our wealth, rather than just paying them for how they perform and what they provide, we are telling them they never have to get better and more productive in their jobs, because they will always be guaranteed a fixed amount of our income. If anyone doesn't see a problem with this economic arrangement, then you probably work for the city.

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By JonC (registered) | Posted February 23, 2009 at 08:01:08

Once again a diatribe, but nothing to the point

So I take it that you concede the point that we already pay less taxes, yet have a lower housing price than Toronto, Oakville or Burlington and that we'll never hear your pointless, false argument again.

It appears that your issue is that you feel cheated because you own an expensive property and feel that you are subsidizing those in the less expensive areas of Hamilton. That's probably a much harder argument to gain support for. At least you'll have to make it honestly.

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By Grassroots are the way forward (registered) | Posted February 23, 2009 at 08:40:30

A Smith: You will take notice that as the government gives itself raisies, it is those that are at the bottom that suffer in the cutbacks of services, amounts of money to live on and the increase of the layers in which a person goes through in just trying to obtain some help, meaning that the bureaurcracy keeps growing as we have seen which reaches out into the not for profit sector and for profit sector, which is now layer upon layer of the same thing. Everytime a piece of paper is filled out, someone is getting money, even though the person that is struggling gets nothing, except directed to another agency and another form to fill out, another piece of paper for that agency to get paid.

To give an example, if one loses their job to an injustice in the workplace, for someone who is a low income earner there is no justice. Some people out there seem to think that the laws cover this but the truth is that for many there is no justice, they cannot afford a lawyer to fight on their behalf and there is no legal aid for employment issues, thus leaving the person floundering having to deal with those that work for the system and some of them are quite nasty, power driven , authoritrian types who use intimidation and fear in the daily course of their jobs.

It is interesting that those who seem to think that they are entitled to things such as living wages, benefits, pensions are the very people that are part and parcel of denying others their rights to the same.

This is one example, yours is another, considering the fact that our liberal leader has openly stated that the values set by MPAC are overstated but they are not going to do anything about that, leaving it to the lower layers to deal with, which we know they will not.

People need to become more involved, to make them, the system, accountable for the dollars they take and spend.

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By A Smith (anonymous) | Posted February 23, 2009 at 09:22:19

JonC >> So I take it that you concede the point that we already pay less taxes, yet have a lower housing price than Toronto, Oakville or Burlington and that we'll never hear your pointless, false argument again

First of all, your numbers for Oakville and Burlington are incorrect, according to the 2006 census which you referenced. Oakville's average owned dwelling prices were 472k and Burlington's were 348k. However, even with corrected figures, you are simply strengthening the point I am trying to make. Lower TAX RATES, which both Oakville and Burlington have, INCREASES the amount of money the city gets from each property.

Do you get it? Having a lower tax rate produces more money for government.

Furthermore, this is not a bad thing for property owners, it is a good thing. Paying higher taxes is a sign that your property has increased in value. Therefore, by lowering tax rates, the city gets more money and the property owner gets more money, because the underlying value of the property increases, increasing his/her equity. It's a win - win situation for everyone involved. That's my point.

Do you get it yet?



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By A Smith (anonymous) | Posted February 23, 2009 at 10:01:13

Grassroots, average people should start demanding that the government increase the personal exemption to 35k and also get rid of the GST and PST. As it stands today, someone earning 15k in Ontario pays about $1,100 in income tax. If you make 25k you pay about $3,200. If you earn 35k, you pay a whopping $5,300. Don't forget about the 13% tax on most purchases with whatever money you have left over.

In Denmark, people earning 35k only pay around $2,000 in income tax, and it rates as the happiest place on earth. By allowing lower income people to keep and spend more of their income, you help business, because poor people spend more, this increases jobs, profits and the ultimately the bonuses of CEO's. A win-win for everyone involved.

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By reuben (registered) - website | Posted February 23, 2009 at 16:48:58

wow, A Smith, i am truely surprised that you are praising the denmark income tax system, where anyone making over 70k pays the goverment 63% of their wages.

one of the reasons denmark rates as one of the happiest places on earth is that "Denmark is the most nearly equal society in the world, in that wealth is more evenly spread than anywhere else"

see article at: www.iht.com/articles/2007/12/05/business/labor.php

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By JonC (registered) | Posted February 23, 2009 at 19:14:40

Take the numbers up with statscan

http://www12.statcan.ca/census-recenseme...

http://www12.statcan.ca/census-recenseme...

