So what’s next? For a start, both levels of government should clean up their finances. Drummond thinks Miller and McGuinty could learn something from Martin and Chrétien about being upfront with citizens about the problems their governments face. “Chrétien and Martin didn’t just slash government spending out of the blue. They put it in context and brought the public into it. And by the time they did it, the public was actually egging them on to be more aggressive than they had intended to be.â€
Miller and McGuinty, Drummond says, need to tell their constituents that Toronto and Ontario are suffering from structural deficits that must urgently be fixed. By “structural deficit,†he means that, on a regular basis, neither government has enough revenues to pay for its programs. The city is not legally allowed to run an operating deficit, so it balances its budget by drawing on its reserves. Drummond thinks that city hall should cut spending as much as possible, then cover the remaining shortfall (and there will be a shortfall) by raising residential taxes, which are lower here than in comparable jurisdictions. He has great faith in the intelligence of ordinary people, and in their ability to handle the truth about the economy. They’ll back higher residential taxes, he believes, if someone shows them why higher taxes are necessary.
Most importantly, he says, if Toronto wants a thriving economy, it has to stop driving away business with its high corporate taxes. The city’s commercial and industrial rate is double the residential rate, which, in Drummond’s view, makes no sense. The rates are also higher than those in the outer suburbs, which is why business headquarters and jobs are moving to places like Markham.