Not enough realism about Toronto taxes
With a little more than a month to go before Toronto elects a new mayor June 26, now seems like a great time to check in on whether the leading candidates are offering real talk about the state of Toronto’s finances — or if they’re just blowing smoke in their bid to be the next person in charge of the Big Smoke. There’s a clear dividing line. After the pandemic increased the need for city services and caused TTC fare revenue to drop, Toronto city hall is facing a fiscal crisis with a $1.5-billion budget hole. Departments at city hall are already quietly planning for service reductions next year, as a contingency should extra funds not materialize.
But, even before the pandemic, Toronto’s financial situation was on unsteady ground, with several reports and audits warning that, unless the mayor and council bring in some additional revenue, city hall cannot afford the infrastructure and services Toronto’s growing population needs.
So I’ve got a real short fuse with candidates who are still out there ignoring this financial reality and offering warmed-over sound bites instead of actual plans.
And, in this election, there are way too many of them.
Let’s start with former police chief Mark Saunders, who last week made a pledge to “not vote for a property tax hike greater than the rate of inflation.” This amounts to a pledge for city hall to take a pay cut every year.
Property tax revenue, by design, does not automatically grow when properties are reassessed, so there’s no automatic windfall when home values go up. And because of an ongoing effort to reduce property tax rates for businesses — an effort that is, in part, prescribed in provincial legislation — the actual impact of an inflationary residential increase is that overall revenues from property taxes will not keep up with inflation.
Still, Saunders says he’ll make this work by rooting out wasteful programs, as if Toronto hasn’t had two successive conservative mayors — Rob Ford and John Tory — who took the same approach and couldn’t find the waste.
Alas, Saunders isn’t alone with this kind of budget talk. Brad Bradford has been sharpening his attacks against front-runner Olivia Chow, saying of late she will “jack everybody’s taxes” while he promises to keep residential taxes at or below inflation.
Bradford, a city councillor with experience on the city’s budget committee, has offered little explanation for how he plans to both fill the city’s budget gap and do things like hire 50 new police officers to patrol the TTC. (Allowing more competition in the city’s construction project bid process, like Bradford has promised, could reduce capital costs, but will do little to help fund the city’s operational needs.)
Let’s add former councillor Ana Bailão to this list, too. She’s also said she’ll keep residential property tax increases at or below the rate of inflation. She says she’ll achieve this in part by getting Queen’s Park to take ownership of the Gardiner and DVP. One small hiccup: Premier Doug Ford, the guy in charge at Queen’s Park, has said he doesn’t want to do this.
On the other side, Chow and city councillor Josh Matlow both deserve praise for thus far being realistic — and not dogmatic — about property taxes, and also proposing new revenue sources. Matlow especially has probably said the words “increase taxes” more than any mayoral candidate in the history of the city. Points for bravery.
I’ll reserve judgment on mayoral candidate and former MPP Mitzie Hunter. She’s promised a fully costed multi-year platform. I’m looking forward to seeing it.
You may disagree with the specifics of some of the proposals coming from left-leaning candidates, but at least they’re acknowledging reality.
Speaking of reality, here’s another dose of it: for the wealthy homeowner class, Toronto is an undertaxed city.
Affordability is always an important concern, but the city already has programs in place to shield seniors with low incomes and people with disabilities from tax increases. Eligibility could be expanded to protect others who can’t afford any increases.
Meanwhile, last year, a Mississauga resident with a $2-million home paid a $16,594 property tax bill. In Toronto, a resident with a $2-million home paid $12,638 — nearly $4,000 less.
I don’t have much sympathy for people in $2-million homes crying about affordability. I don’t think they’re living on the ragged edge of poverty. And there’s a growing number of them. A city estimate projects 92,963 households will be in that $2-million-plus club by 2026. Raising just their tax bills to match that of Mississauga’s would generate somewhere in the ballpark of $367 million a year.
Forgoing that kind of revenue would be one thing if the city’s service levels were acknowledged to be pretty good, but the one thing all candidates seem to agree on is that Toronto feels broken these days. In that light, “Will you jack property taxes?” is the wrong question. Let’s try something more realistic: “Isn’t it time everyone started paying their fair share?”