Last night, Toronto Council, by a majority of 23 of 22, deferred a move to levy new taxes on vehicle licences and land transfers until the fall. This will likely cost the city over $350-million in lost revenue in 2008 toward an expected deficit of $500-million.
This move is all politics and no common sense.
- Advocates of deferring the vote argue that this will hold Queen’s Park’s feet to the fire and make funding Toronto, specifically uploading social services costs, an election issue. Please don’t insult our intelligence. Running on a platform of screwing Toronto is a basic part of Provincial politics. Maybe John Tory will claim that he will fix the problems of downloading, but like his promises on the gas tax, what does he plan to cut so that he can pay to upload Toronto’s costs?
- The right wing organized a very strong lobby against these taxes even though the lion’s share of the cost (the land transfer tax) would not apply to most Torontonians. The same business groups who wanted Queen’s Park to give Toronto more taxing powers screamed like the well-fattened pigs they are when Toronto actually tried to exercise them.
- Many homeowners think, incorrectly, that Toronto Council and Mayor Miller are responsible for tax hikes due to Market Value Assessment. In fact, this was a provincial initiative that McGuinty & Co. have done little to redress other than reining in the agency that handles assessments for one year, long enough to get past the election. Opponents of new taxes are more than happy to take the misguided support this situation creates.
- Opponents of new taxes want the City to “get its house in order”, but cite only small-change projects and privatization when asked how this would be done. Although renovations to City Hall (especially to the Mayor’s office) may have brought criticism, and might have been deferred, the total saving is only a few millions on a one-time basis out of a budget much, much larger. Privatization is a pet project of the business community who want to get their snouts into the municipal trough, and of the anti-labour folks whose solution to every problem is to get rid of the unions. In case anyone hasn’t been paying attention, the TTC, one of the largest blocks of organized labour in Toronto, is having trouble attracting new employees. Imagine what would happen with lower wages and poorer working conditions.
On the Mayor’s side, there has been a great reluctance to publicize the impact of a large budget deficit in 2008. No doubt this is an attempt to take the high road, to avoid accusations of unfounded scare tactics. Miller likes to be diplomatic, but the city needs to know the truth of what will happen without the new revenues.
The total operating budget is $7.8-billion, and the new taxes would have raised about 5% of that amount. Let’s see where “sharing the pain” will take us at the TTC.
The TTC will receive just under $250-million from the City this year. Even without additional service, inflation will push up the total TTC budget of $1.1-billion by $33-to-55-million in 2008 (3-to-5%). If we add a 5% cut in City funding ($12.5-million), this will leave the TTC with a gap of $46-to-67-million going into 2008 before they even consider additional services such as the Ridership Growth Strategy, additional security staff and improvements in the level of facility maintenance. A gap of $100-million would not be unreasonable, all things considered, and it could be higher.
Assuming no other cuts in funding sources (beyond the City share), this would translate to a fare increase of 15-20%, possibly more depending on tradeoffs between improving service, keeping ridership healthy and minimizing the impact on fares.
My preference, even if it comes to this, is to preserve and improve service even if we must increase fares. Service quality is the single greatest complaint existing riders have about the TTC, and potential new riders will stay in their cars if we don’t offer them a better product. The worst possible scenario is to keep fares low for sociopolitical reasons while the service declines and the “choice” riders (who also have more political clout) exercise their options. Driving people away from transit is completely contrary to what politicians of every stripe profess to support.
On the capital side, the ability of the City to borrow for capital maintenance and expansion is directly related to its ability to raise revenue and carry the debt. Say goodbye to many cherished transit projects unless all responsibility for transit capital funding is taken up by Queen’s Park and Ottawa. Even then, we will get the projects they want to fund, not the projects we actually need.
I hope that yesterday’s vote was mainly grandstanding by Councillors who will vote for more taxes when they absolutely must, but who want to be seen on the “right” side of the argument for one brief moment. Tweaking the mayor’s nose on an issue this big may play well in the press, but in the long term it is deeply irresponsible.
Today, opponents of new taxes bask in the glow of their “reasonable” alternative position. Tomorrow, as the potholes grow, the community centres close and the buses don’t even have room on the roof, their folly will be revealed for all to see.
Steve Munro 
But if they eliminated free golf for councilors, they could save $15,000. And then, all they would need to do is find 20,000 other similar projects to cut…
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Miller and Co. did not help their cause by choosing less ‘Green’ Taxes.
Many of us who are pro-transit, pro-environment would have strongly rallied behind a much needed parking tax (especially on free spaces).
Such a tax, at a rate of $1 dollar per space, per day would have raised well in excess of $100,000,000 per year, while clearly garnering tax dollars in a user-fee form and/or sin tax form depending on your point of view, from users of the roads.
Steve: Doing the math, $100-million per year at $365 per space means that there are just under 274,000 parking spaces to which this tax would apply. If we assume that a parking space is 35 square metres (this is based on a quick look at the satellite photo of parking at Kennedy Station), that is about 9.6 square km. For reference, the square bounded by Yonge/Queen/Bathurst/Bloor is 2km on the side or 4 square km. We are therefore talking about all of the land occupied by central Toronto.