Your nit-picking aside...

Fact: Hamiltonians pay less for homes Fact: Hamiltonians pay less property tax

And your one and only solution to anything wrong with Hamilton is to 'cut tax rates'. All that does is put Hamilton's taxes per household even lower than the examples you brought up. If it already costs less to buy and maintain property in Hamilton, than the incentive is already there.

"When you lower the cost of owning property... you increase the demand for property" - A Smith

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By A Smith (anonymous) | Posted February 23, 2009 at 23:06:46

Reuben, what I like about Denmark's tax system is the break it gives lower income earners. However, this low rate should be extended upwards to over 65K USD, the average GDP/capita of Denmark. As it stands today, the top rate kicks in at 70K USD, too high if you want to keep the big brains from leaving.

JonC, I stand corrected, your numbers are correct, it appears the government has two sets of numbers for average home prices.

>> And your one and only solution to anything wrong with Hamilton is to 'cut tax rates'. All that does is put Hamilton's taxes per household even lower than the examples you brought up.

Why would Hamilton be any different than the other cities we have been talking about? These communities, with lower tax rates, pay more per property, not less. However, even if this turned out to be the case, what would be wrong with paying less in taxes, if by doing so, our property values went up. Are you telling me that paying less in taxes and having your property value rise is a bad thing?

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By JonC (registered) | Posted February 24, 2009 at 14:07:27

Correlation is not causation.

It's much more accurate that as the property values rise, the tax rate can come down as less tax is needed to satisfy the existing budget (for most cities in the GTA, regardless of the tax rate, it's between 4k & 5k per household).

The high value of property in towns around Toronto are due to the proximity to Toronto. Try charting out average home value on a map. You can try the same exercise around Vancouver or Montreal or Calgary or New York or London, etc. The geography of the area (distance to employment) is the driving factor.

You have valid opinions in other matters, but you are wrong about this one.

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By A Smith (anonymous) | Posted February 24, 2009 at 14:25:24

JonC, I disagree with you that tax rates don't matter, but at least I have planted the idea in your head.

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By Z Jones (registered) | Posted February 24, 2009 at 14:55:21

"JonC, I disagree with you that tax rates don't matter, but at least I have planted the idea in your head." Translation, I concede the argument, but am not man enough to admit it.

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By A Smith (anonymous) | Posted February 24, 2009 at 19:17:00

Z Jones, I don't concede anything. I am simply trying to be gracious and not be an as$@#@% like yourself. JonC has already provided numbers that confirm my argument that lower TAX RATES lead to higher revenue per property (Toronto, Burlington, Oakville), so what else is there to discuss. JonC originally attacked the idea of lowering tax rates under the false assumption that it would decrease overall revenue to the city, but as his own numbers showed, lower rates actually increase revenue per property and thus overall revenue to the government.

Now that his own numbers have contradicted his original assertion, namely that lower tax rates decrease revenue, he is falling back on the old, "correlation does not equal causation" argument, which is akin to saying unless you have 100% proof, then your argument is irrelevant. At this point, it's obvious he is arguing simply to defend a strongly held belief, whether or not it actually is correct, so that's why I said what I did, not because I think I am wrong, but because I think he knows I am right.

His new argument >> It's much more accurate that as the property values rise, the tax rate can come down as less tax is needed to satisfy the existing budget

In 2001, avg dwelling prices in Hamilton were $166,783 and the residential tax rate was 1.75%. In 2006, prices averaged $252,248 and rates were 1.54%. Therefore, in 2001 revenue per property was $2,918. In 2006, it was $3,885. Therefore, in five years taxes paid to the city went up by 33.1%, or 5.9% per year. Considering that inflation was likely 2% per year, that meant the city increased real taxes (adjusted for inflation) by close to 4% a year. So much for the city watching how they spend our taxes.

If the city had simply increased spending at the rate of inflation (2% a year max) from 2001 to 2006, they would have needed $3,221 per property in 2006. This also means that tax rates would have fallen to 1.28%, much closer to our richer neighbours.

