Which is about as much evidence as you'll find for the notion now roiling Ontario that the provincial government is fixing to let municipalities levy a poll tax, sometimes known as a head tax: a fixed amount per person, without regard to such niceties as ability to pay. Where this little urban myth began is something of a mystery, although all signs point to the Queen's Park press gallery.

All we know for sure is that Bill 26, the notorious omnibus bill - with which the government hopes to give effect to its spending cuts - makes provision within its 211 pages for municipalities to "pass bylaws imposing fees or charges . . . that are in the nature of a direct tax for the purpose of raising revenue."

The same bill has raised accusations that the government is bent on assuming dictatorial powers over the province. But in this case, the complaint seems to be that it is not being quite dictatorial enough, in so far as it would give municipal governments a broader choice of means to raise revenue to compensate for the coming reduction in transfers from the province.

All kinds of new taxes have been conjured out of this obscure clause, of which the poll tax is only the most fanciful: Just because it is not explicitly outlawed does not mean that any municipal politician in his right mind would go near it. Strictly speaking, a "direct tax" means a tax on income or wealth as opposed to indirect taxes like the GST. But "fees or charges . . . that are in the nature of a direct tax" might - or might not - mean just about anything, from sales taxes to gas taxes to user fees - just the sort of frightening spectres that opposition politicians like to take home to mother.

Granted, it's pretty odd behaviour for a government that was elected on a tax- cutting platform. But if there's no evidence that Ontario's municipalities need additional revenues - like the provincial government, they are all taxing and spending at levels that would have been undreamed of a decade or so ago - it might be timely to ask: Are current revenues being raised in the best possible way? Might some of these new taxes be a welcome innovation, not as a supplement to existing taxes, but as a replacement?

As things stand, municipalities raise the biggest part of their revenues in the worst possible way: property taxes. These achieve the neat hat trick of violating all three of the traditional principles of sound taxation, being neither fair nor efficient nor simple. They are unfair, since ownership of property is not necessarily a good indication of ability to pay: an elderly widow may own her own home yet have little income with which to pay the tax.

They are inefficient to the extent that they prejudice investment decisions in a thousand ways that are unrelated to the principle of allocating resources where they may be put to the best productive use - or indeed any other principle. The burden of property tax falls in a haphazard fashion that is almost impossible to predict - exit simplicity - not least because of the continual attempts to reform the tax: market value versus unit value assessment versus (your design here), each no less arbitrary than the last.

The way out of this morass is to ask, yet again, what we want government to do. Where government is involved in providing services whose benefits are largely restricted to those that use them - such as, say, a skating rink - it only makes sense to charge users directly for them, at a price sufficient to cover the costs of production. It's not really fair to refer to user fees of this kind as taxes, since people have a choice of how much they wish to use these services and therefore how much to pay.

It isn't always possible to charge directly, nor is it always appropriate, when the benefits of a service are more diffuse: the police, for example. That's what taxes are for. And when it comes to taxes, the best combination of fairness, efficiency and simplicity yet devised is the income tax (ideally, one that exempted savings). So before everyone works themselves into too much of a state over imaginary horrors like the poll tax, maybe we should ask: Why not a municipal income tax? If it works for the provinces and the federal government, why not for the cities?