Opportunities lost limiting property tax increases
Timed for release just as Toronto councillors are about to begin the
annual dance around the city budget, Social Planning Toronto’s latest report is at least timely.
It says what most observers know: a decade of self-imposed budgetary restraint that limited property tax increases at or below the rate of inflation has severely hamstrung the city’s ability to fulfil its calling as Canada’s largest and most diverse city. So, raise property taxes.
Whether it’s housing or transportation or child care, the reality is the same: Demands and needs outstrip the funding provided. And the result is gggreater disparity between the poor and t those better off, failure to meet pro- gressive standards and targets, and missed opportunities.
For example, compared to a decade ago, Toronto has more child-care spaces, and more subsidized spaces. But only three wards have as many as the city standards call for (50 per cent of the kids in the ward having access to a space in a child-care centre). And the nnumber of parents waiting for a sub- sidized space, numbering 17,282, has increased marginally over 10 years. In total, Toronto has the most expensive infant and preschool child care fees in the country. Not surprisingly, a city
study in 2016 showed that child care was ”unaffordable” for three in four parents.
Transit is another good example of a city that can’t be criticized as a deadbeat parent, but one that doesn’t quite meet the clear and obvious daily needs. While the provincial government has stopped contributing to the operating costs of the Toronto Transit Commission, the city has increased its contributions over the past decade. But, in almost every case, where a transit dollar is needed, the city provides just cents on the dollar. And over time, as the population increases and the needs pile up, and property taxes fail to rise proportionately, individuals are left on their own to bear the brunt of life in the big city.
Yes, Toronto is giving more to the TTC today than it was 10 years ago. But TTC costs are higher than the subsidy, so transit fares continue to rise. And the TTC is now the least subsidized major transit system in North America — meaning the standard TTC fare covers more of the cost of your ride than the transit fares do elsewhere.
Of course, a 1 per cent property tax hike for transit could do a lot to ease that burden, but city councillors are loathe to push such a solution transparently and openly.
“Years of austerity budgets illustrate the point; years of doing more with less have left us with deepening challenges, widening inequities, and mounting crises in our communities,” says the Social Planning Toronto report.
“For the past decade, Toronto City Council has made the political choice to keep property taxes low — the lowest rate in the GTA, Hamilton, and
Ottawa — and to reject other options to raise revenues. That choice has come at a cost to our city. It has starved our city of the necessary resources to create affordable housing, to end homelessness, to improve the public transit system, to increase access to high quality and affordable child care, to address pedestrian and cyclist safety, and to pay for the critical public services our communities rely upon.”
The study points out that, adjusted for inflation and population growth, city of Toronto per capita spending has declined over the decade.
That’s correct, but not as simple as it sounds. In fact, our history shows that property tax increases may not be as politically toxic as the political class argues. And that our residents don’t revolt when faced with “taxes” assessed to pay for city services.
Since amalgamation in 1998, Toronto’s mayors have bought into the principle of property tax increases at or below the level of inflation. Megacity Mel Lastman started it with tax freezes in the first two years and a tiny hike in year three. His next term reflected small hikes. David Miller succeeded Mel and maintained the mantra of inflationary increases.
If that’s all Miller did, we would be in serious fiscal trouble today. He didn’t increase property taxes as much as he should have, but he implemented the vehicle registration tax — worth about $64 million a year — and the land transfer tax that has proven to be the city-saviour, netting hundreds of millions per year. Rob Ford would become mayor and kill the vehicle tax but attempts to end the land transfer tax have always failed. Ford also assessed a special tax for subways, a hike that we’ll be paying for more than 30 years, and tax room that Tory is using this year to create a city building fund that will cost the average homeowner $43 a year for six years and allow the city to borrow $6.6 billion for transit and housing.
So, while our politicians argue that our citizens won’t tolerate property tax hikes, the same politicians impose other taxes to fill the room — be they a land transfer tax or a vehicle tax or a city building tax.
They also employ another strategy that effectively hides the tax increase. Miller took waste management off the property tax bill and began charging residents for waste disposal. The disposal fee is not presented as a tax, allowing city hall to brag about property tax hikes staying at the rate of inflation while bumping up the amount each homeowner pays.
Meanwhile, in a confusing mélange of motions, the very same councillors vote against tolling on the Gardiner Expressway and the Don Valley Parkway to help pay for transit costs.
Social Planning Toronto recommends the city end the games and raise property taxes to cover the costs of a burgeoning city and end the decades of austerity. In a year when Mayor John Tory is poised to secure city council backing for a special tax to pay for transit and housing, the recommendations are likely dead on arrival.
But keep watching. City hall will find a way to deliver at least some of that tax revenue by using a more palatable vehicle than the transparent, annual property tax bill.
In other words, everyone knows the money is needed. How it is extracted, and when, is the issue.