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Construction crews work on the redevelopment of the Union Bank Tower in Winnipeg Tuesday, May 10, 2011. The building will be the new home of Red River College's culinary arts school, student residence and high-end restaurant. Winnipeg downtown development is on the increase.)

John Woods for The Globe and Mail/john woods The Globe and Mail

Canadians flock to the suburbs for the quiet, the larger houses and the backyards. But satisfying those natural desires comes at a cost: more traffic congestion, fewer natural spaces, expensive infrastructure. It's in all our interests to rein in urban sprawl.

And yet our tax system rewards sprawl. We pay our property taxes based on market value, whether we live in a compact neighbourhood or widely-spaced outer suburbs. Development charges, the extra levies that pay for new suburbs, don't always keep pace with the capital costs required to build new water mains or electricity lines.

There might be a better way. What if property owners paid according to the real costs of delivering some services to their properties, instead of market value? Such a system would considerably reduce the incentive to move farther away from city centres.

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British Columbia's Community Charter legislation provides for "parcel taxes" that correspond to actual costs, rather than to fluctuating resale prices, but not many municipalities have acted on it. Provincial governments should think hard about requiring municipalities to move away from market-value-based property taxes. Though a new tax regime designed to match the cost of services would not single-handedly end urban sprawl, it would be a great help.



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