Canada has low consumption taxes, high-ish income taxes (especially because we include provincial taxes), and exorbitant property taxes. You'll note that my thoughts regarding taxes exacerbate the income tax issue and increase consumption taxes, hopefully up more toward OECD average. The purpose is to allow consumption taxes to take up the slack and eventually reduce income taxes. However, I'll get into my thoughts on reducing property taxes by giving municipalities direct input from the treasury later. Canadian cities have very limited ways of raising funds, and most of the ways that would be effective for cities to raise funds are actually under provincial control. They therefore tax what they can tax, and unfortunately, that is mainly only property. The rest is user fees.
The federal treasury has to penetrate the provincial barrier to give funds straight to municipalities, which will use it far more efficiently in some cases than the federal or provincial government. Policy, administration of national programs, defence, etc... these big things are best done by the federal level of government. Service delivery, however, should be a civic bailiwick. The holy trinity of Canadian politics is Education, Healthcare, and Social Services. These things are most efficiently delivered by cities and cities should be directly funded accordingly. Five billion bucks could do wonders for both the educational and health systems, and that's not too much to pay for the two most important things on the Canadian political to-do list.