Business Concessions

As a member of Town Council I would never be in favor of the town using tax concessions as a tool for bringing business to Ponoka.  One reason that I am not in favor of granting tax concessions is because it makes no sense for the town to not collect the one tax that it has exclusive claim too.  I know that supporters of the opposite view would argue that it is better to get the business to locate here and at least have the jobs but such an argument ignores the town's income reality. 

When it comes to income the town cannot tax the employment income of its residents.  That prerogative belongs solely to the province and the federal government.  The only tax that the town can levy is that on the property which belongs to the  businesses and homeowners in its jurisdiction.  Therefore when a town grants concessions those concessions are a hit to the town's bottom line but the town must still provide infrastructure services to the business and its employees.  If the business doesn't pay for these services that means that another town resident and business will have to pay those costs. 

Secondly I am opposed to government at any level that proposes to use the tax system for anything other than what is its proper purpose which is to pay expenses that are incurred in the running of the government.  The use of the tax system as tool to manipulate the economic decisions of individuals or businesses only serves to erode the tax system itself by reducing taxpayer confidence in the system's equity of application.  And in the end it also serves to cheapen the value that is attached to the services that are provided and causes the taxpayers to hole their politicians, who are responsible for administration of taxes, in disrepute.

More importantly though the basis of this argument is to be found in the idea that governments by following certain fiscal policies can grow themselves out of a deficit.  However this argument can only be used by national governments.  I do not think that this argument can be applied to municipal economics because municipalities cannot issue money or set interest rate policy as a way of growing themselves out of debt.  Therefore it is my position that ultimately no one wins when tax concessions are used to alter economic behaviour.