How far afield do you plan to apply this tax to get that much revenue?
The city’s own examination of possible tax revenue calculates that at $250/space/year, the revenue would be $18-million per year. Also there are concerns that a parking tax might be seen as a drag on commercial activity because it is a de facto increase in property tax.
Similarly, electronic tolls on the DVP/Gardiner would make a world of good sense, and the Mayor himself said as much when first seeking office 3 1/2 years ago.
But that proposal was dashed too.
Steve: We have to avoid tolls that just drive people onto the arterial road system which cannot handle the load. The impact on local transit service could be horrendous.
Instead we get a tax proposal which would affect any prospective property buyer; inflating the cost of an entry-level home in Toronto buy as much as $6,000, and pricing Toronto right out of the commercial/industrial property market, where it is barely competive now (this would be anti-transit and pro-sprawl taxation)
Steve: First time buyers would be exempt from the land transfer tax. The comment about “entry-level homes” does not apply. New commercial or industrial investors would also be exempt.
The bigger problem in the commercial market is the high rate of education taxes levied by Queen’s Park on commercial property in the 416 compared with the 905. Those taxes are an ongoing cost while a land transfer tax is a one-time cost.
I’m not completely opposed to the Land Transfer tax, but I have to say, neither would I fight to get my councillor to back it.
I want to see the right mix of new Taxes, which I heartily agree the City must implement in order to fund itself properly, but give me something that shifts the burden from ‘good activity’ to ‘bad activity’, tax cars, tax parking, leave development alone, or tax it minimally.
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Secondarily, I note the City still can’t manage to charge for parking in major regional parks like Sunnybrook and Edwards Gardens that are well served by transit.
While I appreciate that the revenue from such would be at best a few million dollars (across all city parking that’s now free), it would help establish symbolically that the City NEEDS new taxes and isn’t just tacking them on out of laziness.
Steve: You may get an argument about Sunnybrook and Edward’s Gardens. People who go there to picnic can’t easily do this on the TTC. Many suburban parks do not have good transit service, especially for people coming any distance on the weekend.
I feel it is important that the revenue sources not be seen as nickle and diming people for a few million here and there that just gets lost in the rounding errors and doesn’t show up as anything concrete for new services or infrastructure.
Coming this fall, according to today’s Globe, a proposal to tax booze and billboards. On the latter, the obvious question is whether this will apply to all of the illegal ones.
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Steve – Once again you open the contentious door of politics. I hope you don’t quickly slam the door to comments.
First of all, it’s interesting that while the Liberals and Tories have not committed to uploading (the latter not a surprise), neither have the NDP. If the NDP were pushed to include this in their election platform, it becomes an instant election issue even if you doubt the NDP will form a government. People like (former NDP President) Adam Giambrone, Jack Layton and the other Toronto MPs and MPPs should be pushing Howard Hampton to announce this ASAP.
When you want to ‘get your house in order”, job one has to be to ensure that you’re paid when you do work for someone and that means Ontario should pay every dime for downloaded services immediately, and it should also change the Health Tax so that it no longer falls under the language of union collective agreements, which has imposed a massive additional burden on municipalities. (Abolition of this regressive tax in favour of higher general income taxes would be too much to hope for.) It should also ensure that Torontonians do not pay for subway losses in Vaughan, a subway we didn’t ask for.
The fact that the taxes “wouldn’t apply to most Torontonians” is the reason they weren’t fair. At least raising property tax, flawed instrument that it is, would take $50-100 from all households rather than $4,000 (the LTT on an average house in Toronto) from a “few”. Those “few” tend to be younger owners who buy a series of houses as their family size changes, fixing up as they go to build equity – these families will pay multiple LTTs while the rich in Rosedale will only worry about it once – when selling up to retire to Florida.
The focus on property revenue should be firmly on development charges. Too many deals are being made with condo builders – they should be paying through the nose for the impact of the extra sewers, hydro poles and yes transit vehicles their buildings add to the city fabric. It is incredible that the only first time buyer exemption to LTT is for new houses – ones that add burden to the city rather than second hand ones.
There was zero guarantee that the money raised would go to transit. The Mayor was invited to say that new money would be ringfenced for new projects on transit, water infrastructure, etc. – he refused to do that. The money won’t refill the $1 billion in reserves drawn down in the last four years. That means it all goes into the general pot and thus into the next round of wage bargaining.
The Mayor also mentioned the closure of a swimming pool in his neighbourhood, not mentioning that City Council has consistently refused to charge the same user fees for swimming pools that neighbouring muncipalities do – a fee easily waived for heat alert days.
You mention the “revenue tools”. Unfortunately McGuinty only provided hammers, no screwdrivers or saws. The Executive wouldn’t even consider the few good ones like taxing downtown parking! Bad taxes are divisive and do not contribute to a feeling that “at least everyone has to pay them, everyone is sharing the pain”.
It is also clear that even if the vote had gone through yesterday, the City hasn’t started the process of approval with Ontario since it would be Ontario collecting both taxes for the city – and since the bill would be on Ontario paper this might be why there appear to be reservations about allowing Toronto to do this.
