March, 2006
EXECUTIVE SUMMARY
The purpose of this report is to provide an assessment of how the federal government’s economic development efforts have impacted the municipal tax base in Cape Breton.
Canmac’s approach to the measurement and analysis of the Federal Development Impact on the Cape Breton Municipal Tax Base involved the following major activities:
1. A review of municipal units and their tax rates over the 2000 to 2005 period.
2. A review of ECBC major project file.
3. A direct survey of the ECBC’s client base.
4. Direct data collection for each municipal unit.
5. Analysis of the database.
Federal assistance to the Cape Breton economy has a significant impact on the municipal units operating in the Cape Breton region. This impact is felt in two major ways:
1) Tax revenues increase directly by ECBC clients paying property taxes and business occupancy taxes.
2) Tax revenues increase indirectly from ECBC making contributions to municipal infrastructure and similar projects directly to municipal units.
The tax revenue direct contribution rose from $725,136 in 2000 to $6.1 million in 2005. This is a significant contribution that provides revenues for each year into the future for the life of the project.
The municipal infrastructure projects provided an ECBC contribution of $40.2 million that leveraged projects worth $90.0 million over the 2000-2005 period. This is a significant one time injection into the municipal unit that in its absence would have to be funded by increased taxes.