Taxes

Toronto Mayor John Tory announced plans to implement a $2 road toll for the Gardiner Expressway and Don Valley Parkway today, hoping to generate much-needed income for the city.

The highways carry thousands of commuters in and out of the city each day, but Tory said the tolls would raise $200 million every year – funds that could then be used for transit costs and expansion projects. With $33 billion in unfunded capital projects, the city is in need of a new source of revenue, he said.

Tory also proposed a number of cost-cutting measures such as a hotel tax and a 2.6-per-cent reduction in the operating budget of city divisions like police and libraries.

U of T's Institute on Municipal Finance & Governance (IMFG), which is part of the Munk School of Global Affairs, released a paper this week outlining different taxing options for cities like Toronto in order to generate revenue.

�Թϱ�� spoke with Enid Slack, IMFG director and co-author of the report about Tory’s toll proposal and alternative revenue sources.

Why does Toronto need more sources of revenue?

What we've talked about in our paper is really the demands on municipal expenditures and how they've changed over the last 30 years – so for things like roads and transit, investing in infrastructure that's deteriorating, investing in new infrastructure. Our cities over the last 30 years are more interested in being more internationally competitive and that means not only providing water, sewer, roads and the traditional services but also making our cities very livable so we can attract young, skilled workers. Frankly, they can go anywhere, but we want them to come here.

The list goes on and on for the expenditure side of the budget, but when we get to the revenue side and look over the last 30 years, nothing much has changed. Cities in Canada have property taxes, user fees and some provincial and federal transfers so the time has come to think about what other sources of revenue are appropriate for cities.

When we looked at cities around the world – they all have other sources of revenue. They are not reliant on property taxes as their only source of revenue.

This is not as bold as you might think. Other cities are doing this, and other cities have tolls on their major roads.

Other than generating income, what are the benefits to introducing road tolls?

The obvious benefit is to reduce congestion so that fewer people will get in their cars – maybe they'll carpool or maybe they'll take transit. It has a lot of time benefits for people and environmental benefits – less pollution, fewer health care costs as a result, fewer accidents, less policing costs. There are a whole lot of benefits over and above just the revenue.

The point with tolls is that the users of the road are paying for it – whether they live in Toronto or somewhere else. And if the money is put into improving the roads or into transit, everybody benefits as well.

Tory also proposed a hotel tax during today’s announcement – an initiative included in the IMFG paper – what can this kind of levy provide for the city?

Hotel tax has advantages because it's a tax on visitors. When visitors come to the city, they use services. They walk on the streets. They use parks and policing services, and they don't pay any taxes in Toronto. A hotel tax is a way to get tourists to pay for some of the services they use when they're in the city. Other cities in Canada have hotel taxes – Vancouver, other B.C. municipalities, Montreal, Charlottetown. When you look around the world, many cities have hotel taxes.

How can Torontonians be convinced that increased taxes or taxes on more services will benefit them in the long-run?

We shouldn't start the conversation with taxes. We should start the conversation with what's our vision for cities in Canada. What do we want to see? People know what they want. They want good services. They want good transit. They want roads that aren't congested. They want parks. They want libraries. And we have to pay for them. If they have some understanding that those taxes are paying for these services, that they are getting something for their taxes, I think they're less unwilling to pay taxes.

Some politicians will also need convincing that taxes are a good idea. How can that be done?

If we want a great city, we all have to understand – citizens and politicians – that we will have to pay for it. If we don't, our cities will crumble. Infrastructure will deteriorate. The services won't be very good, and people won't be very happy when that happens.

�Թϱ�� experts on why Tory's tax plan is not enough

sgupta — Fri, 04 Dec 2015 16:32:38 +0000

�Թϱ�� experts on why Tory's tax plan is not enough sgupta Fri, 12/04/2015 - 11:32

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“We have dramatic needs for infrastructure investment,” Matti Siemiatycki says (photo by Ashton Pal via Flickr)

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It's a good start but more revenue is required for infrastructure, researchers say

Toronto Mayor John Tory’s plan to introduce a property tax dedicated to public transit and social housing infrastructure is a good start, University of Toronto experts say – but just a start.

Tory announced on Nov. 2 that he will be seeking an annual “city building” tax of 0.5 per cent added to property tax bills, for transit and housing. It would start in 2017 and add about $13 to the average property tax bill of $2,654.50.

Enid Slack, director of the Institute on Municipal Finance and Government at �Թϱ��’s Munk School of Global Affairs and one of Canada’s foremost experts in municipal finance, said Tory’s plan “shows that the city recognizes it has a revenue problem,” not a spending problem.

The Institute did a study before the last municipal election in 2014 on the fiscal health of problems of Toronto that showed it has not been increasing property taxes very rapidly, and has huge infrastructure needs.

“Increasing the property tax is a good start,” Slack said, “but it may not be enough. It’s not a lot of money coming in, so I think they may still have to think about other things to do, perhaps increasing borrowing.”

Dedicating the tax increase to transit and infrastructure for housing “makes it a bit more palatable for taxpayers,” she said, noting that such infrastructure lasts for 30 or 40 years and citizens can reap the benefits at the same time the city is paying back loans over the same period.

Matti Siemiatycki, an associate professor of geography who focuses on municipal infrastructure and transit, echoed Slack’s views.

Siemiatycki pointed to a report from city manager Peter Wallace this week that City Council has planned $23 billion in capital projects without identifying any sources of funding.

“We have dramatic needs for infrastructure investment,” Siemiatycki said.

Tory’s plan “is the beginning of a recognition that we have to come up with ways to pay for all of this. If you want to have it, you have to pay for it,” Siematycki said, suggesting a “variety of other” taxes could be needed.

Borrowing for infrastructure projects is a good thing, he said, as long as the right projects are chosen. They should be ones that “drive the economic engine and create jobs.”

The report released by the institute last year made three basic points: Toronto’s residential property tax is relatively low compared to other cities and growing slowly, and actually declining in real terms; the city can’t manage its infrastructure deficit without new revenue tools and Toronto’s debt load “is modest and manageable for a growing city.”

Slack said that Tory’s plan shows the city is starting to address the problems outlined in the report.

(See the original of the photo above at Flickr)

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Can Toronto meet growing demand for services with existing resources?

sgupta — Thu, 15 Oct 2015 17:31:16 +0000

Can Toronto meet growing demand for services with existing resources? sgupta Thu, 10/15/2015 - 13:31

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City Manager Peter Wallace addresses the Institute on Municipal Finance & Governance at �Թϱ�� (all photos by Johnny Guatto)

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Taxes

Mayor Tory’s Gardiner, DVP toll good for Toronto, says �Թϱ���’s Enid Slack

�Թϱ��� experts on why Tory's tax plan is not enough

Can Toronto meet growing demand for services with existing resources?

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Mayor Tory’s Gardiner, DVP toll good for Toronto, says �Թϱ��’s Enid Slack

�Թϱ�� experts on why Tory's tax plan is not enough