Therefore, unless you can put forward good reasons why government has to spend money faster than the cost of living, there is no excuse for the city not cutting our tax rates.

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By JonC (registered) | Posted February 24, 2009 at 22:58:32

correlation is not causation.

My numbers do not prove what you think they prove. You just want them to.

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By Z Jones (registered) | Posted February 24, 2009 at 22:59:43

A Smith, unlike you I'm not trying to be gracious, if being an as$@#@% is the only way to get through your thick skull I'm willing to take one for the team.

"JonC has already provided numbers that confirm my argument that lower TAX RATES lead to higher revenue per property"

Total B.S. JonC's numbers only show that actual taxes paid are pretty uniform across the GTA. Are property values higher because tax rates are lower, or are tax rates lower in because property values are higher, are tax rates whatever they have to be to ensure an actual tax bill similar to the rest of the region?

You certainly haven't done anything to prove that it's the first alternative instead of the second, the third, or something else entirely.

"Now that his own numbers have contradicted his original assertion, namely that lower tax rates decrease revenue, he is falling back on the old, 'correlation does not equal causation' argument, which is akin to saying unless you have 100% proof, then your argument is irrelevant."

First of all, just because it's old doesn't mean it's not still valid. Cum hoc ergo propter hoc is an old one because it has tripped up alot of well-meaning (and also some ill-meaning) people over the centuries.

I'm sure you've heard about how every summer, ice cream sales skyrocket and so do cases of heat stroke. OBVIOUSLY ice cream causes heat stroke, right?

As for the rest of your case, "100% proof" would be nice but I'd settle for anything over and above your broken-record argument about cutting tax rates. So far, after spilling thousands and thousands of words, you have nothing to show.

In fact as JonC points out (and you conspicuously ignore) you pay less property tax in Hamilton than in other cities since our properties are a lot cheaper - so people should be flooding into Hamilton to take advantage of our lower costs.

Except that isn't happening. People aren't flooding into Hamilton to take advantage of our lower costs. If your harebrained theory about property taxes were true, people WOULD be flooding into Hamilton, since as you keep saying when costs are cheaper "many more people want to own property in Hamilton".

THIS ABSOLUTELY AND DIRECTLY CONTRADICTS YOUR THESIS.

Let me say it again: THIS ABSOLUTELY AND DIRECTLY CONTRADICTS YOUR THESIS.

You can keep bleating about RATES until your face falls off, HAMILTON ALREADY HAS CHEAPER TAXES THAN TORONTO, MISSISAUGA, and OAKVILLE and those cheaper taxes have not translated into "many more peple wanting to own property in Hamilton."

So in conclusion, either you're dishonest or you're an idiot.

Like I said, I'm not trying to not be an as$@#@%.

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By JonC (registered) | Posted February 24, 2009 at 23:33:18

And nothing in there is a new argument

To address your points in order

Lowering the tax rate does decrease the amount of taxes coming in to the city's budget. Like this... avg value of 1 home with an average value of $100, at a tax rate of 1.5% gives taxes in at $1.50. If the tax rate is reduced to 1%, that's $1.00 That's less. Balance the budget this year on a rapid tax cut. You refuse to accept that this is even an issue for council.

I have not proved that a lower tax rate rate leads to higher revenue. I've proved that Hamilton already pays less tax. You draw the inaccurate correlation that reducing the tax rate results in higher values out of thin air. There is no realistic reason to think that is accurate.

I can't belief that you have the gall to imply that someone else is arguing a point that they know is wrong, when that is clearly your position.

That's not a new argument. I've made it before and anyone with a basic knowledge of geography knows that's accurate. Major cities have high property values and the value decreases moving away from the city into rural areas where the cost is the least. That you don't see this as evident speaks volumes.

So the property values increased and then the city reduced the tax rate, not enough for your liking, but they reduced the tax rate after the values increased.

Capital expenses. I don't agree with many of them, but the citizens have consistently voted in councillors with the knowledge that large expenses will follow, so I wouldn't go around blaming councillors for being greedy. It's a city wide issue.

You are completely wrong on this issue.

If you think you are right, please explain why entire the population of Oakville hasn't moved to Hamilton to take advantage of our cheaper properties and the lower average property taxes. Which they would in your model until a point was reached where the property values increased to the point where the taxes balanced out. Forget it, you're insane.

