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Published online by Cambridge University Press: 07 November 2014
This paper is concerned with rural local government, and particularly with the equalization feature of grants to local governments. Reference is made to the Alberta situation.
Significant Differences between Urban and Rural Municipalities. The position of the rural municipality is significantly different from that of its urban counterpart. The basic difference is in fiscal capacity. Fiscal capacity is financial ability, within the taxing powers provided, to perform the functions for which the municipality is responsible.
All taxes are ultimately paid out of income. Rural per capita income is relatively low; disparities in income are less pronounced; production and income are more variable and uncertain; and income produced in rural areas is largely spent within urban jurisdictions. Consequently taxable capacity is lower; and certain forms of taxes (for example, income taxes, sales taxes, and amusement taxes), efficient and appropriate under urban conditions, would be unproductive and uncertain sources of revenue under rural circumstances. The fiscal capacity of rural units is further affected by population dispersion so that the costs of some services, frequently sources of net revenue to urban governments, are high or prohibitive in rural areas.
This paper was presented at the annual meeting of the Canadian Political Science Association in Vancouver on June 19, 1948.
1 The School Grants Act, 1945. Regulations Relating to the Payment of Grants (Orders-in-Council, nos. 882-46, 114-47, and 285-47), Edmonton, 1947.
Basic Grants. Elementary, $275 per room; intermediate, $400 per room; high school, $650 per room.
Equalization Grant. Sect. 4 (c). “Equalization grants shall be paid for each classroom in accordance with the following schedule:………
(iv) For each rural district and school division classroom for each $1,000 by which the average assessment is less than $130,000 the sum indicated in the following schedule:
Transportation Grant. Sect. 2 (a). “there shall be paid for each motor van route according to distance covered in one round-trip per day,—
(1) For less than 15 miles a grant of $300.00 per year.…
(xiv) For 75 miles and over a grant of $650.00 per year.…
“Horse-drawn vans will be paid for at 75% of the foregoing rates.”
Amendments, not yet approved by the Executive Council, provide for increase in the amounts of the grants without substantial change in principle.
2 The Public Highways Act, chap. 74, Statutes of Alberta, sect. 13. “Provincial contributions may be made toward the construction of any district highway, and shall consist of such percentage of the cost of the work undertaken as may be determined from time to time by the Board and approved of by the Lieutenant Governor in Council.”
District highways are those which the chief district engineer considers of less general importance than main or secondary highways, but of outstanding local importance, and are established as such by the District Highways Board. In 1948 the province is contributing 60 per cent of the cost.
Other sections of the act provide for assistance for secondary highways, on the initiative of the local authority (sect. 10); for highways through villages, towns, and cities, as per agreement (sect. 10 a); for development roads (sect. 16); and for local roads in improvement districts (sect. 18).
3 Report of the Royal Commission on Taxation, Sessional Paper no. 71, 1948, Government of the Province of Alberta (Edmonton, 1948). The Commission was appointed in July, 1947, to enquire into:
“(1) The allocation of responsibilities as between the Provincial Government and the Municipalities, urban and rural.
(2) The adequacy (and allocation or distribution) of revenues to enable the Provincial Government and other Municipalities, urban and rural, to discharge the responsibilities of Government.
(3) Any other matters incidental to the subjects mentioned in paragraphs (1) and (2).
(4) Any practical measures which may be taken to simplify and to make equitable the taxation system of the Province.
(5) Municipal tax revenue in respect to Schools, Hospitals, all Social Services and Public Works.
(6) Without restricting the generality of the foregoing, to enquire into municipal revenues and expenditures and the system of municipal assessment and taxation of property.”
Mr. J. W. Judge, deputy minister of municipal affairs was appointed as commissioner. The commissioner's Report was submitted to the premier on February 12, 1948.
4 Ibid., p. 68. “Guaranteed grant equals the net guaranteed minimum (the guaranteed minimum annual amount fixed in the present Dominion-Provincial Agreement less the Statutory subsidies payable by the Dominion to the Province), divided by the amount of the relinquished revenue (the revenue relinquished by the Province by the Wartime Dominion-Provincial Agreement), times the school grant in 1941-42, divided by the enrolment in 1941-42, times the enrolment as determined above for 1946-47 (the 1946-47 enrolment increased 10%).”
5 Ibid., p. 83. “It is recommended that as far as is possible the total of the grant to be made available for roads in rural areas should be equivalent to an amount equal to approximately 25% of the revenues obtained from the Motor Vehicle and Fuel Oil Tax Acts.”
6 Ibid., p. 83.
