A Modest Proposal

A plan to give municipalities access to personal income taxes
March 26, 2024
1.08 MB30 pages

Click here to read the full report online.

Cities lack sufficient revenue to meet increasing service demands due to downloaded costs from higher government levels over the past three decades. Additionally, ownership and responsibility for physical infrastructure have shifted towards municipalities in the last half century. 

This report shows that if the federal government directed the Canada Revenue Agency (CRA) to collect municipal personal income taxes, cities could decide to implement a local income tax. A one per cent tax on the richest, for example, could raise tens of millions of dollars to pay for public services and infrastructure.

Author David Macdonald estimates how much 34 city governments could raise if they changed any of the top four federal income tax brackets. For example, if cities imposed a one per cent municipal tax on incomes over $246,000, these are examples of the amounts of revenue that could be raised for specific city governments in 2025:

  • The City of Vancouver could raise $48 million
  • The City of Calgary could raise $67 million
  •  The City of Winnipeg could raise $16 million

If cities broadened the tax base by imposing a one per cent additional tax on personal income over $56,000 in 2025, these are examples of the amounts they could raise:

  • The City of Toronto could raise $340 million
  • The City of Québec could raise $60 million
  • The City of Halifax could raise $45 million

This modernized approach to city revenue raising would give cities discretion over its use and it would promote flexibility and political responsibility.