Toronto needs more money – a lot more than the 350-400 million dollars the LTT and VRT would raise. One giant step towards this would be 1 percent of PST – McGuinty could give us that by raising PST 1% to match the Tory GST cut and distribute the 1% to the municipalities in which it is raised.
It wouldn’t cost the province much to implement the distribution but again they would have to get past the fear of political consequences – they would have to line up every municipal mayor to talk about what they would do with that money, *even if* Hazel cuts property tax like Jean Charest cut income tax – since it seems to be easy politically to give cities the shaft.
Steve: I only slam the door when the comments become repetitive or abusive. You make several good points here, and that’s why I’m posting this. Where we differ is in estimation of how likely the changes in funding by any party at Queen’s Park is likely to be, especially if Toronto makes no move to use the powers it lobbied so hard to get.
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One of the largest expenditures the city has is for the police force, who also face challenges attracting qualified candidates. Cutting the police budget is a “third rail” political issue. No politican wants to appear to be soft on crime.
That said there is waste at every level of government (and in the corporate world) that could be trimmed and economies to be found, including in the TTC budget. Assets could be sold, Toronto has surplus real estate that could be sold post amalgation.
The real issue is that there is only one taxpayer, regardless of who collects and spends the money. While municipalities and school boards got the proverbial shaft under Mike Harris’s downloading they’ve little but complain about the situtation. They need to stop complaining and start getting their fiscal house in order.
The market value assessment based property tax system is a failed concept. It is not based on ability to pay, but on the “guesstimated” sale value of an asset determined by a omnipotent bureaucracy.
There was also no serious examination of more fees related to the use of city services in these proposals. The TTC is actually one of the better examples of providing service, the users pay some of the costs.
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My two cents on the topic?
What seems to be needed are consumption taxes (parking fees, gas taxes, sales taxes, something other than property taxes but whatever makes up enough money to get our cities back onto a sound financial footing) that are applied uniformly across the GTA or the entire province but distributed within the municipality where the goods/services are consumed. This is the direction taken by Miller with his plea to the federal government for 1 cent of the GST. Unfortunately the provincial government has only given the City the ability to raise special taxes – taxes that add an extra cost to living, working and/or playing in Toronto alone and therefore make it less hospitable in comparison to the surrounding areas. I can’t see special taxes ever being passed by council.
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Steve,
The City’s own analysis of parking tax revenues was based on just 74,000 parking spaces, all of those located in the central business district (Bayview to Bathurst, south of Bloor)
It even exluded 10,000 spaces within this area, on the grounds they were in government buildings (Queen’s Park) or affliated with Hospitals.
Extrapolation of how many spaces there are City-wide is difficult without all the data.
However, I think its a very safe bet there are more that twice as many spaces in the City as a whole vs just the CBD; which would be just over 250,000.
I’m counting every parking lot not for a private residential purpose (schools, factories, etc.)
Further, the City’s estimates max out at only .65c per space per day ($250.00 per year). As opposed to the ($365.00 per year in my assumption)
I don’t think its remotely unreasonable in terms ofa business cost.
A small strip plaza with 10 spaces gets a bill for $3,650.00 per year, the whole point of which would to be to encourage them to make it a pay and display lot, on which they would more than recover their revenue.
Similarly, factories etc. could simply choose to charge staff a small fee for parking each month (only fair since their transit-taking workers are parting with their money each morning).
As an employee of an insurance company in the suburbs we were billed $45.00 a month for parking. (Markham/401 area).
This would be only $30.00.
The only injury would be the WalMart’s of the world with their vast 2,000 space lots.
I can’t shed a tear over the thought that maybe, rather than fork out a few hundred thousand in parking costs they would either A) Charge for Parking or B) Place their parking underground and make better use of their land; or C) Take their discount jobs and merchandise to the hinterland, freeing up their real estate for better purposes.
I hasten to add that we shouldn’t be charging less than the $1.00 per space per day rate for residential parking permits either (we currently are); and that we can and should turn more residential (on-street) parking into paid parking).
Its a greener way to raise money for the Better Way.
Steve: I agree with your analysis, but it runs aground when you move away from commercial lots (charging for space) to lots provided for employees or free for shoppers. The city analysis seems to argue that it does not have the power to tax this type of use under the City of Toronto Act.
Another political point is that parking in the burbs would be seen as largely paying for a service that benefits people who work in the core and in major centres like STC or North York Centre, not those parking in a strip mall on Lawrence East.
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You hear that a lot. It’s an easy thing to say, but a much harder thing to implement. About half of the City of Toronto’s expenditures are set by the provincial government by fiat. Social services are mandated by the province and have to be administered by the cities and paid for out of the property taxes. There is no room for cuts there.
Of the remaining half, you have the cost of operating one of the least subsidized (per capita) transit agencies in North America, whose service is about a quarter [less than] it was 20 years ago, even though it’s carrying about as many passengers. You have the cost of operating the police and the fire services (McGuinty, to his credit, uploaded Ambulance services). You have potholes to fix, streetcar tracks to replace, not to mention new infrastructure to build.
So while there is waste that can be found and get all righteously angry about, there is nowhere near $500 million amount of waste to cover the projected deficit next year, or try to get ahead on the service cuts and actually make improvements to public transportation.
