The announcement of the $650 million SaskPower natural gas co-generation plant for Moose was greeted with joy by all.
The power plant with 600 construction jobs over nearly three years offers the local economy a short term shot in the arm.
The 25 employees running the plant will help. But the best part of this power plant is the potential attraction of industry to a reliable source of power and one that involves less carbon emissions than some other sources.
Don’t be surprised if you hear of warnings about high emissions from natural gas. Some California cities are refusing to allow new buildings to install natural gas utilities.
What did surprise some observers was the clause in the SaskPower/Moose Jaw agreement that SaskPower would never pay the city property taxes or grants in lieu of taxes.
If this plant paid property taxes or grants in lieu of taxes, the city would get about $6 million a year — enough to replace one-fifth of current taxes on property, or hasten the water main replacement program.
The no tax clause was a disappointment, but there is no obligation by the provincial government or a Crown corporation to pay property taxes.
Grants-in-lieu of taxes by the Saskatchewan government started in 1998 as a kindness to help struggling municipalities with revenue.
That sweet deal ended in the draconian Saskatchewan Party government budget of 2017. The end of the grants saved the province $62.1 million and cost property taxpayers an equal amount.
Cities had to cut programs or raise property taxes that year.
In the literature of public finance, the taxing of one level of government by another level is a no-no because it amounts to taxation without representation and certainly is double taxation. It just doesn’t make sense.
Why should one level of government be allowed to tax another level of government elected by a different set of voters?
Provinces impose the tax simply because they can. Municipalities were, after all, created by the provinces.
That raises another issue. If the province not paying municipal taxes, or grants, is wrong, how wrong is the province collecting provincial sales taxes from municipalities? Or the feds collecting GST from municipalities?
Across Canada municipalities pay hundreds of millions every year in provincial sales taxes and federal GST.
Municipalities can build a strong case to become exempt from these taxes.
When will they start lobbying through the Federation of Canadian Municipalities and various provincial associations?
Ron Walter can be reached at ronjoy@sasktel.net
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
