By Ryan King
Community News Reporter
PORT AUX BASQUES – A poll tax is a fixed sum levied on select individuals without reference to income or resources. The term ‘poll’ comes from an archaic word for ‘head,’ meaning a headcount. Poll taxes are sometimes considered a regressive tax, meaning that those affected tend to be lower income and the poor rather than more affluent residents.
In Great Britain, their poll tax, called the Community Charge, was put in place in 1989 by Margaret Thatcher. This fixed tax helped fund services in communities, but the government lowered it for those in households with lower incomes. Nevertheless, it was unpopular as it put a tax burden on the poor since the number of occupants in a home, rather than the value of the building, was its basis. This unpopular tax played a part in the ousting of Thatcher as Prime Minister in 1990.
As is usually the case with poll taxes, those who do not pay cannot vote. In the United States during the middle of the twentieth century, many states introduced poll taxes that targeted African Americans who often could not pay the tax, thus excluding them from voting. However, the twenty-fourth amendment to the United States Constitution in 1964 halted predatory taxing that prevented citizens from voting.
In Canada poll taxes still exist, with some municipalities continuing to implement the tax while others do not. Like in the United States, poll tax in Canada has a sinister history.
In 1885 a poll tax, called the Chinese Head Tax, was implemented to discourage Chinese immigrants from entering the country following the completion of the Canadian Pacific Railway. The government removed the tax via the Chinese Immigration Act of 1923, but also banned the entrance of Chinese immigrants besides special cases like diplomats, foreign students, educators, clergy, and merchants. This tax remained in place until the government repealed it in 1948, and government redress and apology for the unfair tax did not happen until 2006 under then Prime Minister Stephen Harper.
Closer to home, Port aux Basques is among the municipalities in Newfoundland and Labrador that continue to levy a poll tax. Under the town’s current budget, that amount is $300.
“A Poll Tax is typically applied to individuals who use the services of a municipality, work with a local business but do not own property here. The tax makes up less than 1 per cent of the overall tax revenue. All revenue collected is applied towards the Town’s annual operating budget to offset costs for firefighting services, waste collection, water supply and distribution, sanitary/storm water sewer systems, snow/ice control, road maintenance, building utilities & maintenance, administration costs, etc.,” stated Town Manager Leon MacIsaac.
This one percent amounts to $90,000.00 in revenue for the 2022 municipal budget, with the town’s total operating budget at $4,892,758.92.
MacIsaac added that the town would work with people to make good on unpaid poll taxes.
“Poll Tax, as with any taxes collected by a municipality, are collected annually to offset its operating costs. The Town addresses each property or individual on a case by case basis should they fail to pay the applicable taxes or experience a difficulty with payment. The Town will only take additional steps for collection or settlement of outstanding taxes should they be made aware of a refusal to make payment.”
These additional steps include having staff make suitable payment arrangements with individuals and businesses in arrears. Town council can also look at municipal tax accounts found to be delinquent from financial hardship. However the town will turn to other avenues for collections if residents cannot make a payment agreement.
“When arrangements cannot be made, the Town is forced to use a variety of means to collect taxes owed, ranging from demand letters to water discontinuation notices to legal action, including statements of claim. A number of water discontinuation letters may be issued annually and the Town will cut water to residential and commercial properties based on the individual circumstances of each account. The Town will take consideration for termination of services during winter months. It will not cut off water in the winter months.”
The town can also put up the unpaid property in question for tax sale, but that is as a last resort.
“Tax sale of property is limited to non-owner occupied property. The only resort for owner occupied property is referral to an outside collection agency and possible suit through the courts.”
In some cases, such as a rental property, the building owner pays property tax while occupants are also levied individual poll taxes. The property tax amount is often passed along to the occupant as part of the unit’s rental fee, so the occupant is in essence double taxed for a service they would only pay once were they the property owner.
