john tory

Toronto needs to bite the bullet and raise taxes

Mayor John Tory has plan for gradual increase with extra levy

Post City Magazines’ columnist John Sewell is a former mayor of Toronto and the author of a number of urban planning books, including The Shape of the Suburbs.

Mayor John Tory has been widely praised for his proposals to increase property taxes to pay for transit and housing costs. Although I, too, think raising taxes to pay for public goods is long overdue, it is necessary to offer some criticism of the initiative.

His plan is to gradually increase an extra levy of about two per cent each year until 2025 when the extra tax levy will be 10.5 per cent. It will raise some $6.6 billion.

Given that the levy is devoted to transit costs and housing, two significant issues in the city, criticisms have been limited to those who say he is breaking his election promise to keep tax increases at or below the rate of inflation. No one seems willing to challenge the general idea.

And let’s be clear: the leading government ethos of the past few decades is that taxes are bad and that the public sector should be starved of funds. Tory has jumped out and challenged that thinking, and hopefully this will be the beginning of a new trend that uses increased public revenues to improve society.

But here are the two issues which have been missed in the heaping of praise on the mayor’s proposal: what the money is being spent on and what will happen to other public programs.

A large whack of the $6.6 billion will be spent on capital improvements to the city’s transit infrastructure, which definitely needs to be improved. But the city is now on the hook to pay for the new provincial rapid transit plans: a new relief line on the east side which is poorly designed and probably not buildable, as well as putting the westerly extension of the Crosstown LRT underground, when it can easily run at grade at much less cost, and a three-stop extension of the subway into Scarborough, which is a real waste of money. There is also an unnecessary subway extension north of Finch into York Region.

None of these are on the city’s priority list for transit enhancements, yet that’s what a good chunk of the extra levy will be spent on. The rest of the $6.6 billon will be devoted to what the city calls affordable housing.

Many think the very limited initiatives the city has taken in this area in the last few years aren’t nearly affordable enough for those in need. And while the promise is to build 40,000 units over 10 years — 4,000 units a year — the likelihood of seeing even a third of that number being built is low.

A majority of those on Toronto City Council do not have much commitment to new affordable housing in their wards. Those who have a commitment often find their constituents are resistant.

Until the city has a determined new housing staff with a robust mandate that council will stand behind, not nearly enough truly affordable housing will be built, even with the money available.

The intention behind the extra levy might be good, but the uses to which it will be put are questionable.

The other side of the story is the rest of the city budget: child care, youth programs, planning and development control, parks, libraries and so forth. These are programs we use on a daily basis, and in recent years they have been starved for funds. I predict that, when the city’s operating budget is discussed in January and February, we will hear a lot about how increases are being kept at or below the rate of inflation, that is, no serious increases — except of course police.

That will be the trade-off: a special levy for transit and affordable housing, but refusal to adequately fund other city services.

It’s been widely reported that Toronto has the lowest property tax rate in the whole of the GTA.

Even the new levy will only bring the city up to the average property tax load in the GTA.

What city council needs to do, now that it seems willing to bite the bullet of imposing higher taxes, is spread the tax increase across all city services and maybe increase it enough that our tax rate is above average.

That’s a good way to start the new year.

Article exclusive to TRNTO