0w2010 01 RESUM EJECUTIVO 03 DEFcarta ang
26/10/10
19:49
Pรกgina 62
EXECUTIVE SUMMARY 62
United Cities and Local Governments
Figure 8: Local Government Expenditure and Revenue as part of the General Government Budgets in North America
40% 30% 20% 10% 0
revenue expenditure
source in both Canada and the U.S. Changes in the economy (for example the shift from a goods-based economy to a service-based economy to a knowledgebased economy) combined with conscious efforts to reduce property taxes through tax incentives, and tax and expenditure limits have resulted in a reduction in property taxes in the U.S. and, to a lesser extent, in Canada. Narrowing the property tax base means that tax rates have to be higher to collect the same amount of revenue. Higher tax rates increase the excess burden of the property tax, make the tax even more unpopular, and can result in greater tax arrears if there is reduced compliance. Narrowing the tax
base by targeting relief to particular taxpayers can result in an inequitable tax system, for example, by shifting the burden from existing to new businesses or by shifting the burden from those with rapidly growing market values to those with stagnant market values. โ ข
Sales tax base erosion (U.S.): Sales tax base erosion only affects local governments in the U.S. because Canadian municipalities are not permitted to levy sales taxes. Three factors explain the base erosion. First, state governments have chosen to narrow the base by granting a seemingly ongoing set of exemptions. Second, although differences