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By A Smith (anonymous) | Posted February 25, 2009 at 02:03:10

Z Jones, >> Total B.S. JonC's numbers only show that actual taxes paid are pretty uniform across the GTA.

Great, if communities can bring in "pretty uniform" tax revenue per property using varying tax rates, then there is no reason not to cut them?

>> Are property values higher because tax rates are lower, or are tax rates lower in because property values are higher, are tax rates whatever they have to be to ensure an actual tax bill similar to the rest of the region?

So now you're not sure what you think. Then why do you find it necessary to throw around insults.

>> You certainly haven't done anything to prove that it's the first alternative instead of the second, the third, or something else entirely.

Nor have you proved that lowering tax rates would reduce tax revenue? Therefore, if the numbers we actually do have, indicate that lower tax rates have limited effect on revenue, there is no rational reason not to start reducing them. If lower tax rates can bring in similar amounts of revenue per property, why not reduce them and allow the value of Hamilton properties to go up?

>> In fact as JonC points out (and you conspicuously ignore) you pay less property tax in Hamilton than in other cities since our properties are a lot cheaper - so people should be flooding into Hamilton to take advantage of our lower costs.

You do understand that you are contradicting yourself again, right? If Hamilton has higher tax rates, according to your reasoning, this should mean the city gets more revenue, not less. Perhaps you should clear this up in your own mind before you throw around any more insults.

>> If your harebrained theory about property taxes were true, people WOULD be flooding into Hamilton, since as you keep saying when costs are cheaper "many more people want to own property in Hamilton".

>> THIS ABSOLUTELY AND DIRECTLY CONTRADICTS YOUR THESIS.

This is what I actually said..."Similarly, if you cut property TAX RATES, you would increase the amount of demand for Hamilton property. For example, if you have a 180K home in Hamilton and the city decides to cut the tax rate from 1.65% to 1%, this makes owning property cheaper and the result is many more people wanting to own property in Hamilton."

Notice how I didn't say anything about current low property values attracting new buyers. The reason I didn't say this is because the market has already discounted the overall costs of living in Hamilton, which is why property values are as low as they are. Just because prices are currently low relative to richer communities doesn't mean properties are undervalued.

However, if the city reduced the TAX RATE on properties, this would affect the underlying value. The reason is because the new total cost of owning a property (current lower price PLUS new lower tax rate) would now be less than other jurisdictions. Furthermore, lower tax rates would increase the profit margins of current property owners, allowing them to keep their buildings in better shape, allowing them to charge higher rents and have lower vacancies.

>> HAMILTON ALREADY HAS CHEAPER TAXES THAN TORONTO, MISSISAUGA, and OAKVILLE and those cheaper taxes have not translated into "many more peple wanting to own property in Hamilton

We don't have cheaper taxes, we actually have higher taxes silly fellow. For example, on a $200,000 mortgage, you pay $3,300 in taxes if you live in Hamilton, but in Burlington, you only pay $2,200. That's why people are willing to pay higher prices for a home in Burlington, because the city takes less of their income in taxes. Do you get it yet? $3,300 is actually a bigger number than $2,200.

>> So in conclusion, either you're dishonest or you're an idiot.

Great wrap up of a completely nonsensical rebuttal. You are arguing against lower tax rates because you feel that they would lead to less money for the city and yet in the next breath you tell us that Hamilton property owners actually give the city less in taxes, even though they have higher tax rates.

Which is it, are high tax rates better at producing revenue for the city or are low tax rates? Take your time with this one, I don't want you to hurt yourself, you already seem a little frazzled.

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By Z Jones (registered) | Posted February 25, 2009 at 09:22:21

"Great, if communities can bring in 'pretty uniform' tax revenue per property using varying tax rates, then there is no reason not to cut them?"

You're still assuming causality, duh.

"So now you're not sure what you think."

No, I'm pointing out that whenever you see a correlation, you have to consider ALL the possibilities. You just grabbed the one possibility that helps your case and ASSUMED it must be the correct explanation without bothering to do any work to prove it.

"Then why do you find it necessary to throw around insults."

Mainly b/c you're an idiot.

"Nor have you proved that lowering tax rates would reduce tax revenue?"