And then there is the $120 million per year that Toronto property taxpayers pay into Ontario’s education system — money that doesn’t flow back into Toronto’s schools. And not to mention the $1 billion in reserve funds removed to keep the city solvent over the past four years.
If anybody has half a billion dollars in the folds of their couch, feel free to bring it forward. Otherwise, this “the city has to get its fiscal house in order” rhetoric is seriously misguided. The city has done just about all it can to get its fiscal house in order. The only level of government which has the power to put Toronto’s fiscal house in order is the government of Ontario.
Steve and Mark both raise good points. The situation is dire and the measures would have raised critical cash that would have forestalled next year’s crisis, and this sort of gamesmanship *is* irresponsible. Mark is right, though, that the taxes at Toronto’s disposal may not be the right ones, though I have to tell you, Mark, that I doubt that there are sufficient development charges available from the condos to make up the difference. Certainly not the level that allowed Mississauga to keep taxes static ten years in a row.
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A small quibble with your math Steve: you calculate inflation as being 3-5% per annum… For Ontario the CPI (all items minus food – not a big concern for TTC) has been
*2002 – 1.8%
*2003 – 2.8%
*2004 – 1.8%
*2005 – 2.1%
*2006 – 1.7%
Average – 2.04%, a lot less than your calculation and a saving of $11-33 Million from your $100M shortfall.
Just to keep things in perspective.
PS – with food included, the avg CPI is still only 2.12% per annum.
Steve: Some of the TTC’s cost drivers go up at greater than the inflation rate such as fuel costs. Also, changes in labour laws and rulings on the responsibility for costs of benefits have pushed up labour costs per hour of service. All the same, the shortfall will not be trivial, and the basic point of my argument stands.
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Cliff Jenkins (Councillor, Ward 25) offered his solution to the budget crisis in a newsletter: “On the revenue side, Council must significantly increase residential development charges for new construction. Consider this – infrastructure in Toronto is required at a rate of about $23,000 for every new resident introduced through residential growth. Developers, however, remit to the City only about $4,000 per person in development charges. And since the city has been growing at 10,000 to 15,000 people per year, this has resulted in a shortfall of about $200 million per year – for many, many years.”
I am skeptical about getting $200 million in increased development charges. If it were that easy, wouldn’t everyone on city council agree to it?
Steve: Hmmm. Development charges. The last time I looked, they get added to the cost of a new house or condo. Isn’t this precisely the problem for which a “first time buyer exemption” was included for the land transfer tax? Assuming that the average new residence houses at least two new residents, at $23K each that’s going to set them back a lot more than the transfer tax.
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So I’ll try and not get too political here, but you’ll forgive the difficulty of such.
As tempting as it is to blame Miller for all of this, the blame must go to a wide number of sources.
* The Harris gov’t for not thinking this through a decade ago.
* Mel Lastman for his ridiculous notion not to raise property taxes in his first mandate
* David Miller for constantly giving into the demands of unions, re: pay increases, principally. (Lastman at least put up a fight, if a weak one)
* The voters of Toronto for electing nearly a full slate of Liberal MP and MPP, and re-electing every single incumbent who ran in November.
So while the Miller apologists will go off the deep end in saying that this is horrible, and what have you, there are so many things that can be done to help:
* The golf pass thing: Something this small, believe it or not, is symbolic of everything that’s wrong in this city. Whether it’s small or not is irrelevant. That you’re seen to make an effort in reining in the finances of the city, as opposed to living the high life at the expense of everyone else, is necessary to ease the pain. Anything else is just disrespectful.
* I prefer a huge property tax increase, for no other reason then we’re 18% below the rate of 905. Now I understand the need to be cheaper, as you can walk in 905 and not have fear of getting shot, but it still needs to happen.
* Far too many councillors. Elect 23, 4 regional chairs, Mayor selects Deputy and Finance Chair = seven member cabinet to look over whole city issues, regional councils to look over speed bumps and such. 30 is less then 45, last I checked.
* Why the hell isn’t garbage privatised? Right, because…
* Unions have our Mayor by a certain member of his anatomy. All this city council needs to do is rescind its most recent pay hike, and then they could go to the unions and say, “we’re taking a pay cut, surely to God, you can take a pay freeze” Won’t happen, but one can dream.
* VOTERS NEED TO BE NOT
Steve: At this point, the comment ends abruptly. I hope that Trevor did not become “not” at that instant.
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Steve:
I have a huge problem with the (Mike Harris) education taxes that continue to punish the City (and the GTA for that matter). Property taxes are set – traditionally – by municipalities that divide the total assessment base by the total cost (of education for example.) The Ontario government has set the education tax at a constant mil rate across the province. A $400,000 bungalow in Toronto pays the same mil rate as a similar sized $160,000 house in the hinterland – but pays over twice the actual cash education taxes. I don’t understand how the province successfully overcharges commercial and industrial properties in Toronto, but believe the disparities are even greater than on the residential side. After all this overcharging, the province funds our schools (with wide old hallways) worse than schools in suburbs. (I don’t know how the funding formula works, but believe this to be true.)
