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Mayors disappointed by failure to have gas taxes cut.

Mayors disappointed by failure to have gas taxes cut

Northern Ontario representatives came away from the July cross-border shopping summit with mixed feelings.

"I was expecting to come out of the meeting with more than we did," said Fort Frances Mayor Dick Lyons, who participated in the Toronto summit with other border city mayors, business leaders and federal and provincial government officials.

The mayors and business officials were disappointed that they failed to receive a commitment that gasoline taxes would be reduced.

"The province said they would investigate the matter, and the federal government just said |No,'" said Lyons.

Gail Logan, general manager of the Sault Ste. Marie Chamber of Commerce, said she was "disappointed."


The price of gas in Ontario has been identified as one of the main reasons why shoppers cross the border. Once on the U.S. side, Ontario shoppers are also prone to making other purchases.

Canadian businessmen complain that excessive taxes are making it hard for them to compete with their American counterparts.

And while there is little chance that the provincial and federal governments will reduce taxes, the recession and downturns in several local economies have made in difficult for local governments to reduce tax rates.

The Sault, Thunder Bay and Fort Frances have all set zero-percent increase goals for their next municipal budgets. However, mill closures and other local economic problems will make the goal difficult to achieve.

"Unfortunately, when your major employer (Algoma Steel) is restructuring and has not made its tax instalment for 1991 and it accounts for one quarter of the city's tax base, it doesn't leave you with much flexibility," Logan pointed out.

Logan said the Sault has already dipped into its reserves in order to hold the line on taxes.

However, Toronto consultant John Winter of John Winter and Associates questions whether we can afford all the services we presently demand from our governments.

"Canadians have become accustomed to gold-plated service. We want better street lights and a full-time fire department," he noted. "Perhaps in the future towns will decide they can live without an extra baseball diamond or with reduced efficiency of service."

Winter added that education taxes are a local levy which politicians do not control and "no one points a finger at them."

However, both Lyons and Logan claim that the school boards in their respective communities are also attempting to keep rate increases to a minimum.


Following the Toronto summit it was announced that Ontario residents shopping in the United States will be sent a bill for the provincial sales tax on "major" goods they declare at the border.

The move was somewhat of a compromise for the federal and provincial governments. The province wanted the tax collected at the border, but the federal government would only agree to the measure if the province piggy-backed its sales tax with the goods and services tax.

The compromise was not what some of the northern representatives had in mind.


"I didn't really want to get into the collection of the provincial sales tax," Thunder Bay Mayor Jack Masters told Northern Ontario Business shortly after the July 18 meeting. "I'm not comfortable with that particular item."

Under the plan announced by then-Minister of Industry, Trade and Technology Alan Pilkey, a portion of the collected tax will go into a border city assistance fund of up to $5 million to be used for marketing programs. The programs will promote the benefits of shopping in Canada to Canadians.

Logan said the money is welcome.

"We've had the (marketing) program for the past year, but we just don't have the dollars to do the job properly," she said.

Logan said the lack of funds has prohibited the Sault from implementing the second phase of its consumer education program.

Masters, too, is pleased that his city will receive some funding.

"Money spent on marketing does pay off," he said, noting that recent efforts have resulted in an increase in the number of U.S. visitors to Thunder Bay.

However, Winter calls the border city assistance fund "throwing good money after bad."

Winter's company has written a report on the impact of cross-border shopping for the Town of Fort Frances. The report, released earlier this year, recommended that gas prices be reduced and that Fort Frances retailers import products directly from the U.S.

Masters agrees that the second recommendation would reduce retail prices and help Canadian businesses to compete with their U.S. counterparts.

"There are more middle men here, and it's an additional cost," he said.

Masters said meeting with representatives from the other affected communities was the most positive aspect of the summit.

"The tone of the meeting was extremely positive. People were a lot more candid than I've ever seen," he commented. "But the PST (provincial sales tax) was the news story and it took away from the fact that we all came together."

Lyons predicts that the links forged between the five communities will likely remain in place as they share information and ideas on how to combat cross-border shopping.
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Article Details
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Title Annotation:Dick Lyons of Fort Frances, Ontario and Jack Masters of Thunder Bay, Ontario
Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Date:Sep 1, 1991
Previous Article:Jobs will be lost if minimum wage is hiked, warns business federation.
Next Article:Cross-border shopping could affect tourism.

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