How John Tory evolved from a low-tax proponent to the champion of a major tax hike

Thestar.com
Dec. 9, 2019
Jennifer Pagliaro

On the day John Tory declared he wanted to be mayor, he began the way he has spent many of his mornings since: working a media circuit of breakfast television shows and taking questions.

During his stop on Citytv’s Breakfast Television that Feb. 24, 2014, he told host Kevin Frankish that one of his priorities if elected mayor would be “keeping taxes down.”

As he would be asked several times that day, and for many years to come, Tory faced this question: how do you keep taxes low and build up the city?

“If you ask me if there is a further efficiency to be found in this government --and all governments --but at Toronto City Hall in particular, I can tell you, I’ve spent my career running different large and small organizations,” Tory said. “And I can tell you, you have to know how to look for these efficiencies and how to achieve them.”

He promised a full financial plan later.

After five years as mayor and two election campaigns where he has insisted on keeping property taxes low --calling out anyone who said otherwise --on Wednesday Tory stood in front of a breakfast crowd at a Canadian Club event in downtown Toronto and made the case for increasing property taxes an additional eight per cent over the next six years to fund $6.6 billion in transit and housing capital infrastructure projects. He said efficiencies continued to be found, but that they wouldn’t be nearly enough.

It was a turning point that Tory’s critics describe as the mayor finally opening his eyes to the fiscal wall right in front of him, the one they say they’ve clearly seen approaching amid repeated warnings from the city’s most senior officials about the state of Toronto’s finances.

They say his insistence on keeping taxes low as his predecessor Rob Ford did before him has had a hand in squeezing city services and leaving pressing infrastructure needs unattended to --with crumbling public housing and subway fires that leave thousands of people stranded at surface level.

Those who have worked with him closely say he has been purposefully and incrementally moving toward solutions that will garner broad support, both from the public and on council, finding a way to become something of a “Goldilocks” mayor.

Reviewing revenue decisions made during his first term at city hall, Tory introduced several new taxes and tried to introduce road tolls --which have, or would have, raised significant new funds.

“He’s actually made really substantial revenue increases without anybody thinking that he has,” said Siri Agrell, who was in charge of the mayor’s strategy from late 2015 until 2018.

“That’s not by accident.”

Ask Tory himself, as outgoing CBC Metro Morning radio host Matt Galloway did Thursday, and the mayor will define himself in a way many politicians might not put on a lawn sign, as a “moderate incrementalist.”

Tory, in a sit-down interview with the Star on Thursday in his second-floor city hall office, explained they had been working on a proposal to increase the city building fund as negotiations were underway with the provincial government on a transit plan.

That plan, he said, would come with some unknown requirement for the city to contribute financially, but they didn’t know how much.

And there was a pending report on creating and maintaining affordable housing over the next decade also coming down the pipe. He knew the question again, which this reporter asked him earlier this week, would be: how will you pay for it?

Meanwhile, the city was facing cuts in the revenue they were expecting from the province.

Raising the city building fund, already established, seemed to make the most sense. But how much?

“There were options ... There was a table that said, well you can do this much for this long and produce less money,” he said, which might have given the city the ability to invest some $2 billion and might have also been seen as a major step forward. “I just figured, no, if we want to just get on with this stuff and acknowledge to the people, as they acknowledged to us, the urgency.” They settled on the plan that would allow the city to invest $6.6 billion.

Not too hot. Not too cold.

“I believe it’s obviously important to maintain public confidence. And that’s because I want the public to be confident in my leadership. If they lose it then it will be lost for something else you want to do,” Tory said of his approach. “But I also know it’s necessary (in the council chamber). Because I can come forward with any scheme I want, but if I can’t get 12 more votes up there then it doesn’t matter. So we’ve just been steadily moving forward.”

Though Tory’s announcement on Wednesday took several city hall observers and even councillors by surprise, it isn’t the first time he has moved to raise taxes above inflation, even if he would dispute that.

“I believe I am doing exactly what people expected me to do,” Tory said when he first introduced the city building fund in a December 2015 speech, insisting it hadn’t broken his promise from the 2014 campaign, just a year earlier, of keeping taxes at or below inflation.

Councillor Gord Perks (Ward 4 Parkdale--High Park), who has become the most vocal critic of the mayor’s budgets, said then: “I’m glad he got his toe in the tax water.

A look at Tory’s tax and toll decisions over the last five years, shows the increases have made a significant impact regardless of whether the money was drawn directly from homeowners through property taxes or not.

The city building fund introduced in 2015 has raised $56 million to date, according to city staff, and is projected to bring in $61.5 million by the end of the year by raising residential property taxes 1.5 per cent over the last three years.

In 2016, Tory moved to implement a hotel and short-term rental tax, which was implemented in January 2018 at four per cent. That tax collected $47.2 million that year, with a net revenue of $26.4 million for the city, according to city staff. It is expected to net $28.2 million for the city by the end of this year --the equivalent of a nearly one per cent property tax increase (A one per cent property tax increase raises about $30 million).

In December 2016, council approved Tory’s push to toll the Gardiner Expressway and DVP, which, if implemented by 2019/2020 as planned at the $2 toll Tory had backed, would have raised an estimated $166 million net revenue for the city --comparable to a 5.5 per cent property tax hike.

In addition to that, during Tory’s first term, base residential property taxes increased 2.75 per cent in 2015 (including a levy for the Scarborough subway), 1.9 per cent in 2016 and 2 per cent in 2017.