Any effort by Toronto to offer “special” educational opportunities for our diverse population (ESL, Adult Education etc.) is not compensated based on the increased need and cost in Toronto.
As a first step, we need the province to rationalise education taxes. The resulting reductions in Toronto would open tax room for the City to increase the City portion of property taxes without changing the actual cash burden for citizens and businesses.
I do not resent paying my taxes – in fact I embrace the idea that taxes can make our city a better place for all to live. However, concurrent with increasing Land Transfer, Vehicle Registration or other taxes, it is essential that we are dealt with on a fair and equal basis by the province.
I am a strong supporter of the Mayor (and the Deputy Mayor – my councillor). In the recent vote I was hoping that the taxes would be passed – based on the practical reality that the City needs money. However, we also need to pressure our Provincial politicians to implement fairness in their impact on taxation in Toronto. This is all before the potential impact of a reversal of the unfair Harris downloading without compensation to the City.
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This budget fiasco reminds of the days of playing Sim City 4. It is hard enough to balance the budget in the game without the social services. It is baffling that Toronto is paying for social services out of its budget.
Mr. Miller should have the courage to suggest something like allowing gaming facilities in Toronto. Gaming can generate at least $1 billion in revenue per year for the city. If that money is diverted to transit, we can build the equavalent of 1 Sheppard metro or half of Transit City every year. Atlantic City paid for their entire revitalization out of their gaming tax.
The move for land transfer tax is problematic. A high land price policy in Toronto will only push more families to the suburbs. We do not need another Tokyo where the city is empty at night because every one commute to the suburbs. How many Shinkansen and commuter lines are we going to build to move those people?
Steve: Actually, the 905 municipalities are just waiting for Toronto to implement a land transfer tax so that they can lobby Queen’s Park to get the same right for themselves. The disparity between the 416 and 905 will not last long. The 905 is desperate to stop the high rates of tax increases of recent years.
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Disappointing, I admit.
However, once these taxes are in place, we’ll be living with them for the next 100 years. (1000 years?? Do taxes ever disappear?).
A four-month delay to implementing this, to look for other possible solutions, doesn’t seem that serious in the greater scheme of things. And who knows, perhaps it will scare the province into trying to deal with the fiscal imbalance and trying to deal with it properly.
Perhaps McGuinty will pre-empt the GTTA for a third time, and announce that the GTTA will administer a regional road-toll schme to fund transit expansion 🙂
Perhaps pigs will fly – though I’m probably better to leave discussions of the Tories to others …
Steve: Actually, it would be the 4th pre-emption of the GTTA. We have had the diamond lanes announcement, the Presto! announcement and finally MoveOntario.
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Whay can’t the city raise residential property taxes? I think a 20% increase should bring in around 300 million dollars. A steep hike, but a property tax is a fairer way of rasing funds than a land transfer tax.
Steve: The big problem with property tax is that under Market Value Assessment, you are taxed on the theoretical value of your house if and when you sold it, and this bears little relationship to what you actually paid or your actual financial condition especially for long-time owners. People living in neighbourhoods that become “hot” in the market pay more tax only because more people want to live there, not because they are inherently wealthier or because they get any better services.
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I think that this could work for the city by the time the election comes. I think people are now starting to understand (am I being hoplessly naive?) that it is the province, McGuinty and Sorbara and the band of finger-in-the-air poll readers at Queen’s Park, that is responsible for the mess that the city is in.
So the question becomes, can the Mayor further make the case and have it heard that the city will be in a crisis without this new revenue and pin the crisis on the province such that people vote on it? Perhaps some token or not-so-token measures to help convince the Sun that the “house is in order?” (When will someone finally put to rest the notion that the city can spend $500+ million less EVERY YEAR by eliminating free golf for councillors, realizing “efficiences”, and contracting out??)
Without Toronto seats, assuming they keep what they have outside 416, the Liberals will be looking at a minority at best.
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Why is everybody out there (on this website and in the media) convinced that there will be an exodus to the 905 or that the poor will be poorer if we have this land transfer tax?
The so-called emigrants to the 905 will quickly find out that a home with a MPAC CVA of $250,000 often pays $1000 or more every year in taxes than Torontonians do – and that’s only a house worth $250,000!!!
We have the most services and lowest property taxes of any municipality in the GTA with little to no user fees! Does nobody realize this? Is all of Toronto living under a rock? The extra land transfer tax was INGENIOUS, and in typical Toronto-style bicker, we took a creative revenue scheme with little overhead cost to administer and quashed it, pandering to the moronic citizenry that live in this town.
People wouldn’t have even noticed! The notion that an extra few grand when buying a house would cripple our real estate market and put everyone in the poorhouse is laughable. I’m surprised the business community tried it but I’m even more surprised that Torontonians BELIEVED IT!
This proves that there is nothing world class about Toronto.
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James – except you don’t have the same choice of housing in Toronto at 250k as you do in 905 at 250k.
At least in transit we do actually talk about cost recovery ratio. There are some sectors where cost recovery is really not practical without totally demeaning our society (police, fire, ambulance), some where a little burdensharing is appropriate (transit) and others where those who produce should bear virtually all costs (garbage, pollution, construction).
