Report says that municipalities should charge user fees for infrastructure

A report by the School of Public Policy at the University of Calgary says that if Canada is going to pay for its aging infrastructure, Canadian authorities “will simply have to expand the use of user fees.”

The authors, Philip Bazel and Jack Mintz, say that Canada’s roads, bridges, wastewater treatment centres and sewer systems are in such a state that Canadian cities face “some seriously expensive bills” in the next 10-15 years. The solution is to charge tolls and user fees, but this is the remedy that municipalities are most reluctant to put in place.

They say that currently municipalities are relying on general taxes and going into debt to fund infrastructure, not to mention having a heavy dependence on inter-governmental transfers. “In the last 50 years, the portion of municipal revenues provided by federal and provincial transfers has increased from under 30 per cent to roughly 45 per cent,” they say.

“No wonder,” they continue, “since transfers from other levels of government allow municipalities to maintain a low tax rates for their constituents. But citizens, (often the wrong citizens), will ultimately pay the price through provincial or federal income taxes. Moreover, this approach results in unpriced infrastructure access and over-usage.”

“If governments moved toward more optimal pricing for infrastructure, a more efficient allocation of resources would prevail” the authors stress. “Commuters would make wiser choices between housing and commuting costs, which would be less subsidized, thereby reducing urban sprawl. And governments would make wiser budgetary and tax-policy decisions, trading off infrastructure demands relative to demands for other municipal services.”

To read the report, click here