Tory’s time in office comes years after the anti-tax rhetoric of former mayor Mel Lastman. Lastman was followed by former mayor David Miller, who is largely remembered for the divisive tax moves he made early in his second term --seeing council introduce a land transfer tax --which is today key to balancing the budget and is expected to bring in $753 million in 2019 --and the $60 vehicle registration tax.

That tax, which raised around $64 million annually, was cancelled by council at the urging of Miller’s successor, Rob Ford, who came to power in 2010 insisting there was a “gravy train” at city hall and vowing not to raise taxes.

Many have described this as a political pendulum swinging right to left and back again.

You wouldn’t know Tory’s tax history from his speech Wednesday or any other public commentary he makes.

Tory rarely said the word tax in a 30-minute speech about raising taxes. When he did say it, it was to refer to the fact he was still keeping them low. He didn’t connect the idea of a property tax increase at all with the city building fund.

Those who know his strategy say this is on purpose.

Amanda Galbraith, who was the mayor’s director of communications from his 2014 election until 2017, said that positioning on raising taxes makes sense politically.

“People need to take their medicine but they don’t necessarily want to hear all about it,” said Galbraith, who is now a principal at crisis communications firm Navigator.

“We’ve seen in kind of the current political climate, people are wary of raising taxes.”

She said Tory had no choice but to do what he’s done in the face of provincial cuts and a lack of funds, but that how he chose to deal with that situation is also in keeping with his style of governance.

“Politics is the art of the possible,” she said, calling what Tory does the “Goldilocks approach.”

Agrell, now executive director at technology start-up incubator OneEleven, said Tory’s announcement Wednesday was not the result of a “sudden conversion.”

“He’s been doing it all along,” she said, noting the mayor’s office may not want her to point it out but: “He’s introduced a new tax every year in his first term. Like, people don’t do that.”

She said when they introduced the city building fund in 2015, Tory --who consumes all kinds of media and who has insisted his staff listen to AM talk radio to hear those views --was concerned that he had broken a promise.

“Even then he understood that the needs of the city outweighed the hit that he might take on that,” she said.

Though some of his fears may have been immediately realized --there were questions and critical columns about Tory’s tax promise when the fund was announced --it has gone largely unnoticed since then.

“He is really effective at saying, ‘If we say it like this, we can get people to buy in.’ And he’s getting a lot of stuff done,” Agrell said. She said Miller’s failure in messaging to the public on taxes likely helped Ford win in 2010 and led to the resulting stagnation of city building.

“We needed somebody who could help us march down the middle for a while,” she said.

It doesn’t mean Tory’s recent move has come without criticism.

“Needs to change his name to John NDP,” said Canadian actor Jeff Teravainen on Twitter, referring to Tory, who once used the NDP label himself to divisively brand mayoral challenger Olivia Chow.

A Toronto Sun editorial Thursday said Tory should have been upfront with taxpayers during the last election and that the hike proposed to the city building fund was “unfair to homeowners.”

During the last two election campaigns, Tory repeatedly challenged opponents Chow and Jennifer Keesmaat over their positions on taxes --not only insisting he would keep taxes low but positioning himself as the only option over others who might not.

Chow, in an interview with the Star, is quick to point out that even Rob Ford --who was, in turn, accusing Tory of wanting to raise taxes in 2014 --raised property taxes in 2013 by pushing council to implement a property tax levy to pay for the city’s $900 million share of the Scarborough subway.

“I think magic happens when leaders are willing to listen to the plight of the rest of us and when they have the courage to drop their ideological blinders,” she said, adding she doesn’t see what happened as cynical manipulation.

“At the end of the day, it’s not what you say. It’s what you do,” she said. “There is hope.”

She said now that Tory has “seen the light” further action is needed, like a surtax on multimillion-dollar homes --an idea presented during Keesmaat’s 2018 campaign.

“Don’t stop there,” was Chow’s message to Tory. “It isn’t nearly enough.”

Cherise Burda, executive director of the Ryerson City Building Institute, agreed.

In order to make up for lost time, she said the property tax increase truly required would freak people out and other options are now needed.

“There’s a fine line between waiting for the public to invite you to do these things and leading a bold move,” she said.

So, was Tory’s move on Wednesday bold?

“Within the current climate of political leadership in our province these days, I would say yes. But it’s also something that’s overdue,” Burda said.

Perks, the councillor, told the Star that he is “indifferent” to how Tory messages his decisions, but said the mayor didn’t get here on his own.

“This is an example of the mayor being pushed by Torontonians into taking a position that he has opposed since the day he was first elected,” he said, accusing Tory of “belittling and demonizing” those who said property taxes would have to be increased.

“The City of Toronto would be in much better shape if the mayor had not spent the last six years resisting the inevitable.”

Today, Tory continues to try to separate what he’s raised from property taxes through the city building fund --which draws on all businesses and homeowners to pay for capital projects --from the base property taxes that substantially fund the city’s operating budget, despite those funds coming from the same taxpayer, on the same tax bill.

And he is defending still against a spectre of Ford Nation, those who might say any tax increase is too high. These people, Tory knows, are on his flank.

So when he referred to the city building fund Wednesday, he tied it to Ford’s Scarborough subway levy as the origin of the city building fund, even though they are two distinct levies.

Asked about how he can square what he’s promised with what he’s done, Tory doesn’t seem fazed.

“The great thing about this system is the people in the end sort of get to say we’re satisfied with the way you did this or we’re not. And I’m trying to do what I think is right,” he said.

“The write-up you’ll get ultimately when they write it up in 10 or 15 years will be based on what you did, not based on what your polls were at any given point or how many elections you won. Did you get anything done? And I think we’re making progress.

“But that’s for others to judge.”