Accordingly, each individual prop- erty or neighbourhood should pay a charge that is designed to capture the extra cost of the capital facility required by that property or neighbourhood, and a capacity component should be included that covers the capital cost of constructing the facility, plus a location or distance/density charge that reflects the capital cost of extending the service to particu [...] The principal has the power to change the agents’ jurisdictional boundaries, their revenue sources, and their expenditure responsibilities; it 4 In its May 18, 2004, budget, the Ontario provincial government announced that it would transfer to municipalities revenue equal to 1 cent per litre of the provincial fuel tax, to be spent on transportation and public transit; the transfer is to increase t [...] Although the property tax achieves many of the desirable characteristics of a local tax — the base is relatively immobile, it is difficult to export the residential tax to nonresidents, revenues are fairly stable and predictable, and the tax base is visible — it cannot achieve all of them, for a number of reasons. [...] Property Taxes The base for the property tax is the assessed value of the property to be taxed. [...] The amount of tax collected in excess of what is required to cover the cost of city services consumed is effectively an annual fixed cost — it has no relationship to the cost of city services used, and it must be paid regardless of whether the firm incurs a profit or loss.