PST Reduction, Oklahoma City and the might-have-beens in Manitoba
As of July 1, the provincial government has reduced the Provincial Sales Tax to 7%, costing the treasury somewhere around $300 million per year province-wide (estimates on revenue loss vary from source to source). Coincidentally, I was in Oklahoma City recently at the International Downtown Association conference, and spent a lot of time hearing about that city’s MAPS program. Not maps in the traditional sense, but rather “Metropolitan Area Projects Plan”.
The MAPS initiative is about twenty years old in OK City. It involves increasing sales taxes in the city by one percent (sound familiar?) in order to fund various infrastructure projects. However, there are some big differences with the Manitoba experience. Firstly, the tax increase is subject to a referendum vote within the City approximately every 8 years. Secondly, the list of proposed projects is on the ballot – it is developed in advance after much public consultation. Thirdly, the projects are constructed once the money has been collected – there is no debt financing aspect. The first MAPPs initiative raised $350 million. The most recent MAPS 3 involved $777 million, raised over 7 years.
My first reaction was “this is a red state, there is no way in hell these people voted for a tax increase” – but I was wrong. Each time the MAPS list has gone to a vote, the residents have approved. The projects have ranged from a streetcar line, to a baseball stadium to new school gyms to seniors fitness centres.
Maybe, just maybe there is some opening here for the City of Winnipeg. Estimating that PST collected in Winnipeg would be 70% of provincial total, which yields about $210 million per year. Taken over 3-4 years that produces about the same as the MAPS 3 total in OK City. It could be made subject to a city-wide referendum as in OK City, and the list of projects would need to be presented as part of the ballot. This could not build all of the City of Winnipeg’s proposed BRT lines, but it could build some, as well as projects that would benefit each ward.
Of course the provincial government as PST tax collector would have to agree to this plan. Some might say “why don’t you just put a 1% property tax hike to a referendum?” We could, but that would raise only $6 million per year – not enough to do the major infrastructure projects. One could also criticize the “incidence” of sales tax, in that lower income individuals pay a higher percentage of their income towards sales tax than do higher income residents. However, if the projects provided public benefits such as rapid transit, I think some of this inequity would be counter-balanced.
It is too bad that some better planning did not accompany the PST increase introduced by the former Manitoba government. I will say this – the streetcar ride in Oklahoma City was great, and I got off at Mickey Mantle station and walked around by the newish ballpark and canal area (all MAPS projects). It made me think about the might-have-beens with the Manitoba experience, and the possibilities for the future.