See, this is the "you're an idiot" part. This year, let's say the city takes in a billion dollars at current tax rates. Then let's say they decide to cut rates by a third. Immediately, the city's tax revenue will go down by a third, and the city will have to cancel a third of it's spending since cities aren't allowed to run deficits.

Over the long run it's not clear what will happen. Over the short run it would be an unmitigated disaster for Hamilton.

"Therefore, if the numbers we actually do have, indicate that lower tax rates have limited effect on revenue, there is no rational reason not to start reducing them."

The numbers we actually do have DO NOT indicate this.

"If Hamilton has higher tax rates, according to your reasoning, this should mean the city gets more revenue, not less."

c.f. my earlier comment about you being an idiot. Properties in Hamilton are WORTH LESS than equivalent properties in Toronto. That means the city gets LESS REVENUE even with higher tax rates. It may well be why the city has to charge higher tax rates in the first place, and not the opposite as you insist.

"Notice how I didn't say anything about current low property values attracting new buyers. The reason I didn't say this is because the market has already discounted the overall costs of living in Hamilton, which is why property values are as low as they are."

You clearly stated that when you make it cheaper for people, they invest more. Your argument about tax rates is a FUNCTION of this thesis, i.e. cutting tax rates is a way to make it cheaper for people to invest.

The whole point of my opposition to your point (and I assume JonC's as well, and anyone else still reading this with half a brain) is that IT'S ALREADY CHEAPER IN HAMILTON BUT PEOPLE STILL AREN'T RUSHING HERE IN DROVES.

To say there's some voodoo power about tax RATES as opposed to the actual number of dollars coming out of your bank account is just wacked out.

"However, if the city reduced the TAX RATE on properties, this would affect the underlying value."

Yeah, so you keep saying. Try proving it with something more than a loose correlation.

"For example, on a $200,000 mortgage, you pay $3,300 in taxes if you live in Hamilton, but in Burlington, you only pay $2,200."

Yeah, but a house that costs $200,000 in Hamilton costs $300,000 in Burlington, so you pay about the same tax. You know, dollars coming out of your bank account, what you actually pay.

"Which is it, are high tax rates better at producing revenue for the city or are low tax rates?"

You do realized that you're the ONLY ONE HERE insisting that doing something with tax rates is how to produce revenue for the city. Meanwhile, real people choose to live in this place or that based on lots of considerations, like how far it is from their job, what the commute is like, what the schools are like, what the amenities are like, local parks and green space, perceptions of safety, competency of local government, yadda yadda yadda. The price of the property tax is only one very small part of that whole, a part that you're FRIGGIN' OBSESSED with and the rest of us are trying to point out is not the real issue why Hamilton is languishing compared to Oakville and Mississauga.

You know what, forget it, you're too far gone to penetrate any sense at all into. Go ahead and live in your low tax rate bubble, I don't care any more, you're not worth any more of my time, I'm sorry I even bothered to go this far.

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By A Smith (anonymous) | Posted February 25, 2009 at 12:20:40

Z Jones, >> You're still assuming causality, duh.

You too are assuming causality. You are making the assumption that increasing tax rates will produce higher revenue for the city and yet where is the proof to back that assumption up. According to the numbers JonC presented, higher tax rates in Hamilton have not led to higher revenue per property. Therefore, you're assumption is not borne out by the facts.

>> This year, let's say the city takes in a billion dollars at current tax rates. Then let's say they decide to cut rates by a third. Immediately, the city's tax revenue will go down by a third, and the city will have to cancel a third of it's spending since cities aren't allowed to run deficits.

Who said anything about cutting rates a third in one year? How about 5% a year? Would that lead to disaster? Seeing that the city wants to spend millions on a stadium and has recently shown it loves to spend money at 3x the rate of inflation, you are in no position to cry foul about not having enough money. The city has plenty of money, all it needs to do is a better job of allocating it.

>> Properties in Hamilton are WORTH LESS than equivalent properties in Toronto. That means the city gets LESS REVENUE even with higher tax rates.

Exactly. If the city wants more revenue it needs to reduce rates.

>> It may well be why the city has to charge higher tax rates in the first place, and not the opposite as you insist.

The city does not need to spend at 3x the rate of inflation no matter what you say. Most of the cost associated with running the city is employee compensation (514 million in 2007), so there is plenty of room to cut back. It would simply mean that city employees would have to have their pay linked to inflation until we could bring rates down to 1%, at which time property values would have increased enough to offset the lower rates.

