MDB Insight Blog

What You Need to Know About Understanding Tax Sensitivity

What You Need to Know About Understanding Tax Sensitivity

Knowing what initiatives your community members want in your community, and knowing what they’re willing to support with their tax dollars are two very different things.

Table of Contents (4 minute read)

  1. What You Need to Know About Understanding Tax Sensitivity
  2. Representative Data Matters: Get It with Tax Sensitivity CalculatorTM
  3. What Projects Can You Use Tax Sensitivity Calculator™ For?
  4. But How Does the Calculator Actually Work?
  5. Sync Budgeting Decisions with Citizen Priorities

Many times community members aren’t sure which initiatives they want to support, because they can’t clearly see how it will affect their personal tax rates. Knowing what projects your community members are willing to support financially means understanding their tax sensitivity. 

There are tools that can help you identify the services and projects that your community is willing to pay for, and those that they’re not keen on at the present time. You want to know that your community will support service improvements, so it’s critical that you have the right tool to provide the evidence you need to prove that your policies and projects are in sync with what the people want and are willing to fund through tax changes.

Caution: not all tools are created equal.

Representative Data Matters: Get It with Tax Sensitivity CalculatorTM

While traditional budgeting/tax products do provide information on what residents support in terms of budget allocation, they completely lack the ability to measure residents’ sensitivity to supporting service changes through tax increases or decreases. Furthermore, these approaches are usually opt-in and don’t represent the opinions of the community at large.

tax sensitivityThe people who typically opt-in for such surveys are not representative of the community as a whole. In fact, those people traditionally have strong opinions that are on the polar ends of the spectrum either for or against a given endeavour. Additionally, many of these traditional surveys still use only landline sample to reach participants. The landline technique will unintentionally bypass swathes of the population because more and more people are using mobile phones instead of landlines.

By relying on opt-in methods and outdated outreach techniques, traditional surveys leave large segments of your community under-represented, if represented at all.

Unreliable and non-representative data will not give you the insight you need to plan strategically for optimal impact.

If you want to reach a more representative sampling of your community, you need an approach that:

  • uses both landline and mobile calling technology
  • relies on random, representative sampling rather than opt-in methods

An approach that delivers these, and more, such as MDB Insight’s Tax Sensitivity Calculator™, will allow you to stay on top of what your community wants. You will be able to precisely determine the willingness of the community to support service changes and the degree to which they would be willing to participate in the funding of these changes.

The benefits of such a tax sensitivity survey are tangible and far-reaching. Members of your community will be pleased that they have more agency in the budgeting process. And with opportunities to voice their opinions on budgeting decisions, residents can become more involved and invested in the community and cultural development of their municipality, and possibly even more satisfied with the work Council has been doing. A representative and reliable citizen satisfaction survey, such as MDB Insight’s Citizen Satisfaction IQTM, would quantify that satisfaction for you. Council members would also benefit from such insights.

The more representative, timely and relevant data that comes from Citizen Satisfaction IQ™ will allow you to:

  • Prioritize funding for municipal projects based on residents’ stated priorities, also playing a role in strengthening the local economy
  • Identify budgeting sweet spots, where residents’ wants overlap with what they are willing to pay for
  • Provide evidence to justify budgeting decisions to residents and Council

What Projects Can You Use Tax Sensitivity Calculator™ For?

The Tax Sensitivity Calculator™ can be used to measure your residents’ tax sensitivity for nearly any community project your council is considering. You can even include a variety of projects in one survey, so residents can see how each project might affect their taxes. 

The calculator is great for measuring things across all industries, from culture to waste management to infrastructure repairs and upgrades. 

Municipalities around the world are facing the challenges of going green. Environmental stewardship is an important part of municipal management these days, but going green can be very expensive. With the data from the calculator, you’ll be able to determine which environmental responsibility projects are the most practical for your council to move forward with.

Depending on the size of your community, or your proximity to other communities, you may be in the investigation stages of considering public transit. The Tax Sensitivity Calculator™ could help you determine if your community is interested in or would be willing to support a public transit pilot project

Communities are starting to realize the advantage of having strong cultural assets in their community. Have a strong cultural community is often tied to the history of your region, and managing, upgrading, or restoring heritage properties may be part of your cultural economic development. With the calculator, you’d be able to determine the type and scale of cultural development your community is willing to support. The results might surprise you!

But How Does the Calculator Actually Work?

If you’re still wondering how the calculator actually works, you might be interested in this case study from Flagstaff County, Alberta. They used the calculator to allow the community to choose which road surfacing option they would prefer to pay for. It made the council decision easy, and they could back it up with data from the community, showing that they were listening to citizens. 

Sync Budgeting Decisions with Citizen Priorities

Strong, reliable real-time data that demonstrates what citizens want, and how much they are willing to pay to get it, will allow you to:

  • plan more strategically,
  • allocate your resources more effectively, and
  • give your residents what they most want in their communities.

To learn more about how MDB Insight can help you use this and other community development tools strategically and effectively, download this e-book.

Community Development Cost Calculator Ebook

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