Liquor sales, licence plates among tax targets for Toronto’s city manager
“All taxes are generally viewed negatively by the public,” Peter Wallace acknowledges in report on revenue options.

thestar.com
By Betsy Powell
Nov. 24, 2016

City manager Peter Wallace is recommending council consider a slew of immediate and long-term revenue options to help pay for Toronto’s fiscal needs, including road tolls, a vehicle tax, and alcohol and tobacco taxes.

His long-awaited report includes an analysis of the social and economic impacts of new taxes and levies.

“All taxes are generally viewed negatively by the public and directly affected parties,” the report says. “The challenge is to choose those options that produce the least harm, with particular sensitivity to those who are directly impacted.”

Wallace wants city council to ask the province for permission to move ahead with legislative and regulatory reforms that could be in place in the 2017 budget cycle.

That could allow the city to implement:

• A hotel and short-term accommodation rental tax, which would also apply to Airbnb rentals;
• Authority to require the collection of taxes by intermediaries, such as alcohol, tobacco, hotel and short-term rental accommodation taxes;
• The imposition and collection of an alcohol tax at LCBO stores;
• Allow tolling on roads owned by the city, something Mayor John Tory is expected to endorse. They “can be an effective user pay option to generate funds to pay for highway rehabilitation costs and potentially other related mobility projects,” the report says. They also can be “an effective traffic management tool.”

The report also asks council to consider reinstating the personal vehicle tax of up to $120 annually per car. The Ford administration killed the levy in 2011. Sources say Tory will not support its reintroduction.

The report did not recommend a parking levy on commercial and retail spaces, which was backed by some councillors who argued it would generate a lot of money and be relatively easy to implement.

Wallace also recommends council ask the budget committee to consider a range of options for the 2017 budget process, including:

• A dedicated property tax levy for capital;
• Allowing commercial property tax rates to rise up to 50 per cent of the residential property tax increase;
• Harmonizing the Municipal Land Transfer (MLTT) with the Ontario Land Transfer Tax (LTT), including the new graduated rate;
• Harmonizing the MLTT first-time homebuyer (FTHB) rates with the Ontario Land Transfer Tax first-time homebuyer rebates, including the new Canadian citizenship and permanent residency test;
• Changing the MLTT first-time homebuyer rebate eligibility criteria to include a maximum value of consideration;
• Introducing an above-inflation increase to the third-party sign tax.

The report also asks the province to make the necessary legislative reforms so the city can introduce, in 2018 and beyond, graduated residential property tax rates, a parking sales tax, municipal income tax and sharing the harmonized sales tax (HST) with municipalities.

“The City’s finances are often complex and seemingly abstract, but they are fundamental to achieving council’s collective vision for a growing, diverse and dynamic community, with unique challenges such as traffic congestion, higher incidence of poverty, and disproportionate social housing burdens from those faced by surrounding municipalities,” the report says.

In September, Wallace acknowledged that finding “political acceptance” for many revenue measures will be a challenge with council averse to raising taxes, particularly property taxes.

“And that is a reality. That is a reality. That is my reality, that is the public policy reality, and it is something that I work within. So recommending the unacceptable is not a great way for a public servant to make a living.”