>> IT'S ALREADY CHEAPER IN HAMILTON BUT PEOPLE STILL AREN'T RUSHING HERE IN DROVES

First of all, there are more people in Hamilton than Oakville and Burlington combined, but that's not the point. The goal is to not just increase the population of the city, but to increase the amount of people who would like to live here, the demand, there is a difference. That's why tax rates are so important if you want to not just increase the total amount of people that live here, but also increase how much they are willing to pay for a property. Understand?

>> Yeah, but a house that costs $200,000 in Hamilton costs $300,000 in Burlington, so you pay about the same tax

What sense does that make? A $200,000 house in Hamilton is obviously NOT the same as a $300,000 house in Burlington, otherwise the market would not price it 50% less. Furthermore, prices for homes are not simply reflections of square footage, but reflect the overall desirability of the neighbourhoods they make up. To suggest that a 2,000 sq.ft home in Hamilton currently has the same value as a 2,000 sq.ft home in Burlington means that either the whole real estate market is wrong, or you have made an incorrect assumption. I'll go with the latter.

>> You do realized that you're the ONLY ONE HERE insisting that doing something with tax rates is how to produce revenue for the city.

That's not true, if you didn't believe that higher tax rates brought in more revenue for the city, why would you be arguing against my proposal to begin lowering them? The only rational reason why anyone would be against lowering tax rates is because they DO believe it will affect city revenue and not in a positive way.

If you can't even understand who or what it is you are arguing against/for, maybe you should take some time to figure it out before calling people idiots.

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By JonC (registered) | Posted February 25, 2009 at 13:03:06

"Furthermore, prices for homes are not simply reflections of square footage, but reflect the overall desirability of the neighbourhoods they make up."

Which I 100% agree with.

So, is your assertion that the only factor affecting desirability is the tax rate? If not, feel free to list other factors affecting the desirability.

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By A Smith (anonymous) | Posted February 25, 2009 at 14:17:28

JonC, well, one of the consistent variables found in communities with high property values is a vibrant private sector and people with high amounts of disposable income. When tax rates are reduced, it allows existing property owners to keep a larger percentage of their income (including the increased equity from higher housing prices), which in turn allows them to spend more money at local restaurants, stores and also fix up their property. In effect, reducing tax rates encourages more private consumption, which in turn produces more jobs, which in turn leads to more demand for city property, better neighbourhods, which ultimately drives up revenue for the city.

That's why I am calling for reducing tax rates, because once they were brought down to 1%, then the city could go back to spending at rates that matched any increase in property values, which is generally the case today. Except at this point, the city will have permanently improved its desirability, precisely because of the better economy, larger private sector and improved quality of our neighbourhoods. Think of it as suffering some pain in the short term, in order to enjoy higher property values and all the positive qualities that will bring for the long term.

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By Grassroots are the way forward (registered) | Posted February 25, 2009 at 23:39:38

A Smith: Lowering the tax rates would be good in one sense if they cut down the bureaucracy, but in actuality, the tax cuts would punish those at the bottom,as those at the top could never do with less.

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By JonC (registered) | Posted February 27, 2009 at 07:58:18

You believe that if we reduce the tax rat to match Oakville/Burlington "at this point, the city will have permanently improved its desirability, precisely because of the better economy, larger private sector and improved quality of our neighbourhoods"

It seems like a trend, but again you're wrong.

To reference back to Oakville & Burlington. They have lousy private sectors.

http://www.oakvillechamber.com/oakville-...

Non-Res as a Percentage of total assessment From 2005/2006 Financial Statements AS AVAILABLE

Assessment Year 1999 2000 2001 2002 2003 2004 2005 2006

Oakville 15.35% 15.71% 15.45% 15.31% 14.85% 13.86% 13.84% 13.44% Mississauga 25.9 % --- 26.3 % 24.6 % 24.4 % --- 24.6 % --- Hamilton 29 % 28 % 26 % 25 % 25 % 24 % Vaughan 26 % 25 % 24 % 24 % 24 % Brampton 20 % 21 % 23 % 22 % 21 % Burlington 16.7 % Milton 20 % 25 % Waterloo 24 %

Oakville Chamber of Commerce Sources: Annual Reports for each municipality with data where available

Which probably relates back to them having to levy higher taxes against their citizens than Hamiltonians.

