Canadian municipalities have become increasingly dependent on property taxes and user fees for their revenues. Over 76% of municipal revenues came from property taxes and user fees in 2004, up ten percentage points from 66% in 1995. Over the same period, the contribution of federal and provincial transfers to municipal revenues dropped by a similar amount.
Federal and provincial governments have surpluses available that could provide the funds that municipalities need. New revenue sources for municipalities should grow at a stable rate and be matched to program needs, progressive, flexible and efficient to administer - and not subject to harmful tax competition and avoidance.