The city of Toronto has come up with a slew of new taxes to help alleviate what’s been dubbed a financial crisis and asked for staff reports into many more at a city council meeting yesterday.
On Sept. 7, city council gave its approval to an updated long term financial plan and a set of measures aimed at tackling the extraordinary financial challenges currently facing Toronto.
Outlined in the 2023 financial update and outlook report presented to the council earlier this year, the City of Toronto confronts a substantial financial crisis, both immediate and long-term in nature. This crisis is characterized by a projected $1.5 billion budgetary pressure for the 2024 operating budget, as well as a requirement of approximately $29.5 billion for the 10-year Capital Plan. These figures are part of a staggering $46.5 billion shortfall predicted over the course of the next decade.
Even with the actions approved by council, a statement release by the city of Toronto explained that the immediate and sustained support from the Government of Canada and the Province of Ontario is still urgently needed. As a result, city council has requested that the Province of Ontario authorize new revenue tools that grow with the economy and reflect the scope and complexity of the fourth largest city in North America, such as a municipal sales tax on the purchase of goods and services in Toronto or a share of existing sales taxes.
“The people of Toronto deserve a city where they can find affordable housing, rely on the TTC to get to work on time and access the programs that make life in our city better,” said Mayor Olivia Chow. “Toronto is stepping up to meet our significant financial challenges and deliver the services people need. Despite the multiple actions approved by Council today we still need our partners – the Government of Canada and the Province of Ontario – to step up for the people of Toronto.”
In the absence of a new funding model or growth-related revenue tools, city council notified the Government of Canada and the Province of Ontario that the city will be forced to reduce essential service levels and cancel capital projects that benefit the region, province and country and contribute to shared priorities such as housing, transit, refugee response and climate action.
As immediate first steps, city council directed staff to do the following right away:
- Implement graduated Municipal Land Transfer Tax rates for high value residential properties valued at $3 million and above, for January 1, 2024
- Develop multi-year approach for property tax rates
- Remove on-street parking rate cap to enable a comprehensive rate review
- Report back on increasing the Vacant Home Tax rate from one to three per cent
- Request the TTC work with the City and the Toronto Arts Council to increase ridership.
In addition, Council requested staff reports for the introduction of the following new revenue and policy tools:
- A Foreign Buyer Land Transfer Tax
- A Commercial Parking Levy
- A dedicated 911 Next Generation levy
- An Emissions Performance Charge for buildings
- An additional land transfer tax on buyers of residential property where the purchaser owns more than one property within Toronto, with appropriate exemptions
Council also requested staff reports to explore reducing expenditures and forgone revenues, optimizing asset management and the feasibility of additional revenue tools:
- Restructure or dissolve the Imagination, Manufacturing, Innovation and Technology (IMIT) Financial Incentive Program
- Reduce or remove non-residential non-ground floor area development charge exemptions
- Review surplus and underutilized real estate assets to maximize greatest value and/or use
- A levy per passenger from Billy Bishop Toronto City Airport
- Graduated municipal property tax rates for high value residential properties and for properties that are not the owner’s primary residence
- A municipal lottery.
According to the city, previous actions combined with the new city initiatives approved at the council meeting are still not enough to address the 2024 budget shortfall and city’s long-term financial crisis. The City faces real and urgent consequences starting next year if additional actions are not taken by the Government of Canada and the Province of Ontario.
“The City is stepping up to face the significant risks and challenges identified in the City’s first Long Term Financial Plan, but we cannot address this crisis alone,” said city councillor and budget committee chair Shelley Carroll. “It is time for the Government of Canada and the Province of Ontario to step up and give Toronto the funding and revenue tools we need to continue being the economic engine of the region, province and country.”
In addition to the many moves outlined above and previously approved, the city also requested the Province of Ontario upload the responsibility and costs associated with the continued construction and maintenance of the Frederick G. Gardiner Expressway and the Don Valley Parkway, including any future capital and operating costs.
Premier Doug Ford already nixed that idea during the lead-up to the last municipal election when the idea was floated by candidate Ana Bailão.
“We aren’t uploading the Gardiner,” said Doug Ford, last year when the issue came up. “They (city of Toronto) just want to throw their burden onto us. They’re responsible for it and they have to fix it.”
Then again, with the provincial government under fire for the mismanagement of the Greenbelt, that particular tune might have changed.