À la recherche du gain fiscal

This report focuses on the link between real estate development and municipal finance in Quebec. It investigates the relation between real estate or demographic growth and municipal tax rates. Our estimations validate the existence of a fiscal gain associated with municipal growth in Quebec. Municipalities with 1,000 inhabitants or more that experienced higher population growth or higher increase in their number of real estate units between 2008 and 2018 show lower progression in tax rates on property values. They also collected a larger share of their revenues from fees, permits and development charges, possibly financing part of their current expenses. But the fiscal gain from growth remains ephemeral. Ultimately, our analysis shows that municipalities with a higher population have higher per capita spending. However, these higher expenses are financed by substantial property values, which suggests that property tax is well suited to municipal growth. It is not possible, according to our analysis, to conclude that the incessant quest for growth by municipalities necessarily has negative impacts on social well-being. The gains from growth are temporary and relevant. They provide incentive for municipalities to prevent homevoters’ coalitions from slowing down real estate development in a context where access to housing is becoming increasingly difficult.