Rob Ford’s first big victory at city council was an easy and a satisfying one. After a day of last-minute carping, his chastened opponents on council let him have his way and kill the unpopular car-registration tax. Only a lonely half dozen councillors voted nay. Even champions of the tax like former budget chief Shelley Carroll and proud “pinkos” like freshman Mike Layton decided not to vote against the mayor.
So be it. Killing the car tax was one of the central planks in Mr. Ford’s election platform. He swore again and again on the campaign trail that he would get rid of it. After winning such an impressive victory at the polls, he had every right to follow through and swiftly dispatch the tax. “It feels really good,” he said after the vote, “and the taxpayers of the city I’m sure are really thankful.”
No doubt they are. Poorly explained and sold, introduced in the midst of a recession, resented by motorists already annoyed over the “war on the car,” the tax was a red flag for voters who felt they were paying more and more to city hall while getting little in return. Even Joe Pantalone, David Miller’s deputy mayor, conceded during his own run for mayor that the tax had to go.
But amid all the exultation over the slaying of the tax, it is important to remember the downside. Eliminating the tax will take $64-million a year out of the city’s revenue stream. Mr. Ford has not given us any real idea how he intends to make up for that loss. When councillors queried him about it on Thursday, he batted their questions away as premature. Wait till the budget next year, he told them.
Meeting the press after the vote, he fell back on his old line about making up for tax cuts by squeezing waste out of the budget. “I’ve always said there’s a lot of money being squandered.” What he has not said is where it is being squandered and how he would cut taxes and spending without cutting services – a guarantee he repeated on Thursday.
It’s worth recalling that the car tax was not, in Mr. Ford’s phrase, a random “tax grab” by a greedy government. It was an attempt to solve a problem that has faced the city for more than a decade.
Unlike many big North American cities, which have sales taxes and even income taxes to rely on to pay for transit and other services, Toronto relies mainly on property taxes. That worked well enough when it was a smaller place with less expensive operations. It is much harder now that it has become a megacity, especially since the provincial government saddled it with responsibility for things like handing out welfare.
Recognizing that Toronto was in a fix, and unwilling to “upload” many of the obligations it had imposed on the city, at least at the pace the city wanted, the provincial government did the city the dubious favour of giving it new taxing powers under the City of Toronto Act. City Hall studied a number of options, from liquor and cigarette taxes to an entertainment tax. The tax on car registration was deemed the easiest and cheapest to collect. City Hall used the same new powers to enact a tax on land transfers.
The idea was not to soak the taxpayer for the fun of it but to diversify the city’s sources of revenue, lessening its reliance on the property tax and helping to get rid of a chronic budget shortfall that has touched half a billion dollars a year. Toronto was to become a more mature, more responsible level of government, which could find revenue of its own and stop begging Queen’s Park for alms every year.
So much for that. Having enacted a new tax only to kill it after just three years, Toronto has effectively ended its attempt to create a more sustainable formula for financial health. What mayor will dare to exercise the city’s new taxing powers again? With one crowd-pleasing gesture from Mr. Ford, the city’s new tax powers have been rendered useless. Mr. Ford promises to kill the land transfer tax next, and it brings in three times what the $60 car tax did.
So enjoy that 60 bucks, but temper your rejoicing with a thought for the city’s fiscal fix.