You would think it would be thrilling to be consistently right, but it actually makes me feel sad for you.

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By JonC (registered) | Posted February 27, 2009 at 08:03:55

It looks like the spaces were filtered out of the table. I'll try that again

Assessment Year 1999.. 2000.. 2001.. 2002.. 2003.. 2004.. 2005.. 2006

Oakville...... 15.35% 15.71% 15.45% 15.31% 14.85% 13.86% 13.84% 13.44% Mississauga... 25.9 % ------ 26.3 % 24.6 % 24.4 % ------ 24.6 % ------ Hamilton.................... 29 %.. 28.. % 26.. % 25.. % 25.. % 24.. % Vaughan............................ 26.. % 25.. % 24.. % 24.. % 24.. % Brampton........................... 20.. % 21.. % 23.. % 22.. % 21.. % Burlington..................................................... 16.7 % Milton.................................................. 20.. % 25.. % Waterloo....................................................... 24.. %

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By JonC (registered) | Posted February 27, 2009 at 08:06:28

So, the text that I write in the comment box is different than what show up on the post, which is a pain, since there isn't a preview function. Anyhow, click to the Oakville Chamber of Commerce or visualize all those rows being aligned to the right most column. blah.

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By Ryan (registered) - website | Posted February 27, 2009 at 08:28:34

Hi JonC,

I feel your pain. The comment form is very rudimentary, but we are working on making it less sucky in the near future as part of a site redesign.

Part of the problem is inherent to HTML, which collapses multiple spaces between words down to a single space.

Given your difficulties, it occurs to me that it would be nice to be able to post tabular data (i.e. text separated by tab spaces) and have the comment form automatically convert it into an HTML table.

In the meantime, if you are a registered user on RTH you can post URLs in your comments and they display as clickable.

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By JonC (registered) | Posted February 27, 2009 at 11:10:20

Good to hear. If I new more about web design I'd offer my services, but alas, I'm a leech on the web, always extracting.

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By A Smith (anonymous) | Posted February 27, 2009 at 13:55:16

JonC >> To reference back to Oakville & Burlington. They have lousy private sectors.

Really, then why can the people that live there afford to drive newer cars, fix their homes more often and spend more at local stores and restaurants? That is what I am referring to when I talk about the private sector, not whether or not the proportion of taxes that comes from the commercial sector is high or low relative to the residential assessment, but rather the overall private wealth that a community has, which includes the value of their home.

Think about it this way, if your neighbour wins the lottery, allowing him/her to make his home and property into a masterpiece, this would make living in the area much more pleasant for you and would also likely cause the value of your home to go up as well. Furthermore, almost every single home buyer recognizes the value of private wealth in a community, because most people would rather choose to live beside a mansion, then a public school, or a city owned stadium, even though the cost of both a public school and a stadium are higher than a mansion.

Just think about the value of homes in and around Ivor Wynne, they are low and its because people don't find the neighbourhood attractive. However, if that area of the city was only taxed at 1%, the people living there would have more money to spend on their homes, at local shops and on things like newer cars, etc. This in turn would make the neighbourhood a much more pleasant, attractive place to live, and the result would be higher assessments for the city.

That's what I am talking about when I say that lower rates would result in a bigger private sector, bigger in proportion to the amount of money that government spends. Lower the share of money that government takes as a percentage of the private wealth and people will want to move here.

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By JonC (registered) | Posted February 27, 2009 at 21:18:13

I've come to love your method of ignoring empirical evidence and presenting what you feel as fact.

"Really, then why can the people that live there afford to drive newer cars, fix their homes more often and spend more at local stores and restaurants?"

I just gave you empirical proof that Hamilton collects almost twice as much of their revenue as a percentage of total revenue from the private sector than Oakville. Which in trumps your fictional concepts of reality every time. To reiterate what that means, since it appears to have gone over your head, is that HAMILTON'S PRIVATE SECTOR DOMINATES OAKVILLE'S.

"That is what I am referring to when I talk about the private sector."