For me I think property tax should be regeared to the impact your property has in terms of how much land it takes up – a similar formula could be found for condos etc. This could then be indexed to neighbourhood average house price to allow neighbours to pay about the same amount of tax. The problem is that taxpayers are horrifically resistant to upward changes in property tax.
The only way I think this could work is if a 1% sales tax allowed the total property take to decrease and then regearing could take the form of smaller or larger property tax cuts.
We need to engage the public about what they are willing to pay for as individuals and what they are willing to pay for as a society – the City should listen to the answers, unlike the “consultations” held on the LTT and motor tax, and citizens who are not members of the Canadian Taxpayers Federation should consider turning up.
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Trev (message #10) got it right. We are overgoverned and drowning in unions. Why is everyone on this site’s first reaction to a fiscal problem to dump on car drivers for more money? How about licencing bicycles, how about a surcharge on TTC fares?
We don’t all drive a car, we don’t all ride the TTC but the citizens of Toronto do have one common feature, we all live in taxable premises in the city whether we own the property or not. For this reason the only equitable source of more revenue for our city is in property tax increases. Those home owners on fixed income and unable to pay more can have a lien registered by the city in the amount not paid against the eventual sale of their property.
Steve: Actually, people like me who live in apartment buildings pay property taxes at a far higher level than people living in houses because we are taxed as commercial, not residential property. Nobody wants to fix that particular inequity because it would send taxes on houses sky-high.
As for a lien on the property, this is impractical if there is another debt such as a mortgage that takes precedence. Indeed, if the City were able to register a lien that stood above an existing mortgage, the lenders would get rather nervous because their equity in the property could be eroded by a gradually accumulating tax bill. [Any legal types who care to comment on this, please feel free.]
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I agree that amount of savings the City can find in the short term are limited, and would primarily involve cuts to services, but I wonder about your comment that the TTC is having trouble recruiting staff. The TTC pays something like $30 an hour, with generous overtime provisions for anything over 40 hours a week.
I understand that the average operator makes around $75K a year, and every year a dozen or so show up on the “Sunshine List”, i.e. they make more than $100K, which would put them in the top 2 or 3% of earners in Canada.
How much should the City pay them? The average salary in Canada is something like $40K a year, and for the vast majority of workers overtime is something you do for free to show you are “committed”. I believe it is fair to say that the City is very generous with all its employees compared to other governments and the private sector. Over time, this issue must be addressed through more realism and vigilence in negotiating its collective agreements.
Steve: In fact the TTC has had trouble recruiting operators even at the wages you cite. Getting people to apply is relatively easy, but getting them to (a) qualify and (b) stay on the job is much harder
Based on a 40 hour week at $30/hour, the annual pay would come to about $62K. Add in benefits and you’re up to the $75K level that you cite.
To get up to $100K per year would require over 500 hours of overtime at time-and-a-half, and that is not something that anyone would do for free. Indeed, not paying someone for overtime is illegal under the labour laws, and there have been court cases to support this.
I just looked at the “sunshine list” and there are only 17 operators out of the entire TTC staff who made over $100K, and then only barely.
If you want to mess with wage rates and working conditions, get ready for (a) a long strike and (b) big problems hiring and retaining good drivers and other staff.
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I think property tax hikes are in order… but wait, there’s more to it. Hike the taxes of those who have recently bought – meaning if you (and you know who you are) just bid $140k over on a house listed for $400k – you will pay the price. I tried to download some data the other night from the MLS site (not the public one) that would tell me the selling prices of houses in Toronto were in 2006, and what the property tax reported for those properties. I’m sure there is a nice chunk of change there for office renovations, support staff and what-not.
Grandma next door? Well she shouldn’t be punished by the bonehead moving in until she sells or her estate sells.
Motor tax? Bring it on. Land transfer tax? bring it on. Road tolls? Bring it on. Just tell me specifically what these funds are going towards (like TRANSIT)
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I do agree that trying to cut wages at the TTC would be a disaster. I would be interested, however, to see staff/service benchmarking to other similar sized transit systems. I’m not saying the TTC is inefficient, but it would be interesting to see how it compares to say the MTA in NYC, or Transport for London on staff counts per “unit” of service. My anecdotal experience in traveling is that there appears to be a lot more automation in other places but maybe this is false. Being a TTC operator isn’t the most glamourous job, but those are very good wages, higher than a lot of professional jobs that require extensive post-secondary education; I do wonder how those employees who don’t stay find their experience of finding something as lucrative with other employers.
Steve: Don’t forget that it is very hard to “automate” driving a bus or streetcar down a street. Similarly, maintenance of vehicles and facilities is very much a manual process. Indeed, some forms of automation such as Smart Cards actually could raise operating costs by introducing a whole new layer of facilities that have no direct equivalent in the current system.
Solo crews are technically possible on the subway, but they are not going to make a big dent in the total workforce.
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I am fully cognizant of the TTC theme of this site and the gentle bias that is to be expected towards the care and feeding of that entity. I still have to ask why it is when the City finds itself in fiscally dire straits the culprit is always, without exception, the car driver. I expected a more rational, thoughtful reply to my previous post. Why not licence bicycles, are they not owned and ridden by citizens like you and I? I am sure they would love to contribute to the greater good of their City if only given a chance.
