Tax credit

A MasterCard that accumulates rewards and reduces the cardholder's property taxes.

Back in 2002, Giorgio Gianniotti was struck by the many newspaper editorials he read about rising property taxes. He also noticed just how many ads were pushing credit-card rewards programs. Though seemingly unrelated issues, Gianniotti found a way to combine the two.

The result is the MuniCard MasterCard, a credit card that accumulates rewards used to reduce a cardholder’s property taxes. As CEO of Toronto-based Civic Strategies, a private company that works with municipalities to boost local economies, Gianniotti pushed the concept, and the city of Vaughan, located north of Toronto, became the first municipality to sign on. The program launched on Sept. 17.

The cards are linked to the users’ residential property identification numbers. For the first $5,000 they spend annually, 0.5% of that amount goes to paying property taxes. A rate of up to 1% is applied to additional spending over $5,000.

The project took a few years to get off the ground. The MuniCard was supposed to launch in 2005, and then in 2006. Part of the delay had to do with the fact that none of the potential financial partners had worked with municipalities in such a way before.Negotiations with National Bank of Canada also fell through, and Gianniotti had to travel to more than 20 municipalities across Canada to drum up some interest. He eventually teamed up with MasterCard and GE Money Trust Co. Civic Strategies and GE Money handle all of the promotion, and it costs the city nothing. Even though the rewards are collected regardless of where the card is used, Gianniotti says there is incentive for users to spend in Vaughan, thereby adding kick to its economy, given that local merchants can participate in a cardholder discount program.

Oshawa, Ont., is supposed to roll out the program in 2008, and Gianniotti says he’s had interest from U.S. counties. So far, the cash rewards can only be used for residential property taxes, but the program could be extended to business and could also provide rewards for other municipal services. But what features are added depend on what users want, Gianniotti says: “We have to see if the cardholders require us to do more.” JOE CASTALDO