Glen Murray's Failed New Deal

Article excerpt

When he was president of the Federation of Canadian Municipalities, Jack Layton called for cities to be recognized constitutionally so as to be independent of the provinces and to be able to create their own forms of taxation. The Federation backed his argument that cities could not continue to finance themselves through property taxes alone. The media and federal governments chose to ignore the issue until Winnipeg's then-mayor, Glen Murray, picked up on the idea and made it a national issue to the point that a cities agenda has become a declared top priority of Paul Martin's new Liberal government.

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What was it about Murray's original "New Deal" that created such excitement, stirred up such debate in Winnipeg and gained national attention?

Glen Murray is very persuasive. He was able to demonstrate that cities are desperately underfunded with huge infustructure deficits and badly in need of improved public transit. But Murray went well beyond what the Federation of Canadian Municipalities was talking about and is still talking about. He argued that not only did cities need more revenue from the provincial and federal governments, but that there ought to be a significant reduction of property taxes, which would be shifted to user and consumption taxes--tax shifting.

Despite all the hoopla, in the end Murray failed to garner sufficient support to deliver this New Deal. What he did manage to get through Winnipeg's City Council was the basic proposition that the city needs a bigger share of provincial and federal revenues, no more than what the Federation of Canadian Municipalities has been calling for over the last seven years. Today, that is all that is left of Glen Murray's "New Deal." Nobody in Winnipeg's city hall, including Murray's successor as mayor, Sam Katz, is inclined to bring back the original "New Deal." Nor, evidently, is anybody else in the municipal scene around the country. (Katz, a local businessman in the entertainment industry, seems most concerned to eliminate Winnipeg's business tax and is questioning Winnipeg's need for an improved public transit system.)

What was the Glen Murray "New Deal"?

Murray centred much attention on tax shifting. Donna Morton, head of the Centre for Integral Economics think tank, who helped shape this aspect of the New Deal, argues that taxes need to be focused differently--less on income, property improvements, investment, labour--which she calls "good things" that need to be encouraged; and more on the "bads": pollution, traffic congestion and urban sprawl, which need to be discouraged. The idea is to use taxes to change behaviour and get different results--tax the bad to encourage the good.

Winnipeg's property taxes are high compared to other cities, which rely more heavily on a variety of user fees and higher charges on water and sewage. The original "New Deal" was to cut property taxes by half, eliminate the business tax, cut bus fares by half and eliminate the amusement tax. Taxes would be shifted from property/business taxes to user taxes and fees. The shift was to include, but was not limited to, a city sales tax, a gasoline and diesel tax, income-tax sharing with the province, increased property frontage levies, a natural gas and electricity tax, garbage collection fees, a liquor tax, a 911 telephone fee, a hotel tax and, finally, increases in water and sewer rates.

No question, Murray's New Deal taxes would bring a lot more money into the city coffers. But then again, Winnipeg faces a $100 million infrastructure deficit.

The other godparents of Glen Murray's "New Deal"--besides Donna Morton--are Richard Florida and Jane Jacobs. In his book. The Rise of the Creative Class, Richard Florida argues that talent goes to communities that are tolerant, multi-cultural and creative--values much emphasized by Murray and embodied in his "New Deal." For years Jane Jacobs, a well known urban activist, has argued that cities are generators--not merely recipients--of economic activity, and that we need to move towards the concept of a "city state. …