The PST hike was ostensibly meant to fund infrastructure. Yet, as Sam Katz pointed out, it will actually reduce the ability of the City of Winnipeg to meet its own infrastructure obligations. Katz argues that while Winnipeg residents pay 61 percent of PST revenue, they’ll only receive $7 million of the $277 million from the PST increase.
The real problem, though, is that the PST increase inhibits the ability of the city to increase taxes to pay for municipal infrastructure. Not only are they not getting provincial revenue, but the city can’t make up for it either. Credit to Katz for recognizing this, rather than simply asking for a bigger handout.
This provides a perfect example of why we need to shift revenue generating capacity downwards in Canada. The federal and provincial governments have more money than they need, resulting in highly politicized transfers to cash starved municipalities, which don’t have the capacity to generate revenue to fund their own services.
