Commodity values like the price of gas could be used to pull the plug on tax increases, if a regional district director has his way.
The Regional District of Nanaimo voted Tuesday to forward a motion to staff that called for a limit on tax increases, based on the consumer price index.
The CPI is a measure of pure price change compiled by Statistics Canada and is updated at monthly intervals throughout the year. The value is commonly referred to as inflation, or the relative purchasing power of money.
Statistics Canada uses a fixed "basket" of consumer goods to measure real price change.
That basket includes things like gas, groceries and rent.
Outside factors like taxes and changes in the quality of goods are eliminated to give a more pure measure of the purchasing power of money.
"The biggest component is shelter," said Statistics Canada analyst Amanda Wright in an interview with the Daily News. "We follow that by transportation; which not only includes gas, but cars, airfares and other modes."
The result is the CPI, an index that measures year-over-year monthly changes in the spending power of money. For example, in September the price of goods had increased by 1.1 per cent compared to that month in 2012. A change in the purchasing power of money is especially important to people on fixed incomes, such as pensioners.
Bowser director Bill Veenhof is the one behind the motion.
Veenhof called the motion to link tax increases to CPI in an effort to prevent the RDN tax bill from eating into money that those on fixed incomes might use for things like food and rent.
"It's an elderly population," he said of the region that also includes Shaw Hill and Deep Bay. "Lots of pensions, fixed incomes. .. Few of those people can afford any real tax increases."
The intention was not to reduce the size of the budget, Veenhof said. If that was the case, it would be difficult. The Bank of Canada strives to achieve a two per cent inflation mark each year. Instances of 'deflation' are extremely rare.
"I want it to stay where it is (the budget)," said Veenhof. "I don't want it to balloon."
RDN staffers are expected to report back on the motion at a later date. Residents of the RDN paid over $38 million in taxes last year. Nevertheless, the Veenhof motion has received mixed reviews.
Canadian Taxpayer Federation's B.C. spokesman Jordan Bateman called the proposal a step in the right direction.
"Property tax increases do move much quicker than the rate of inflation," Bateman said.
Over a stretch of years, inflation can slowly dilute a pensioner's ability to afford the goods and services they need, he said.
"They get further and further behind," he said. "Eventually they have to find themselves making tough decisions."
RDN chairman Joe Stanhope said there was a "fair bit" of opposition to the motion. He said the regional district has a limited ability to hold back spending when "people want more services all the time.
"I've always maintained we should keep any increases within the cost of living index," said Stanhope.
As an economist with the University of Victoria, Pascal Courty, said the motion could be a dangerous one for local governments like the RDN.
He described it as a potential excuse for an increase in longterm borrowing that could allow one generation to download costs of government onto the next.
What's important, Courty said, is how the money is spent.
"Binding yourself to such a constraint seems fairly restrictive," said Courty.
"It might put the RDN under greater debt; future generations would have to pay."
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