Councillor James Pasternak’s misguided point about voluntary taxes
The city councillor suggests that the little money that comes in from citizen donations is proof that Toronto doesn't want higher taxes - but he’s wrong.

thestar.com
By Edward Keenan
Feb. 21, 2017

Councillor James Pasternak of North York is not one of city council’s more noteworthy orators. Many of his colleagues will issue up a patented stemwinder on virtually any topic, bringing their personal flare to bear on whateveritistoday: Giorgio Mammoliti’s angry left field rants addressed directly to the camera, Anthony Peruzza’s meandering personal non-sequiturs, Janet Davis’ impassioned urging of consciences to evidence, Gord Perk’s principled lectures, Denzil Minnan-Wong’s curt interrogations.

But Pasternak hunches up to the microphone less often to share his drawling, cranky thoughts, and when he does, it usually means it’s time for some “North York Relief Line” theory. This is a westward subway extension of the Sheppard line through the heart of his ward that persists as a plan - perhaps whimsical notion is a better word than “plan” - more in his heart than anywhere else. Despite its virtually total lack of popular, institutional or evidentiary support, he persists. It often seems that whatever the topic at hand, Pasternak will find a way to make the theme of his speech “The Dream Will Never Die in North York.”

At the budget meeting on Wednesday, however, he addressed a different topic in his questions to staff, and it was clear from the start he was feeling his Wheaties. With uncharacteristic pep in his voice, he began asking about slips of paper that are mailed out with tax bills that allow people to voluntarily donate money to the property tax pool. “So in fact the residents of Toronto, homeowners of Toronto, have an opportunity to pay more than what we approve here at council?”

The city CFO confirmed this remained the case.

“And I understand the dough’s just rolling in,” he deadpanned to the laughter of those around him. “Where we at now?”

This year $74,000 due to a large donation, in average years more like $20,000 to $24,000, the CFO said.

“So, the story that we hear,” Pasternak said, gesturing with his arms, “that Torontonians are dying to pay more taxes is a bit of a myth.”

The CFO would not speculate.

With a smug grin at the corners of his mouth, Pasternak asked if we could find out how much the residents of one leftist councillor’s ward in particular contributed, “because she’s standing here saying how generous her residents are.” He later apologized for singling out the councillor. But it was clear he thought he had proved his case - and then he went on to ask more questions, the theme of which was: wouldn’t you agree that taxes in Toronto are higher than they should be? There’s the land transfer tax, which other cities don’t have, he said. There’re seniors on fixed incomes, he said. There’re young families trying to buy their first home. “Above the rate of inflation tax increases are a barrier,” he suggested.

The city manager explained, in response, that those taxes have been falling since amalgamation, so they are less of a barrier than they were, and that since city council would not cut services or increase fees, the appropriate tax rate would need to be set to pay for them.

Well, Pasternak said, “I would say increased costs remain a barrier.” He asked again if the city manager would agree with him. The city manager again declined to do so, saying again that this “barrier” had been getting lower, “the city, from a property tax perspective, is more affordable than it has been in the past.”

I relate all this to point out something that Pasternak, who appeared proud of his performance, may not have been aware of. That his insistence on the second point he made - he thinks property taxes should be frozen or cut - completely undermined the first point he was trying to make - that people failing to voluntarily pay more to the city demonstrates they don’t want taxes raised.

Never mind for a moment that outside the tax-slip program, private citizens have, in fact, announced donations of more than $28 million in the past two years to high profile projects under the Gardiner and in the Don Valley (equivalent to more than the annual return on a 1-per-cent property tax increase citywide).

The main thing is that there is a big difference between a broad tax increase and a single citizen writing a cheque. When taxes are raised, everyone pays more: this generates a lot of money - a useful amount - the pain shared fairly. An equivalent private donation, by contrast, will usually generate very little. A tax increase of just $1 per household would generate about $1 million, roughly enough to buy a new bus and pay its driver for two years. Meanwhile, if I pay $1 extra on my own - using the slip of paper provided in my tax bill - the money will barely cover the bank fee for clearing the cheque.

I’ve written about all this before, when Denzil Minnan-Wong pursued a similar line of argument, so I won’t rehash the whole very basic, introductory political science and economics principles of collective action problems. But I will say that suggesting that my not having donated more shows my preference for lower tax rates is similar to me suggesting that since Pasternak has not personally gone out with a shovel to start digging the North York Relief Line tunnel by himself, he’s proven he doesn’t really support the project.

But it’s actually worse than that. Because it isn’t just that I know my contribution would be too small to make a difference without being pooled with others. And it’s not just that it is unfair that all those others would share the benefits of my voluntary contribution without chipping in. It’s that I think there would be no shared benefit in the form of improved services.

Because what Pasternak would do with my contribution if I sent it in is fairly certain. He would use it to cut tax rates for other people.

He pretty much said so, right there in the very same speech.