“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
– Jean-Baptiste Colbert, Louis XIV’s Finance Minister
Here we go again. Yes, that was the opening line of my article “All Smoke and Mirrors” six months ago, so here we go again. Good old franchise fees are set to rise by 1.5 per cent up to an alarming 20.3 per cent on gas delivery charges. But the good news is that your municipal taxes will not need to bear the brunt of the decrease in municipal revenue as a result of the reduction in the cost of gas delivery. No, since the efficiency of the gas utility results in less cost to you, the consumer, the revenue generated by the existing franchise fee results in a decrease in revenue for the city.
So, what’s the solution? The solution in the minds of city administration is to raise the franchise fee. Diane McMordie, director of finance for the City of St. Albert, justifies this recommendation to council by saying: “This is about keeping our franchise fee revenue whole, so we are not shifting the burden back on the taxpayers.”
So, the reward for the gas delivery system becoming more efficient results in lower charges on your gas bill but the city has to make up for that efficiency by increasing the franchise fee. What a merry-go-round! What goes down must come up.
So, what happens when costs rise for the utility company? Will the franchise fee be lowered? Don’t bet your boots on it! If anything the franchise fee will continue to rise until it hits the 35 per cent maximum limit authorized by provincial legislation.
Last spring, the issue was the imposition of a franchise fee on the electrical utility; now it is the gas utility, where there has been a franchise fee for several years. Initially the electrical franchise fee is to be five per cent rising incrementally to 10 per cent by 2021, and who knows where it will go after that. Once the principle of adopting a fee has been made, raising it causes less “hissing” from the taxpayer.
Let’s face it, municipalities are addicted to spending and demand every cent they can squeeze out of the poor old taxpayer to pay for their frivolous dreams. Any time they face a small cut in their revenue stream, they must find another way to make up for it and guess who pays?
But really, the consumer is about to get a break from the natural gas provider in a decrease in the gas delivery charge because of their efficiency, only to get a kick in the pants from the City of St. Albert with a corresponding increase in the municipal franchise fee. And of course that will come with an additional five per cent GST and maybe even an increase in the carbon tax levy. Perhaps the city should look at a little “efficiency” in their operations.
As I said last April, the root problem is that the City of St. Albert does not have a revenue problem; they have a spending problem! Maybe the city should just do away with all the smoke and mirrors and get rid of franchise fees all together.
Ken Allred is a former St. Albert alderman and MLA.
