Economy of Greater Sudbury - Taxation

Taxation

The city's economic growth has been hindered at times by taxation issues: because of federal corporate taxation rules pertaining to natural resources companies, Sudbury's ability to directly levy municipal taxes on Inco and Falconbridge is severely curtailed, compared to most cities whose major employers operate in other industries. As early as 1954, the Sudbury Star was referring to Sudbury as "a city without a city's birthright", because of this taxation barrier. Prior to the creation of the Regional Municipality of Sudbury in 1973, the city could not levy any taxes against the mining companies at all, because the Ontario Municipal Board consistently denied the city's requests to annex the outlying company towns, such as Copper Cliff, Coniston, Frood Mine or Falconbridge, where the mining facilities were actually located.

This fact sometimes left the city without a sufficient tax base to adequately maintain or improve municipal services. At one point, Sudbury offered the fewest municipal services of any city of comparable size in Ontario, despite having residential property tax rates fully 20 per cent higher than any of the same cities. For example, the city did not maintain a public transit system until 1972, instead relying on a succession of private operators, which were eventually consolidated under the ownership of Paul Desmarais, to provide bus services to commuters. The city only took over the system after a public outcry following an incident in which several students en route to classes at Laurentian University were hospitalized for carbon monoxide inhalation when their bus stalled and exhaust leaked into the vehicle. In the 1950s, the provincial government began providing the city with an annual grant to make up the shortfall, although a municipal accounting study in 1956 found that this grant was only providing 52 per cent of the revenue the city would have received from a direct tax assessment on the mining facilities.

In 1973, the city and its suburban communities were reorganized into the Regional Municipality of Sudbury. The expansion of the city's boundaries gave the city the power to levy property taxes on Inco's surface operations in Copper Cliff and Frood, but not on their underground facilities. This change improved the city's tax base, but the ongoing discrepancy has still been cited as a factor in municipal politics during the 2006 municipal election. As of 2007, 75 per cent of the city's tax base comes from residential property taxes.