Future Municipal Financial Viability in Canada - Essay Example

Definitely, I feel that municipal financial viability is an issue since improper tabling of policies may result to a negative business effect. For instance, the direct impact on Small, Medium, and Micro Enterprises by municipality policies on property valuation, user charge collection, and collection of levies makes businesses end up bearing not only the intended costs, which in this case are actual payment of services to a municipality, but also the unintended costs, which include effort and time required for tax administration.

To add on policies pertaining to revenue, expenditure-related policies may also affect finances generated by businesses in a municipality. This, as a result, may lead to a positive or negative impact on SMMEs through regulation of supply chain management, and preferred procurement as well as credit control. Additionally, there are other challenges facing developing countries in the commonwealth in local government revenue terms. These include weak revenue base for local government leading to weak central government revenue base and lack of a municipal’s own revenue sources, which brings up inappropriate composition of revenues, especially balancing between grants and own revenue resources.

Further, the way they interact and autonomous revenues where strong central control is posed on local government revenues is a challenge as well. Municipalities have several responsibilities. First, they have the function to ensure urban and town planning, and regulate use of land and building construction. Moreover, they must ensure economic and social development planning, fire services, ensuring supply of water for domestic, industrial and commercial purposes. A municipality relies heavily on revenues generated through taxation and user charges/fees.

It too heavily depends on transfers from central government and/or contribution from donors. These factors will significantly determine the future municipal financial viability in Canada (Sancton and Young, 2009). Some of the strategies, which should be employed to ensure proper municipal financial viability, are as follows. First, the intergovernmental fiscal transfers’ reform program should be implemented. These reforms focus on simplifying and rationalizing transfers to municipalities and introducing a period of allocation of these transfers to stabilize municipal budgeting processes by improving predictability.

Second is transparency, which opens access to information about how municipal finances are managed will give a clear outlook to every citizen allowing no room for misuse. Third, the program of budget reform which greatly focuses on improving allocation of resource planning and management. Further, having accountable decision-makers who can accept responsibility for their own actions and using contestability as a competition tool to achieve money value. It is essential to come up with a municipal support program to provide technical assistance to municipalities in financial management areas.

Bringing up new, legislated and refined national policies aimed at improving the flexibility of the legal framework within a municipality resulting to improved leadership, management and accountability in municipal governments could play a key role. Still revenue enhancement program nationally coordinated and aiming at assist municipalities with revenue