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Is the municipal taxation system a systemic issue that hampers development of more diversified sustainable regional economies, in the Okanagan and across the country?  In short, one dangerous characteristic of systemic issues in an economy is society’s lack of understanding of the issues; therefore, society adapts to the symptoms and lives with the problems. Society will first react when systemic issues adversely affect a large group of people. Then often, the symptoms are treated rather than the underlying systemic causes that, unnoticed, are allowed to repeatedly escalate into worsening adversity. Is the municipal taxation system a systemic issue?    

Consider that the municipality’s main revenue sources and transfers from government are entirely allied to land and real estate development, and not from personal and business income. Consequently, one must ask, is the taxation system causing municipal Councils and administrations to overly focus on land and real estate development and allied sectors, with less interest in facilitating investment in diversified and more sustainable economic development?  Would changes to the taxation system, giving municipalities power to levy tax on personal, investment and business income generated in the municipal regional and local economy, stimulate municipal Councils and administrations to focus more on facilitating investment in value-added economic production, and thereby advance a more diversified resilient economy with less ecological impact?  

Fueled by factors such as demographics, generational wealth transfers, and deferred tax pension systems, a region such as the Okanagan, with natural beauty, climate and location advantages, investment in land development, real estate and allied sectors comes automatically, and with that ecological challenges. The problem is what certainly doesn’t come automatically is investment in economic production, which contributes to a more diversified and ecologically sustainable economy. It entirely depends on our government system and policies that, early enough, address issues in the allocation mechanism that hamper investment in a more sustainable economy. Issues that unsolved inevitably cause social economic and ecological adversities, and issues that are government’s primary task and accountability to society to analyze address and formulate solutions to, and not the private sectors’. Issues particularly critical in highly ecological sensitive regions, such as in a closed ecology like the Okanagan; is development usurping social, economic and ecological realities? Is our government   structure, analysis, planning, economic development models and policies working to advance sustainability and long term prosperity?    

Ultimately, is the municipal taxation system a systemic issue that hampers sustainable economic development in regional economies in Okanagan and elsewhere? Would a municipal tax on personal and business income, stimulate interest in economic development models that further more sustainable economic development with lesser ecological impact? British Columbia’s Community Charter and 3P public private partnership route, transfers of traffic fines to municipals and municipal surtax on the gas; is that treatment of the symptoms rather than curing the disease?  Who has the first line of accountability for regional and local economies, and can society afford to allow systemic issues to, not understood and hence unsolved, escalate into adversity. 

Furthermore, realizing that municipalities are not government but an arm of the provincial government, that share the constitutional accountability to the members of society that makes up regional and local economies, is there a need for an appeals statute that would allow appeal of municipal decisions to the government, rather than to the court, which few if any can afford? Making the Court to the last resort appeal instance rather than the first. Is the system of a Municipal Corporation placing an appointed court as the appeal route really a firewall, and subsequently shelter government from accountability to society - is that not at least a sort of democratic failure?  

Research to increase understanding of municipalities roll in regional and local economies, can be used to develop technology that assists government to develop policies that address social economic and ecological issues, early enough and before the issues unsolved are allowed to escalate in to adversity. 

This is a part of OISD’s IISRE Initiative, the “International Institute for Sustainable Regional Economies”, an interdisciplinary initiative and cooperation between university faculty, government, first nations, and private sectors in Sweden and Canada with a global scope. Information about IISRE can be found at

Kelowna March 16, 2007 

Kell Petersen

Executive Director

Phone: 1.250.862.3960