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Toronto Mayor John Tory speaks during the debate over new taxi regulations in Toronto last week.Mark Blinch/Reuters

Toronto Mayor John Tory is proposing a new .5 per cent annual tax to help raise money for the city's ambitious transit and housing plans.

In a speech Wednesday afternoon at the Economic Club of Canada in Toronto, Mr. Tory outlined a five-year plan starting in 2017 that would require Toronto home owners to pay the extra tax on top of the existing property tax.

The mayor's office said the increase beginning in 2017 would amount to approximately $13 in the first year. The amount would increase each year thereafter.

"For that amount – less than a trip to the movies – we can add tens of millions of dollars per year to the City Building Fund," he said, according to a transcript of his speech.

"And we will be able to pay for transit projects across Toronto, just as we are all working together to help improve transit in Scarborough," he added.

Toronto taxpayers already pay a Scarborough transit tax to cover the ongoing subway extension project. During the Toronto mayoral campaign, Mr. Tory promised to keep property tax increases at or below the rate of inflation.

The new tax proposed by Mr. Tory on Wednesday casts doubt on his ability to keep that pledge.

Mr. Tory also pledged during the campaign, in an interview with Toronto Star, not to create a new tax to raise money to fund infrastructure projects.

The City Building Fund would be a dedicated source of funding to help Mr. Tory meet his affordable housing and transit commitments made during least year's election.

The Toronto Region Board of Trade welcomed the creation of a City Building Fund for transit and housing.

"Today's announcement is a step in the right direction, but as he noted the City must find ways to grow this fund," said the board's president and CEO, Jan De Silva The board estimates that there are $17.9-billion in unfunded infrastructure projects that include transit, improving the waterfront, and flood protection.

Ms. De Silva also praised Mr. Tory's focus on improving and building infrastructure.

"This is vital to our economic foundation and long-term prosperity and must continue to be a priority. Getting goods to market and people to jobs has been our members' top priority for many years," she said.

The plan has to be put to Toronto city council for approval.

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