Steve: If it is any consolation, I have no qualms with other proposed new taxes including the Land Transfer Tax, the Booze Tax and especially the Billboard Tax.
Now if we have billboards advertising cars and booze, we should be able to make a killing!
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The shame here, I think, is that the local taxpayer has never been more willing (in my living memory anyway) to give some of their hard-earned money BACK to the city in exchange for, well, a better city. Have Torontonians gone mad? Many of us actually WANT to pay more taxes to fund things like Transit City but our municipal leaders aren’t so sure they want to collect them. So while Council quibbles and cowardly defers on this decision, public support will only get weaker.
Memo to City Council: The local taxpayer’s apparent willingness to share comes with an expiry date — let’s move already.
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I don’t see what everyone’s fuss is about the now quashed land transfer taxes. It was pretty funny seeing real estate agents line up to say how the entire market in Toronto would be destroyed because a THREE HUNDRED THOUSAND DOLLAR house suddenly cost $5000 more. I mean, it’s not like the price of housing has kept going higher and higher and done nothing to quash the market. It’s not like the prime rate (and thus mortgage rates) which have also been creeping up have done anything to kill the market in the last few years. In fact that market keeps recording records.
All of this fearmongering on a mere $300/year extra for a 25 year mortgage (after factoring in interest) is pretty laughable at best.
The city needs this money to provide what the people want from the city. If it doesn’t raise taxes, where else will it get it from?
I hope at the very least property taxes will start rising to be more on par with 905 property taxes at the very least so that Toronto can get it’s books in order.
And yes, the entire Rob Ford demands are pretty laughable at best as well… $10,000 here and $20,000 there doesn’t add up to 1 billion in the hole.
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A response to Don Hamilton:
I think people look to taxing drivers vs. transit users (over and above property taxes) because there appears to be far less cost recovery on cars.
For transit, we cover a big portion of the costs every time we pay a fare.
The city’s only direct revenue from drivers that I know of are parking permits and fines.
Also, drivers from 905 and elsewhere use Toronto roads all the time but contribute no property taxes toward it. 905 TTC users still pay the same fare as everyone else.
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To Tom B.:
My experience is that London is much more heavily staffed. Train crews are single person but even small stations seem to have 3-5 customer service staff each (some above, some at platform level), and that’s aside from the large contingent of British Transport Police.
To compare the cost-effectiveness of transit systems, I think the typical tool is operating ratios (the percentage of operating expenses covered by fares, advertising etc.; the part left over is what gets paid by government). Obviously the ratio is not specific enough to say if a system is overstaffed or staff are overpaid. But the TTC has a very high operating ratio, meaning we get more transit for less government funding than most other places. Of the three you mention, NYC Transit has a ratio of 43% of costs covered by revenue; TfL managed 62% in 2005/06 (with much higher fares than Toronto), and the TTC hits 75%.
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Casino — I thought about it when this first came up, and it’s now in the news.
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To Leo:
True, an extra $300/year for a 25 year mortgage is not a big deal. But what if you have to sell the house after just a few years of owning – due to a loss of income, or relocation for a new job? Those extra $5000 become a major extra loss. And that loss is not related to the person’s income, hence poorer residents would be proportionally more affected.
A large increase in any of the one-time payments, such as LTT, makes the home ownership more risky.
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Steve in response to #18 I believe the city can and does seize property for failure to pay taxes. If the property has a “registered” mortage the lender will usually seize the property themselves and pay the back taxes. The back taxes are added to the outstanding mortage, which the lender will try to collect from the borrower and/or the sale of the property. Otherwise the lender would loose the asset that they have secured the load against.
The courts can also order the seizure of property that was obtained through the proceeds of crime (e.g. grow-ops), which if there are outstanding taxes leave the city and holder of an outstanding mortgage high and dry.
To all the people who would like to donate money or is that pay higher taxes to the City of Toronto, you can pay up all your outstanding property tax installments, or better yet overpay your property taxes, that’s right check the tax act, you can “gift” money to the city and write it off against your federal and provincial income tax (check with your tax advisor first though). The sooner the city gets the money the better, right?
So who of the people that want higher property taxes are willing to go down to 100 Queen St. W. (or any of the 5 other locations) cashiers desk and drop their cold hard cash on the counter? Don’t forget to ask for a receipt and call all the papers so we have a record of the event. Don’t all crowd around the desk now!
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The proposed parking tax seemed like a beauty idea to me. But not just for downtown and North York as Miller had wanted, reasoning that only those areas were well-enough served by transit. Guess he forgot about the Bloor-Danforth line. It should be city-wide and applicable to all forms of parking – paid, free, parkades, private homes, wherever. Why should the rest of us subsidize free parking that a lot of people get at their workplace? They aren’t even taxed on that perk federally.
Parking lots
-increase urban heat island effect
-increase stormwater runoff which pollutes the lake
-make communities inhospitable to pedestrians
-encourage the unhealthy, drive everywhere lifestyle
A parking tax
-would not require infrastructure like road tolls would
-would encourage development of healthy, walkable communities
-would encourage transit use
-would be like another “sin tax” in that if you don’t use it, you don’t pay it.
