Comment 35574

By A Smith (anonymous) | Posted November 19, 2009 at 00:57:22

Ryan >> The city would collect over $7 million in additional transit funds if all wards of the city paid what the lower city pays today.

That assumes that tax rates on property won't influence the underlying value of the properties being taxed. Ryan, I know you are a smart guy, have you ever considered that Hamilton's high tax rates are keeping assessments artificially low?

You have cited both Boston and Portland as examples of how transit can help improve the quality of life and economy of Hamilton, but both of these cities also have spending/revenue caps that limit their politicians ability to spend taxpayer's money. Have you ever asked yourself why this is?

Furthermore, even if LRT is a net positive for this city, it won't help if the politicians simply take the added revenue that it creates and waste it on projects that aren't.

Think of it this way, let's say the LRT will cost $10 million/year to operate and produces $20 million a year in added tax revenue. The politicians can then take that $20 million and spends it on projects that only return $10 million in added tax revenue. Therefore, the net result of the LRT without a cap on taxation is ZERO. All the LRT has done is to allow the politicians to waste money on things that don't produce good returns

In contrast, by capping taxes at the rate of inflation + new growth, politicians will be forced to spend efficiently. Furthermore, since the economy usually grows faster than the rate of inflation, people's incomes will grow faster than their property tax bill and this money will be left to flow into local businesses. This will create new jobs and decrease poverty.

In Boston, through the introduction of Prop 2 1/2, which limits spending, has been robust assessment growth and property tax rates that have fallen from over 2% to around 1%. There is nothing wrong with asking politicians to be more efficient with our money and history has shown that unless citizens make it easy for politicians to restrict their spending they just won't do it. The temptation to spend other people's money is just too strong.

Lastly, if the politicians felt they needed new money for a sure bet investment, there could even be a provision for holding a referendum. If 2/3 of voters felt that a new expenditure was necessary, it could get passed. Otherwise, spending would be limited to the rate of inflation.

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