Council to decide whether to study new Toronto taxes
Councillor Shelley Carroll plans to bring a motion to council asking for a report on new revenue tools to solve a looming budget crunch.

TheStar.com
Feb. 18, 2015
Jennifer Pagliaro

In a push to deal with a looming budget crunch, city council will decide next month whether to study new taxes that could balance the books.

But just the idea of a report that would look at those tools — what could include liquor, tobacco and entertainment taxes — has already drawn criticism at city hall, led by Mayor John Tory.

Councillor Shelley Carroll said she will bring a motion to council asking for a report.

“If we’re going to order a big study, budget committee should not go off on its own,” Carroll said, responding to criticism from Tory who said Tuesday he would not support such a motion if it landed at budget committee.

The discussion comes as Tory and senior officials work just to balance the current budget before them without taking out a loan. The city’s top financial bureaucrats say that pressure, including an $86-million hole this year, stems from the province’s decision to cancel funding to offset the cost of social housing.

City manager Joe Pennachetti said during recent discussions that the city will eventually need a sales tax — something Tory’s office quickly shot down.

Tory does not agree with his predecessor Rob Ford that the city has a problem with overzealous spending — what Ford called “gravy” as he moved to slash budgets during his term. But during the campaign, Tory pointed to a revenue problem not to do with taxes, but “under investing” by the other levels of government. He promised not to raise taxes above the rate of inflation and instead lobby for more money from the province and in Ottawa.

Carroll said the kind of robust study she’d like council to approve was last done in 2007 after the City of Toronto Act came into force. That made it possible for council to impose new taxes.

At that time, taxes on things such as liquor, tobacco and entertainment were considered, including how much cash they could produce and how they compared to other similar-sized cities.

In 2007 dollars, those studied taxes would have brought in modest amounts of cash — a 1 per cent alcohol tax would have resulted in $15 million; a 1 per cent tobacco tax would have netted $6 million; a 1 per cent entertainment tax bringing in $3 million.

Still, the city needs to find an estimated $160 million in cuts by 2018 to keep property taxes from rising 1.7 per cent each year — numbers outlined in the most recent solution to the city’s budget problem and the prompt for Pennachetti’s call for new tools.

The 2007 debate eventually led to the controversial doubling of the land transfer tax and implementation of the $60 vehicle registration tax under former mayor David Miller that was later abolished under Ford.

Carroll said it’s time to revisit those numbers.

“I want new information because we are not going to be able to live out the full plan that we’re adopting for the loss of pooling compensation money,” she said, arguing property taxes are headed “through the roof” if bigger changes aren’t made.

“We need to start planning a more sustainable future now.”

On Tuesday, ahead of a trip to Ottawa to push for new infrastructure funding, Tory said he would reject Carroll’s motion if it landed before budget committee.

“I would encourage the city budget committee to vote against that motion at this point in time and just say, let’s get the budget done first and attend to that business and then we’ll see where we go from there,” Tory said.

While the budget committee is filled out by three of Tory’s executive members, it’s not clear how Carroll’s motion would fare at council with all 45 members present.

Though the mayor earlier opposed her idea, Carroll said she is hopeful her motion will be well received. Tory has argued the timing needs to be right, but Carroll used the same argument for needing the study now.

“This is not about whether or not we are good at balancing our books,” she said, adding the city finds a small number of efficiencies each year. “There is only so much you can cut.”