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City council voted 26-19 to endorse Mayor David Miller's two controversial new taxes - one on land transfers and the other on vehicle registrations - drawing to a close a months-long political drama at city hall.

Yesterday's vote was crucial to Mr. Miller's future political clout, after he suffered an unexpected defeat in July when council opted to defer the measures, forcing him to order unpopular budget cuts.

After a daylong debate and weeks of intense lobbying, councillors supported a compromise package, endorsed by prominent developers and the Toronto Board of Trade. The deal lessened the impact of the up to 2-per-cent land-transfer tax, the more controversial of the two measures.

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But the compromises, and the delay caused by the original deferral, mean the revenues the taxes will generate in 2008 - estimated yesterday by the city's treasurer to be about $175-million - fall even further shy of filling the projected $414-million budget gap the city says it faces next year.

The mayor, who, in a move designed to appeal to fence-sitting councillors, agreed last week to convene a blue-ribbon panel to look for ways to reduce the city's costs, denied yesterday's development was a vote of confidence in him.

"I think it's a vote of confidence in Toronto," Mr. Miller told reporters. " ... I think what council did was vote for the future of this city in a way that says we've got confidence that our city is going to succeed, so we're prepared to say something very hard to people: Please pay a bit more."

About 200 people packed the public gallery when the vote was taken just before 7 p.m., and more were in the chamber as debate began. But unlike in July, most of the audience appeared to be supporters of the tax proposals organized by a coalition of labour unions and arts groups. Many, including the city's union leaders, wore yellow scarves to show their support.

Lobbyists for the Toronto Real Estate Board, which waged a vocal campaign against the taxes, as well as some real estate agents and citizens opposed to the taxes, were on hand as well, but their numbers dwindled as the day wore on. As the mayor rose to speak in the morning, he was heckled by a realtor who was then escorted out by security.

Case Ootes (Ward 29, Toronto-Danforth), who was among the group of right-leaning councillors leading opposition to the taxes, argued that while the vote didn't go their way, his side had defeated the mayor in the battle for public opinion: "He won the vote, but he lost the city."

At the lunch break, Councillor Anthony Perruzza (Ward 8, York West) told reporters that he still had an "open mind" on the mayor's tax proposals. In the debate's dying minutes, he finally announced he was supporting the land-transfer tax, but not the vehicle tax. Councillor Maria Augimeri (Ward 9, York Centre) voted the same way.

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Councillor Peter Milczyn (Ward 5, Etobicoke-Lakeshore) supported the vehicle tax but voted against the land-transfer tax.

After the taxes passed, the crowd of Miller supporters broke into sustained applause - and Mr. Miller strode over to Councillor Mark Grimes (Ward 6, Etobicoke-Lakeshore) and shook his hand. Mr. Grimes, a low-profile councillor and not a member of the mayor's inner circle, helped craft the 11th-hour compromise that won over centrist councillors and key business leaders.

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The new taxes

Land Transfer Tax

The formula

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The buyer pays a tax based on the purchase amount, using a scale similar to the existing provincial land transfer tax:

0.5 per cent on the first $55,000

1 per cent on the value between $55,000 and $400,000

2 per cent on the amount greater than $400,000

Examples

Purchase price Proposed tax
$400,000 $3,725
$650,000 $8,725

Exemptions

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First-time buyers of new or resale homes receive rebates of up to $3,725, meaning those buying homes worth up to $400,000 pay nothing.

Sale agreements signed before Dec. 31, 2007.

MOTOR VEHICLE TAX

Toronto residents pay a $60 additional charge on the current $74 provincial fee for registering or renewing registration for a motor vehicle.

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A taxing vote

City councillors voted 26-19 in favour of Mayor David Miller's land-transfer tax yesterday.

Yes

Maria Augimeri (York Centre)*

Sandra Bussin

(Beaches-East York)

Shelley Carroll

(Don Valley East)

Raymond Cho

(Scarborough-Rouge River)

Janet Davis (Beaches-East York)

Glenn De Baeremaeker

(Scarborough Centre)

Frank Di Giorgio

(York South-Weston)

John Filion (Willowdale)

Paula Fletcher

(Toronto-Danforth)

Adam Giambrone (Davenport)

Mark Grimes

(Etobicoke-Lakeshore)

Suzan Hall (Etobicoke North)

Adrian Heaps

(Scarborough Southwest)

Norm Kelly

(Scarborough-Agincourt)

Gloria Lindsay Luby

(Etobicoke Centre)

Giorgio Mammoliti (York West)

Pam McConnell

(Toronto Centre-Rosedale)

Joe Mihevc (St. Paul's)

Mayor David Miller

Howard Moscoe

(Eglinton-Lawrence)

Joe Pantalone (Trinity Spadina)

Gord Perks (Parkdale-High Park)

Anthony Perruzza (York West)*

Kyle Rae

(Toronto Centre-Rosedale)

Bill Saundercook

(Parkdale-High Park)

Adam Vaughan

(Trinity Spadina) No

Paul Ainslie (Scarborough East)

Brian Ashton

(Scarborough Southwest)

Mike Del Grande

(Scarborough-Agincourt)

Mike Feldman (York Centre)

Rob Ford (Etobicoke North)

Doug Holyday

(Etobicoke Centre)

Cliff Jenkins (Don Valley West)

Chin Lee

(Scarborough-Rouge River)

Peter Milczyn

(Etobicoke-Lakeshore)*

Denzil Minnan-Wong

(Don Valley East)

Ron Moeser (Scarborough East)

Frances Nunziata

(York South-Weston)

Case Ootes (Toronto-Danforth)

Cesar Palacio (Davenport)

John Parker (Don Valley West)

David Shiner (Willowdale)

Karen Stintz

(Eglinton-Lawrence)

Michael Thompson

(Scarborough Centre)

Michael Walker (St. Paul's)

* Ms. Augimeri and Mr. Perruzza voted against the mayor's motor vehicle tax, which also passed council yesterday, by a vote of 25-20. Mr. Milczyn opposed the land-transfer tax but voted in favour of the motor vehicle tax.

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