Municipalities in Financial Distress

Written by Louis Even on Sunday, 01 February 1959. Posted in Social Credit

The importance of municipal councils

The municipal council is the organ of government closest to the people. Of all the types of governments it renders the greatest number of daily services to those within its sphere.

This point was made recently by the mayor of Ottawa, Miss Charlotte Whitton, at the Congress of Mayors and Municipalities "If the federal government were suddenly to cease its activities it would probably be a good week before the effects would be felt in the daily lives of the citizens. But if the municipal government were suddenly to cease operating, everyone would know it immediately, there would be no fire or police protection, no garbage collection, no education, no repairing of drains, no water supply".

Can you, for example, imagine the women of Montreal and Ottawa finding their water faucets empty; no water for cooking, washing, for the toilet, and no possibility of returning to a community of wells and water buckets...? Such matters are vastly more vital to them than the fervent appeals of the federal government to build up an army, navy and air force to defend Christianity, or the interests of oil companies, against possible attacks from Germany yesterday, Russia today, Red China tomorrow and from some ally of today, the day after.

The municipal council is of greater service in the daily life of the population than the federal and provincial governments together.

Furthermore, the city administration is decidedly the better judge of the needs of those under its jurisdiction. It has first-hand knowledge of those in need and misery who require public aid, without having to await bureaucratic inspectors sitting in comfortable chairs a thousand miles away, more zealous in caring for their interests than in looking after the victims of poverty, disability and disease.

Logically, the municipal government should be the first to receive all the financial aid necessary to carry out adequately its functions.

However, the facts are quite the contrary.

Victims of a pernicious financial system

The existing financial system, with respect to taxes and the allotment of credit, tends to centralisation. It concentrates wealth in the hands of a few and tends to concentrate power in the hands of governments far-removed from the people and least likely to hear the voices of individuals and families in want.

More and more, the municipalities are forced to tax and retax its rate-payers, or to borrow and plunge itself into debt to such an extent that it is forced into a position very similar to that of a minor under the charge of a guardian — once it has been shamefully exploited by the rulers of money and credit.

There was a time when all or, nearly all citizens were proprietors with revenues sufficient for their needs, with no tax on this income nor a multitude of other taxes to pay to central governments. It was comparatively simple to support their municipali institutions, to finance municipal services through a property tax amounting to a very small sum from each proprietor.

Such is no longer the case. Proprietors are in the minority in many cities, a very small minority in Montreal; and a goodly number of these property owners carry mortgages, which means that they must make yearly payments with interest.

Furthermore, resistance to further tax increases is, with good reason, becoming more marked everywhere, especially where an informed and alert citizenry refuses to let itself be clipped without raising a hue and cry.

The municipalities bestir themselves

The latest provincial congress of municipalities and the National Congress of Mayors and municipalities have dwelt at some length on this situation and have demanded other sources of revenue for the municipalities. Of course there was one dissenting voice — that of Gaston Hardy, mayor of Shawinigan and erstwhile National Union candidate against Rene Hamel in the Quebec elections of June 20. He suggested increases in municipal taxes on top of all other existing taxes, provincial, federal and bank. The suggestion got no support, for Gaston belongs to the old school whose, epitaph has already been written.

The newspapers of August. 8 carried this declaration by Mayor L. McCrae of Welland, president of the Association of Mayors and Reeves of Ontario:

"The Association of Mayors and Reeves of Ontario has for long maintained that the existing practice of taxing at municipal level is most unjust; and it maintains that the recent proposals of the federal government, with respect to financial agreements with the provinces, makes any modification of the municipal financial setup impossible.".

Summing up the grievances of the municipalities he stated that they were being obliged to expend more and more money each day to meet the demands of industry and growing populations. They had to meet the expense of maintaining adequate service in water supply, sewers, streets, garbage disposal, snow removal, police and fire departments; added to all these was the burden of supporting education and caring for the old, the poor and the orphans... In the opinion of the mayor, all these services extended beyond the area of direct responsibility with respect to the municipality and should be financed by means of other revenues apart from property taxes, for they (the responsibilities) devolved equally upon the provinces and the federal government.

On August 28, the Canadian press carried the following despatch from Edmonton (Alberta):

"The Canadian municipalities will call for a federal-provincial-municipal conference, if neither of the other governments take such a step, to discuss the financial problems of municipalities.

"Mayor William Hawrelak, of Edmonton, new president of the Canadian Federation of Mayors and Municipalities said yesterday that plans for the meetings on three levels will be discussed at the reunion of the Federation's executive next November."

At the congress of the Federation of Mayors and Municipalities, some objected that the convocation of the three governments by a municipal federation was unconstitutional... True, the municipalities are dependent on the provincial government from which they must receive their charters. But when the constitution becomes an obstacle to the normal life of the essential public services and institutions of municipalities, and when it becomes inimical to the best interests of individuals or of families, then it must be modified or overridden.

The solution in Social Credit

We view favorably this attempt by the municipalities to find some method of financing themselves other than through mounting property taxes (either by an increase in evaluation or a rise in tax rates). But the right method must still be found. In the matter of taxation rights there are gross inequalities which reduce the municipalities' share to the absolute minimum. But even a redistribution of these rights would provide no solution to the problem. As long as finance is the tyrannical master instead of the faithful servant; as long as we continue to think in terms of money-debts and tax-debts instead of thinking of physical potentialities, and the production of true wealth, just so long will the situation be one of two dogs fighting for a large share of a very small bone.

On the other hand, the source of conflict disappears along with artificial restrictions when we admit and apply the very simple principles of Social Credit which have been set forth and explained for years in the official organs of the movement:

All that is physically feasible and meet the public and private needs of the people should, by that very fact, be rendered financially possible.

All production of new goods should be financed by new credits and these credits should disappear only in the same measure as the wealth is consumed, destroyed or depreciates;

Such new credits should come into being where new wealth appears, and should cease to exist with the consumption of wealth.

Municipal developments, such as a new aqueduct or the enlargement of an old, are actually the creation of new wealth, brought into existence at municipal level. So it is there, at municipal level, that the new credits to represent this wealth should be created. The same holds for the production of other types of goods in the municipality, or in the province, or nation.

There are no conflicts of jurisdiction; the only clashes arise concerning the source of finance. The application of Social Credit makes these latter unecessary. For it becomes no longer necessary to pin ones hopes on innumerable and useless conferences between voracious lions and starving sheep.

It is all very well for the representatives of the municipalities, our mayors and councillors, to plan meetings with the provincial government from whom they hold their charters; likewise to plan to meet with the federal government, because OUR bank, that which by its very definition makes us shareholders in it, The Bank of Canada, holds its charter from Ottawa. But let these meetings and congresses have as their purpose the hastening of a financial regime which will serve, a financial regime which is in step with realities, a Social Credit financial regime.

28,15% for Mammon!

The municipality of Thetford's budget for 1958 climbed to $876,082; this includes revenues from not only property taxes but all taxes levied on the taxpayers. Of this sum, $246,687 goes to service the municipal debt — or 28.15 percent of the total revenues. More than a quarter of the taxes go to fatten high finance without the population having a single square inch of sidewalk or an ounce of service to show for it. The same situation exists elsewhere. And yet there are still to be found politicians and economists who find this system entirely satisfactory and agreeable!

About the Author

Louis Even

Louis Even

Leave a comment

You are commenting as guest.