September 2019
FCM Releases Report on Federal Gas Tax Fund

2019-09-11 11:21:13 AM

FCM (Federation of Canadian Municipalities) has released a report on the state of municipal finance in Canada and argues why the federal Gas Tax fund (GTF) is the “best fiscal tool available to local governments”.

Some highlights of the report include:

  • Among advanced economies, Canada is an outlier in its reliance on property taxes to fund local governments. In 2016, property tax accounted for 48% of municipal revenue. This may be not be a reliable source of revenue in the future given the rise of e-commerce.

  • GTF is a flexible tool that currently only represents a small fraction of overall government transfers: less than 2% of national municipal revenues where government.

  • GTF’s two percent annual increase does not keep up with other economic fundamentals thereby limiting its effectiveness.

In the run up to the federal election in October, FCM recently called for all four national parties to permanently double the value of the annual GTF transfer. Doing so would support the renewal of core infrastructure, roads, waste and transit systems as argued in the report.

AMCTO has previously echoed similar sentiments in our previous Pre-Budget Submissions recommendations to allow municipalities access to greater revenue tools and a continued investment in infrastructure. Given that municipalities in Ontario are currently facing a growing $60 billion infrastructure gap, increased investment is necessary for municipalities to address such a gap in infrastructure to ensure local governments can respond to the needs of their communities.

Moreover, AMCTO addresses topics related to infrastructure financing during its annual Municipal Finance Forums where academics, municipal practitioners, and relevant Ministry staff have discussed such topics, trends, and best practices. During last year's finance forum, for example, AMCTO was pleased to have former Parliamentary Assistants to the Minister of Infrastructure and Minister of Finance (Stephen Lecce, now Minister of Education, and Doug Downey, now Attorney General respectively) attend to discuss the priorities of their Ministeries.

For more information, please see below:

FCM: The Case for Growing the Gas Tax Fund: A Report on the State of Municipal Finance in Canada

AMCTO: FCM Seeking Federal Gas Tax Fund to Permanently Double

AMCTO: Pre-Budget Submissions

AMCTO: December 6th Finance Forum


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