Anyhow, it's not my opinion (well, I do agree with it), but the Oakville Chamber of Commerce thinks the city of Oakville has a lousy private sector. Whether they have more consumer goods (as per your observation) is independent of the quality of town's private sector. If the residents of those towns do have more consumer goods, they clearly are buying them outside of their own city. So even in your magical land where reducing property taxes to 1% cures cancer and feeds the homeless, the private sector is hurt. If I made arguments in the same fashion as you, I would say that the lower tax rate is responsible for this poor private sector as Hamilton has a greater private sector developed on a higher tax rate and then ignore any evidence to the contrary.

So, to recap...

Residents of Oakville pay more for homes They pay more taxes on those homes They take their free capital (which according to you they have an obviously larger amount of) and spend it in other municipalities' private sectors.

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By A Smith (anonymous) | Posted February 27, 2009 at 23:27:32

JonC >> I just gave you empirical proof that Hamilton collects almost twice as much of their revenue as a percentage of total revenue from the private sector than Oakville.

So you don't consider individuals as part of the private sector? The Government of Canada does consider them part of the private sector and that's why consumption undertaken by non governmental sources is termed "private" and not "government consumption".

>> HAMILTON'S PRIVATE SECTOR DOMINATES OAKVILLE'S

See above.

>> the Oakville Chamber of Commerce thinks the city of Oakville has a lousy private sector.

What else do you think the business community would say? All businesses want to grow and so they're calling for lower tax rates, the opening up of land for industry to build on (currently limited by Greenbelt legislation) and government to stop zoning land so as to limit their ability to run their businesses the way they see fit. These are all points that argue against government interference in the local economy, including restrictive zoning requirements and high tax rates, so thanks for reinforcing the message I'm trying to get across.

>> Whether they have more consumer goods (as per your observation) is independent of the quality of town's private sector.

Once again, private sector wealth includes the accumulated earnings of the residents of the communities in which they live and not just businesses.

>> So even in your magical land where reducing property taxes to 1% cures cancer and feeds the homeless

???

>> Residents of Oakville pay more for homes
They pay more taxes on those homes
They take their free capital (which according to you they have an obviously larger amount of) and spend it in other municipalities' private sectors.

Another way of looking at it...
They have nicer homes.
They pay a smaller percentage of their net worth in taxes.
They have more disposable income to spend elsewhere.

If your goal is to pay the least amount of taxes as possible, then yes, Hamilton is probably a great place to be, but then again living on the street is even better. However, if your goal is to live in the best community you can, then lowering tax rates is a great way to do this. By allowing people to keep a larger percentage of their net worth, you allow them to spend more money on their homes, on consumer goods, at local shops, all of which make the community a more desirable place to be. It also increases assessment values, which is why Hamilton city council should start doing it immediately, if they want to increase revenues for the long term.


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By jason (registered) | Posted February 27, 2009 at 23:28:54

ASmith... thank you for reminding me why I will never live in Oakville or Burlington. It doesn't get any lamer or more boring than a community where "a pleasant and nicer place to live" is determined by the kind of cars people have in their driveway.
Brutal.

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By A Smith (anonymous) | Posted February 27, 2009 at 23:41:18

Jason, you're right, having money to spend is pretty stupid. By the way, if you have any you want to get rid of...

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By highwater (registered) | Posted February 28, 2009 at 08:51:27

I grew up in Oakville, and my husband was working in Oakville at the time we made the decision to move to Hamilton. Frankly my quality of life in Hamilton is much higher, but then, like Jason, I don't judge my QOL by the square footage of my home or the make of my car. And I know from experience that the rarefied neighbourhoods of Oakville are not a particularly healthy place to raise kids. (Saw too many extremely privileged kids go off the rails.)

The mistake you make is to assume that everyone would want to live like this given the chance. If that is how you feel, then all i can say is: be careful what you wish for.

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By JonC (registered) | Posted February 28, 2009 at 11:40:40

So you don't consider individuals as part of the private sector? The Government of Canada does consider them part of the private sector and that's why consumption undertaken by non governmental sources is termed "private" and not "government consumption".

Words have different meaning in different context. But on top of that you are calling 'private' the same as 'private sector'. The municipalities do not count residential taxes as private sector taxes.

So even in your magical land where reducing property taxes to 1% cures cancer and feeds the homeless

???

to answer your question: What I meant was that you make no sense.

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