Council passes new taxes
Is Mayor David Miller finished with new taxes and fees, or is he just getting started?
Despite ushering in two new taxes, the city will still be short about $239M, leaving Miller to weigh large property tax hike and lobby the province again
Oct 23, 2007 04:30 AM
Jim Byers
CITY HALL BUREAU CHIEF
Mayor David Miller had just finished basking in the glory of a hard-fought victory when his budget chief delivered the tough news.
Toronto city council last night okayed new taxes on land transfers and personal vehicles. But Councillor Shelley Carroll, who oversees an annual budget that was set at $7.8 billion last year and is larger than most provinces, said the hard work is just beginning.
"We've made the leap now from a city that's still mired in basically whining about its amalgamation to developing the formula that successful cities enjoy," she said. "We came of age today, and we've asked a lot of our citizens. But the hard work is just beginning."
Miller suffered a blow in July when council voted to defer consideration of both taxes. The interim period was filled with headlines about community centre and library closings and delayed opening of ice rinks, the latter move that was avoided only when MasterCard came to the rescue with a $160,000 bailout.
Miller worked hard to get the new taxes approved, lobbying councillors right up until the time of the vote. A "no" vote would've been widely seen as a lack of confidence in the leadership of a man who handily won last fall's municipal election. But in the end, council fell in line by a 26-19 margin on the land transfer tax and approved a vehicle registry tax by a 25-20 tally.
"It was a tough decision to impose new taxes on the people of Toronto but it's an essential decision if we want to do our part in creating the kind of city that Torontonians want," Miller said.
Council was told the taxes were originally supposed to raise $356 million a year, which would go a long way to helping the city deal with a revenue shortfall of about $415 million for 2008. But because of delays in implementing both taxes and exemptions and rebates in the land transfer tax, the city likely will get only $175 million next year, staff said.
That means a revenue shortfall of perhaps $239 million for next year's budget, and that translates to a property tax hike next spring of 10 per cent to 12 per cent.
Miller said he'll do his best to wrestle that down to something in the 3 per cent range but said it will be very difficult.
The mayor said he'll soon visit with Premier Dalton McGuinty to talk about uploading social service costs and helping pay operating costs for the TTC. But provincial politicians yesterday said they've already done a lot for Toronto and can't promise when future help might come.
In addition to seeking help from elsewhere, Miller said he'll consider recommendations from a panel he appointed last week to look at city finances and that compensation for city management will be studied.
Councillor Mark Grimes, whose behind-the-scenes work helped forge a modified land transfer tax proposal that won the support of major developers and the Toronto Board of Trade, said he's "adamantly opposed" to new taxes but felt his compromise was the best thing for the city.
"At the end of the day I did what I thought was right and that's all I can do," he said.
Tax supporters packed the council chambers and wore scarves of bright yellow, one of the colours used by Miller in his election campaign last year. One man was removed from chambers after heckling Miller during his opening speech. But the day also featured some polished rhetoric of the sort not often heard at Toronto council.
"The sterility of the debate over taxes, pro or con, leaves me wondering why such an assemblage of bright people, backed up by a large and mostly non-partisan public service, can't generate better ideas than the blunt instruments we have before us," said Councillor Denzil Minnan-Wong.
Minnan-Wong said the tax increase should lead to "visible improvements" in public service.
"If Torontonians, when they see taxes, see only payment but no improvement, they will rightly feel robbed."
Tax opponents said the July deferral was good because it forced Miller to bring in the spending review panel and that they were able to reduce the land transfer tax amounts for some properties.
Councillor Maria Augimeri, who wavered back and forth on the land transfer tax before voting "yes" at council (she opposed the vehicle registry tax), said she and other councillors who supported tax freezes under former Mayor Mel Lastman were partly to blame for the city's fiscal mess.
"I don't think we looked deeply enough into the future," she said. "And every time we dug into reserves, we really were digging ourselves into a larger and larger hole."
With files from Donovan Vincent, John Spears, Paul Moloney and Kerry Gillespie