Toronto Mayor John Tory wants to boost taxes on property owners in an effort to raise billions for transit and affordable housing.
At a speech Wednesday morning, Mr. Tory proposed increasing and extending an existing levy on property taxes called the city-building fund, which would rise to 10.5 per cent in 2025 from 1.5 per cent this year. This push for a bigger levy comes after years of Mr. Tory insisting that homeowners could not be asked to bear the massive bills for capital projects, and two election campaigns in which he ran on restricting property tax increases.
Mr. Tory told an audience at the Canadian Club that other ways of Toronto raising money had been thwarted, including the province vetoing his attempt to put tolls on a pair of city-owned highways. Raising the city-building levy was “the only way, given the limited current tools available to us,” he said, according to his prepared remarks.
The city-building tax was introduced by Mr. Tory, originally as a 0.5-per-cent levy on property taxes. Council supported the fund to start in 2017 and approved increasing it by 0.5 percentage points annually, to a total levy of 2.5 per cent in 2021.
In his speech, the mayor proposed raising the city-building levy by 1.5 percentage points next year – instead of by 0.5 percentage points – and each subsequent year through 2025, to a total levy on property taxes of 10.5 per cent.
According to his office, each 1.5-percentage-point increase in the city-building levy would cost the average household around $43 and the money raised by the levy could fund $6.6-billion of spending by the city.
“If we don’t make these investments, one thing I can promise people for sure is that this city will not be able to maintain the incredible success we’ve had over the last five or so years as a magnet for investment and smart people,” Mr. Tory told reporters.
“The city will start to strangle itself, on things like congestion, we won’t achieve our environmental objectives and people will not have [an] adequate, affordable place to live.”
The Toronto Region Board of Trade praised the move to raise the levy as “a responsible and necessary step,” but an official with the Canadian Taxpayers Federation denounced it as "not what he campaigned on.”
"The mayor can call this whatever he wants, but … his proposal would force Torontonians to pay the government more money, which sounds an awful lot like a tax,” Jasmine Pickel, interim Ontario director of the anti-tax group, said in an e-mailed statement.
The increased levy must be approved by city council, where it should pass handily. Councillors on the left have long clamoured for more funding for these priorities while many of those on the right are allied with the mayor, who determines what roles they play on city committees.
“Ensuring this is dedicated funding, unlike our general property tax revenue, will protect it through this term and beyond so that it is collected and spent for one purpose and one purpose only – building up and investing in our transit and housing infrastructure,” the mayor promised in his speech.
There have long been calls for the city to adopt new methods of raising revenue, going back to a report this decade by Anne Golden, former president of the Conference Board of Canada. Such calls were usually rebuffed by city council or rejected by the provincial government.
Mr. Tory broke the stasis when he got council to pass the city-building fund, which at the time was earmarked for funding transit and housing. But new bills kept piling up.
In return for taking over the Scarborough subway extension and other transit projects, the province insisted the city dedicate the money it would have spent on those projects to transit maintenance and repair.