Jan 12, 2023
This is our third budget since we began living with the realities of the pandemic. As Mayor Tory, City Council, and really all of Toronto embark upon this process together once again, I think we need to consider it in a different light.
When this all began in early 2020, there was a lot of talk about a hundred years ago: "What about the Spanish Flu?"; "How did they cope in 1918?"; "What did they learn, and what can we learn from them?". We didn't ask what one or two specific politicians did during that pandemic. We looked back a century and held the whole society to account. I believe that is how people will look at this pandemic and all of us one hundred years from now.
What will be our legacy? I don't just mean the Mayor's, or the Premier's, or even mine. What will they say about all of us? Did we suffer losses and cope for a couple of years, and then all get cranky because the city was never quite the same again? Or did we find ourselves at a tipping point and collectively realize that we need to fundamentally change the way our city works so that we can all move forward without leaving anyone behind?
I believe we are at that tipping point right now. The economy is still reeling, cases and variants keep coming, and there is still nothing quite "normal" about the way we work or live. City Hall continues to try to address those challenges while keeping your services intact, but we have never been made whole from COVID impacts. We are still carrying over $1.4 billion in pandemic-related expenses on our books, without a municipal funding source or any committed relief from the other levels of government that have the taxation tools to cover it.
A graph showing the COVID-19 budget impacts we've faced since 2020. Click to view a detailed version. Facing all these pressures, the City has little choice but to keep its annual property tax increase in line with inflation. Most of the announcements Mayor Tory made last week about budget investments are for service needs that have been put off for a long time, such as investments in our emergency services. These cannot be put off any longer as our population continues to grow. This year's property tax increase is comprised of 5.5% that will go to operating City services and 1.5% that will go to capital infrastructure projects that can't be delayed any further. That combined increase of 7% will still place your property tax bill in the middle of the pack in terms of both neighbouring and major cities.
A chart showing Toronto's residential property taxes in comparison to other large GTHA municipalities and major Canadian cities. Click to view a detailed version. The fundamental problem with property tax increases is that they can never fill the gap in the City's finances that has been dogging us and holding us back since amalgamation in 1998. Even if we had a steep increase every year, we would only be just keeping pace with inflation at best. Moreover, in times of booming economy, property tax is the one kind of tax that doesn't get a boost—it's based on your address, not whether your income has increased. It was apparent before, and the past few years have made it even clearer: Toronto needs a new and steady source of income. Imagine that each year, the City has an additional $500 million to operate and expand the TTC. On top of that, imagine there is still anywhere from $250 to $400 million that can go straight to infrastructure improvements and state-of-good-repair for our roads. Now, the real cherry on top: imagine that none of that comes from your property taxes or from debt.
This could be a reality for Toronto if we were to introduce a 1% municipal sales tax. This is the norm for many other major cities. A municipal sales tax provides an annual, sustainable source of funds drawn from residents based on their ability to spend. Sales taxes also introduce a way to collect revenue from regional neighbours that use our city every day but contribute nothing to our upkeep.
Years ago, in 2006, Prime Minister Stephen Harper reduced the GST by 1%, and then by another 1% a year later. Prior to that, Ontarians paid a combined sales tax of 15%. None of us felt a financial windfall from that reduction. Poverty was not eradicated throughout the land. At the time, then-Mayor David Miller and several others across Ontario suggested that 1% should flow to municipalities so that we could use it to build transit and repair bridges, but it fell on deaf ears. The politics of the day were different and the economy was thriving.
Today, we find ourselves in very different circumstances. Folks across the political spectrum are calling for better funding sources for cities—even former Conservative leader Tim Hudak is advocating for a municipal sales tax. In this post-pandemic era, I know that the Federal and Provincial governments want to tighten their own spending and reduce deficits. Allowing us to collect our own revenue and sustain ourselves is really the best solution for them as well as for City Hall and Torontonians.
The needs of a city as big of Toronto go far past what property tax alone can sustain, and those needs are only becoming larger and larger. Today, not only do we have to nurse our city back to health, we must run a full-service transit system even though ridership is only at 60% of what it once was. Our shelter, support and housing system will cost us $700 million next year as we try to build rapid, accessible housing and better shelter accommodations for our new standard client load of over 9000 people seeking beds. On Sunday night, when we hold our North York Budget Town Hall, you will learn more details about the expenditures our city must undertake. Then, I think an urgent conversation is in order.
An inflation-driven property tax increase might get us through the year, but it won't buy us a brighter future. Only a big city revenue source like one cent on the dollar would do that. We need to start talking it up all over town. As a community, we need to map out how we will go about getting permission to fundamentally change our City's funding system to one that is fair, and one that everyone can afford no matter their circumstances. Let's take action now to find a way to build a truly vibrant and sustainable city for generations to come, without relying even more on your property taxes.
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