0w2010 01 RESUM EJECUTIVO 03 DEFcarta ang
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North America Executive Summary
Canada and the U.S. are constitutional democracies with a federal structure of government. Both countries are geographically large (over 9 million km2) but the population of the U.S. (304 million) is much larger than the population of Canada (33 million). Canada has one federal government, ten provincial, and three territorial governments, and almost 4,000 local governments. The U.S. government structure is composed of one federal government, fifty states, and 89,476 local governments. Although Canada is a highly decentralized country in terms of federal and provincial powers, it is much more centralized with respect to provincial and local powers. Local governments are often referred to as “creatures of the provinces” because they have no original powers in the constitution and enjoy only those powers that are delegated to them by the provinces. Each province has separate legislation governing municipalities in the province and, as a result, there are differences across the country. In general, municipalities are responsible for delivering police and fire protection, roads and transit, water and sewers, solid waste, recreation and culture, and planning. Property and related taxes account for more than half of municipal revenues. Other municipal revenues include other taxes (such as taxes on hotels, restaurant meals, and liquor), provincial and federal transfers, and user fees. Municipalities are not permitted to levy income or sales taxes. The heavily reliance on property taxes has meant that Canadian municipalities have not experienced significant revenue losses as a result of the recent economic crisis.
In the U.S., the assignment of service responsibilities at the state versus the local level can vary widely across states based on constitutional and statutory provisions. The federal government generally plays a much smaller overall role in direct service delivery than do state and local governments, but the federal government often has important influence over service delivery through federal grants, loans, and cost sharing that come with various restrictions, as well as federal laws and regulations. State and local governments have nearly exclusive responsibility for a number of services, including fire, education, libraries, solid-waste management, sewerage, water supply, and transit. Water, electricity, gas supply, and sewerage are exclusive state and local responsibilities, although the federal government plays some regulatory and fiscal roles in all of these fields. U.S. local governments generally raise revenue from property taxes, sales taxes, income taxes, user fees and charges, and federal and state transfers. The recent economic crisis had a very uneven effect on local governments. Property tax revenues rose during fiscal year 2009. On the other hand, combined state and local personal income and sales tax revenues fell.
Main issues and challenges for local government finance Nine issues in local government finance in North America are discussed in this chapter: •
The contribution of property taxes to local finance (Canada and the U.S.): The property tax is the largest local revenue
William F. Fox, University of Tennessee, U.S.A. Enid Slack, University of Toronto, Canada