Toronto city council approved a multiyear series of hikes to property taxes on Tuesday, money that is to be dedicated to funding transit and affordable housing.
The increases will continue through 2025, by which time the average homeowner will be paying an additional $326 annually. The money raised will be leveraged by the city to allow billions in new spending.
The higher tax drew support from both the left and right sides of the political spectrum during Tuesday’s debate, with many councillors praising Mayor John Tory for moving past his long-standing position that the property-tax base couldn’t be expected to fund major capital projects.
Councillor Gary Crawford – a Tory ally who, as Toronto’s budget chief, has defended the mayor’s pledge to keep property taxes low – spoke in favour of the increased levy. He acknowledged that the extra cost will be difficult for some residents but argued it is “the right thing to do to build up our city and protect our prosperity.”
After a few hours of debate the tax hike passed by a resounding 21-3 margin, with councillors Michael Ford, Stephen Holyday and Anthony Perruzza the only votes against it.
Mr. Tory announced two weeks ago he wanted to increase the city building fund, which is financed by a levy on the property tax. The levy is 1.5 per cent this year and had been designed to increase slowly over five years, topping out at 2.5 per cent in 2021.
After Tuesday’s vote, it will instead rise at a greater annual rate and over more years. It will now reach a maximum of 10.5 per cent in 2025.
The mayor argued that a number of circumstances this year forced the change in approach. As one example, he pointed to a report last January from the Toronto Transit Commission that identified approximately $33-billion in maintenance and equipment-replacement requirements, most of it unfunded.
“The question that quite fairly arose … was how are you going to pay?” Mr. Tory said to councillors. “Efficiencies alone cannot produce the amount of money that we need to fulfill our own obligations.”
A series of city managers have warned that Toronto is facing an increasingly dire financial situation, with huge bills looming and limited ways to raise money. Politicians have long complained that only 8 per cent of the tax revenues raised in the city remain in Toronto, which bears a disproportionate share of the region’s social costs.
An attempt by Mr. Tory to put tolls on a pair of highways that lie within Toronto boundaries and are owned by the municipality was blocked in 2017 by the province, which exercises broad authority over the city.
When he floated an increase to the city building fund, Mr. Tory framed it as the result of other ways of raising money being thwarted.
During Tuesday’s debate, Councillor Joe Cressy noted that per-capita spending by Toronto has been sagging in recent years, leading to cracks in the city’s services as staff and politicians tried to do more with less money.
He praised Mr. Tory as quarterback of the increased levy and also, continuing the football analogy, noted that council’s left-leaning members had acted as de facto blockers to create political space for the higher tax.
“Today, we turn a big corner … across the political spectrum,” Mr. Cressy said.