“An apartment building would be taxed at the residential mil rate and would not be assessed a business tax or commercial tax. An individual living in an apartment building and working within the Town avails of all the municipal services as the property owner (i.e. water, sewer, roads, etc.) but does not pay a residential tax. The owner of the apartment building would pay the applicable residential tax and the individuals living there and working within the Town would pay a Poll Tax. A Poll Tax is not levied if a person is not employed or has been employed for less than 90 days in a fiscal year,” said MacIsaac.
While municipalities like Port aux Basques still implement poll tax, other communities have stopped the practice. Corner Brook is one municipality that eliminated the poll tax from its 2020 budget.
Mayor Jim Parsons stated that removing the tax did not happen overnight, but was a process that took three years. The city council decided in 2017 to phase out the regressive “double-tax” that the town saw as targeting young adults and residents with lower incomes.
“So as not to shock the budget of the City we phased it out, steadily increasing the income exemption limit to help those with lower incomes get off the roll first,” said Parsons.
While that might suggest a negative impact on the city’s budget, Parsons explained that collecting the tax incurs costs.
“Once it was completely phased out we were able to realize some internal savings from our collections effort, which helped offset some of the missing revenue.”
Port aux Basques Mayor Brian Button does not believe poll taxes unfairly target people in his community. Individuals below the financial Basic Personal Amount set by the federal government at $13,808 for the 2021 taxation year or $14,398 for 2022 are exempt.
“Anybody making less than that, they would be excluded and wouldn’t have to pay the poll tax,” said Button. “Once they brought in their income tax and (have) shown that you didn’t make that in that particular year, and you were under that threshold, well you don’t have to pay the poll tax. You’re excluded from it, so I don’t know if that statement is necessarily true that it will only be targeted.”
Button also pointed out that while other communities may have incurred costs related to collection, Port aux Basques has not had that trouble. He also said that other communities have opportunities to collect revenues that Port aux Basques does not have.
“Corner Brook has other, like when we’re trying to compare like for fees and services, they have municipal enforcement as well that’s around, so you’re able to find those revenues in another… different means.”
Corner Brook’s population base also has greater transient fluctuations than smaller towns likes Port aux Basques.
“There was more resources and more spent on trying to collect it. Here in our community, we only have certain means of being able to collect taxes to provide services, and we have a lot of people that, besides living in the community, travel into the community utilizing services of the community.”
If Port aux Basques were to remove the poll tax, Button said that the money lost would need to be compensated for in some other way.
“If it’s not, if we drop that, where is that going to be found? We still would have to basically look for $100,000 in your budget then, of being able to find another means of collection. So that would either fall back on the people that we’re already taxing, like for residential and property that pay their tax for it. Or do we continue on for the other people who don’t have residential property, but yet live in the community, work in the community, and their contribution is a lot less than what a property owner would be? And like I said, someone who’s not making that amount of money, they wouldn’t be qualifying anyway, and they would be exempt from the tax regardless. So it you know it’s not so simple as saying that you’re going to get rid of it.”
Removing the tax could also trigger a reduction in services the town is able to offer.
“It could mean a cut on some sort of service that you’re going to do, or it could mean that there’s another thing that we’ve had from people that are requesting to have this or that done,” said Button. “So in order to provide that you have to have revenue coming in. You have to have some sources of revenue to be able to provide services that people want. So if you’re going to eliminate them, well what’s going to replace it? Or how are we going to be able to provide that service? So that amount of money that comes in on the poll tax that showed on this year sheet, I mean that can go a long ways into things that you do, such as sidewalks, roads repair, or whatever. So it’s substantial amount of money that comes in, so you have to be able to find it.”
While it may only represent 1 per cent of the town’s tax revenue, Button said that is still a significant amount to the overall budget.
“I know it’s it shows 1 per cent of an overall budget, in a $4 million budget or whatever, but it’s still got to be found. At the end of the day when we’re sitting down in budget meetings, that’s what we get down to is the 100 thousands of dollars that you get into; that ‘where do we find this’? It’s not the millions, it’s the other part that enable (us) to balance a budget.”