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Really?! Is that a 1-to-1 offset? If so, I think this may be the start of a campaign.
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The thing that bothers me the most about this debate is how, for the so-called “fiscal conservatives” the answers are always simple. Finding “efficiencies” in an 8 billion dollar operating budget is not simple. Nearly every solution proposed so far–from outsourcing to cuts to “non-essential services”–amounts to a very small drop in a very big bucket.
So here’s simple right back at you, fans of small government: crime rates are down nationwide; Toronto’s are the second-lowest of all urban regions in Canada. Never mind the headline-grabbing stuff like gang shootings that throw people’s perceptions off the reality that Toronto is fundamentally a safe city. Where are the city councillors with the courage to say that policing costs are out of line with other municipal expenditures. Freeze hiring of new police officers. Hell, lay off a hundred or two.
And for those who think a casino is the solution to our problems: who pays for the social costs associated with gambling? Doesn’t it strike you as at least somewhat problematic that a lot of government spending on cultural and social goods in this province is totally dependent on a population that’s addicted to a vice that’s often rated as bad for society as booze, drugs or prostitution?
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I do not understand why there is an opposition to use gaming revenues to cover TTC operation cost. If Toronto host 4 casinos in its borders, we will have half of the gaming space of Atlantic City. We are talking at least $3 billion in gaming taxes alone and not even including property taxes. The gaming facility at Windsor also pays for the salaries of some police officiers too. Gaming will save the TTC. If I have it my way, there will be VLTs in bus terminals. Look at what gaming did for Detriot. They are revitalizing their entire downtown.
The TTC should still look to automation as a way to save cost. Yes, it cost more money to put trams on guideways. However, with a fully segregated right of way, the trams can be installed with automatic train control. Driverless trams will save in labor cost year after year. The guideways and viaducts are a one time cost. With ATC, the Toronto metros can be manned with one person. The TTC must carry more people while keeping labor demands down.
Steve: I’m with you on casinos. Why should we be exporting all of the gambling revenue to other towns around southern Ontario when we can keep it here?
However, I am completely opposed to trying to massively convert the major TTC routes to guideway-based automatic operation. This is a boondoggle beside which the Sheppard and York subways would look like brilliantly wise investments.
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All this money shortage thing is another scheme whipped up by the city. They want us to support them and blackmail the provincial + federal government for more money, so the city decides to do all these cuts on the TTC and other programs and turn our lives into a drama show.
Steve: The way this issue was handled with a bombshell announcement followed by few actions related to service at today’s TTC meeting makes many observers justifiably cynical.
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To those who advocate casinos for Toronto – the City gets less than 5% of Woodbine revenue, the Province gets half. Torontonians are large proportions of Niagara and Rama patronage. Bringing a casino to Toronto (requiring provincial approval) will enrage Niagarans (Liberal seat under threat) and Orillians who are more likely to switch their vote accordingly. (See – once again Torontonian revenue going out of Toronto).
This is before you even start on the social harm. In short, there is no pot of gold for Toronto in gaming when it is in the gift of Ontario and it is a political third rail on several fronts.
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Steve in response to comment #18 you wrote:
“Actually, people like me who live in apartment buildings pay property taxes at a far higher level than people living in houses because we are taxed as commercial, not residential property. Nobody wants to fix that particular inequity because it would send taxes on houses sky-high.”
This relates well to one of the fundamental problems with Toronto. If you had access to your building assessment data, yes, you could find that the rate of property tax paid (via your rent) is about 4 times greater than that of a residential property. What you are missing is that the rates being so high have decapitalized the property. The average assessment value per rental unit in the city of Toronto is less than $70,000. If one was to convert your building to condo’s, overnight the values would increase by 200% to 400%. It is very similar in how Mississauga generates more revenue from a lesser rate that Toronto.
I urge you to look at the chart entitled “Absolute Changes in Industrial Land Values” on page 12 of this report. If in 1986 one was to have spent $1,000,000 on industrial land in Mississauga today it would be worth over $4,000,000. By comparison if that money was spent in Toronto it would be worth on average today $1,800,000. Applying commercial tax rates on the current values would mean that Mississauga would receive 42,678.84 from that property (4,000,000 * 1.066971%). By comparison Toronto would receive 41,278.13 (1,800,000 * 2.2932294%). All the while it misses out on the development and other charges which net the city a lot of revenue. In the end, even though Mississauga has a much lower tax rate, it makes up for the 2% difference in net property tax ( realised income ) by increased development charges and volume.
Anyone can search commercial real estate listing and find that these results are true. Commercial land in Toronto is worth about half as much as comparable properties elsewhere. The low values has meant that the city was not able to collect the expected revenues on non residential properties and this is part of the reason why it finds itself in a hole.
Steve: My comments about taxes on rental residences stand. Note that I was talking about the amount of the tax, not the tax rate applied against the so-called value of the property.
The City used to send out notices to all renters telling them what their property taxes were. The last time I received one, the tax on my two-bedroom apartment at Broadview & Danforth was almost identical to the tax on a seven-room house in North Toronto sitting on a 29 x 195 foot lot.
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