Campaign finance reform a good idea for civic government. So too might be a municipal sales tax.

A little spat appears to have broken out between Manitoba premier Gary Doer and Winnipeg mayor Sam Katz over the provincial government’s proposal to restrict corporate and union donations to municipal election campaigns. It will improve transparency and accountability in municipal government, says the premier. It will only reinforce the power of incumbency, says the mayor.

The province’s position seems to be better supported by the evidence than the city’s position. One study by two economists at George Mason University found that contribution limits tend to lead to more competitive elections, both in terms of the number of candidates standing for election and the greater ease of turfing out incumbents.

Another study in 2004 by Kihong Eom and Donald Gross of the University of Kentucky shot down the assertion that limiting donations would give the incumbents an advantage.

“Critics of campaign contribution limits have long argued that they can have the undesirable effect of increasing the size of the financial advantage already held by incumbents over challengers,” they wrote.

“We simply find no evidence to support this claim in any of our analyses.”

Those two studies alone provide just cause for going ahead with municipal campaign finance reform.

Yes, there are studies that are critical of campaign finance reform. However, the most critical of this research was sponsored by the Cato Institute and the American Enterprise Institute. As both of these institutes rely on contributions from the same corporations that would stand to lose the most political clout under campaign finance reform, their credibility is not the greatest.

A milder criticism from Northwestern University’s Matthias Dahm and Universidad Pablo de Olavide’s Nicolas Porteiro is that, “[campaign finance reform] may deter informational lobbying so that less policy relevant information is available and as a result political decisions become less efficient.”

The arguments for reform still outweigh those against.

However, there is more than just campaign finance reform that could be done to keep municipal politics clean.

There have been suggestions from time to time that cities should be allowed to levy sales taxes. These have been routinely shot down by the provincial government, which likely wants to stay clear of the controversy that it would cause.

However, there is reason to believe that replacing property taxes with consumption taxes as the main source of municipal government funding might help clean up one of the longest-standing complaints about municipal government.

The following comes from the research of Robert MacDermid of York University:

“Competition within the development industry to be first in line to receive zoning changes, secure sewer access rights or to win extensions of services to land owned by one developer rather than another drives them to try to influence council decisions. Developers want politicians to approve their developments first and secondarily be supporters of the industry as a whole.”

“Municipal politicians have their own good incentives to participate in the process that drives development. They are not reluctant participants, for city councils need development to broaden a tax base that depends on the extent and value of property development. Trapped in this logic, the best way for municipal politicians to increase the tax base and respond to the needs of existing residents is to be advocates of development. New houses, factories, condominiums or office towers add new taxpayers to the property rolls and also drive up the value of pre-existing property. Increasing land values through development creates an appreciation in land values for citizens although it also increases taxes that are tied to property values.”

In short, part of the reason why property developers tend to have as much influence as they do in urban politics is because municipalities are dependent on property tax revenues from new developments in order to balance their books.

Getting away from property tax dependence by getting those funds from consumption taxes instead would help correct this perception of ‘developer dominance’ in municipal politics.


About theviewfromseven
A lone wolf and a bit of a contrarian who sometimes has something to share.

2 Responses to Campaign finance reform a good idea for civic government. So too might be a municipal sales tax.

  1. mrchristian says:

    I completely agree with a muni sales tax.

    City council has been officially a full-time position for over a decade now. Give them the tools to collect the necessary monies and thus do the long term planning based on that money.

    No need for grand uncle to dole out allowance. Us and them we’re all grow’d up and can figure it all out at election time whether they did a good job or not.

  2. Fat Arse says:

    Completely agree with the sentiments expressed. For too long there has been a lack of transparency in municipal election financing in this province. In fact, I would argue that this new legislation may even lead closer elections not in the City of Winnipeg, but in the mid-sized cities & towns (Brandon, Portage, Dauphin,The Pas, and Thompson) where corporate donations can make all the difference.

    p.s. I posted my own silly take on it & would link to your post – but regrettably, I am, apparently, too much of a caveman to figure out how that function works! Bottom line though, nobody should be upset over this development.

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