Taxes
What’s the right blend of commercial and residential property taxes? What other revenue streams are needed or possible for the City?
Setting the Agenda 2010
What's your vision for Toronto?
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November 17, 2009 at 4:53 pm |
There has to be a way to have people pay their fair share of use of services based on their impact. Example: people who drive into the city core from outlying areas require a whole host of services attention. How do we aportion shares of use?
November 20, 2009 at 10:34 am |
All the data points show that Toronto is now a net exporter of labour. In other words more residents from Toronto work in the 905 municipalities than the opposite.
The growth in the cores population is has far outstripped the anemic job growth. Furthermore looking at wards 20,27 and 28 combined (Downtown) the stats show an alarming trend. Between 1989 and 2004 these wards combined had lost 26,404 employment positions (Toronto employment survey). Between 1991 and 2001 the percentage of residents in these wards whom commuted outside of the city to work increased by 14.3%.
November 18, 2009 at 11:50 am |
Property tax is a regressive form of taxation unrelated to the current ability to pay of the rate payers. It should be scrapped and replaced with user-charges for the cost of services to properties, and a municipal income tax tied into the overall income tax system for other general revenue requirements. These measures combined with a bond-based financing facility for capital expenditures would relieve the crippling burden of property tax on many people, give the City much needed financial flexibility to make the long-term investments needed to bring itself from the infrastructural conditions of the 1950s (where we now are) into the 21st century; it could allow for reduction of housing rents as well.
November 20, 2009 at 10:44 am |
Joe, can you please tell us how much it cost to provide services to Toronto residents on a per household basis. Out side of any cost shared or mandated programs. Knowing what typical city expenses like police, fire, EMS, parks, waste management libraries and transportation, cost (in total not as a percentage of property tax) would shed some much needed clarity on this issue.
Before any recommendations can be made, what is needed is some honesty. Between 2002 and 2008 the relative value of the the non residential assessment base has declined by nearly 10%. This automatically forces a a shift in burden towards the residential class. Keep in mind that that a 10% loss in the value of the commercial / industrial property class translates into a far greater loss of revenue, as the tax rate is nearly 4x. Sadly the city has framed this occurrence as a positive as remarked by city manager Joe Pennachetti in the Post ” City manager Joe Pennachetti said this morning that the provincial assessments are helping the city accelerate its recalibration of property tax ratios, to increase the portion that comes from the residential sector to two-thirds and reduce the ratio contributed by business to one third”.
What is in fact a sign of trouble is spun to look like city policies are working faster than anticipated.
November 20, 2009 at 4:16 pm |
Deciding on taxation should start with a basic question: What are our values?
Can we prioritize what services are important to us?
Too often it becomes ‘I hate you, city. Your hands are in my pocket AGAIN!’
Once we know what is important to us, then we can assign levels of taxation that reflect and build on what we want to see.
Properly done, this exercise, that requires massive public consultation, would give cit bydget bureaucrats and deciders (council) a template on which to produce budgets that reflect the true priorities of citizens.
I speak of a proactive process. Not what is done now – a draft budget/statement and wringing hands about where to cut. Let’s decide where to BUILD first.
November 22, 2009 at 4:43 pm |
We have one of these “massive public consultations” every 4 years.
November 20, 2009 at 8:11 pm |
1. In an ideal world, property tax would be replaced with a municipal commercial and income tax. Property tax is a regressive form of taxation unrelated to the ability to pay. However property tax does have the vital virtue of providing a stable income for the city. I think the best overall solution is a) a lower property tax along with b) a modest municipal income tax, and c) the ability to bank surpluses in fat years to draw on in the lean years.
2. Few in the general public realize that many of poorest citizens pay a disproportionately high share of municipal taxes. That’s because rental properties are taxed at a commercial rate, about 3 times the residential rate, and that tax rate is passed right on to the renters through their rent. And in Toronto, renters are overwhelmingly low income folk. It should be a law that the municipal tax be shown separately on the rental contracts. If this simple change were implemented, I think it wouldn’t be long before there was overwhelming pressure to reform this most inequitable system.
3. I think the current administration is on the right track with respect to commercial tax rates. Toronto currently has the lowest residential tax rates in the GTA (not necessarily the lowest taxes, since on average our properties are more expensive). But our commercial tax rates at the highest in the GTA. This is a significant factor in the exodus of jobs from the city. But over the last 6 or so years, the city has being gradually lowering the commercial rate and gradually raising the residential rate, so as to put us in line with our neighbouring municipalities.
4. Ever notice how some prime real estate just sits as a parking lot, blighting the urban landscape for decades? Or the LCBO can plan to build a one-story outlet at King and Spadina? Our current tax system actually encourages this behaviour, since tax is based mostly on the value of the building, not the lot. By simply reversing the proportion, so the lot is taxed more heavily, developers have a real incentive to put their land to its best use. This change-over should be revenue nutral on appropriately developed properties, and should be implemented by gradually changing the ratio over a decade or two so that people have time to change their behaviour.
5. In general, Torontonians should be paying more municipal tax. We cannot fund the city that we want and need without doing so.
6. The three levels of government should get out of each other’s business. Cities shouldn’t have to rely on federal and provincial handouts to build and maintain their infrastructure. But likewise, cities need the tax raising powers, including sales, business and income tax, now jealously guarded by the higher levels of government. I believe that only then can we stop wasting time on endless political manouvering, and piece-meal projects, and build a coheasive, sustainable infrastructure.
November 23, 2009 at 3:27 am |
Is it time to re-raise the debate over some form of road toll/congestion tax for downtown vehicles during rush hour?
November 24, 2009 at 12:21 pm |
Absolutely!
Road tolls/congestion taxes would help many issues listed on this website.
By making it more expensive for people to drive, we move closer to the true cost of using vehicles. This gets people onto public transit, which then lowers the cost for riders. This reduces congestion and CO2 emissions, maintenance costs on the roads, sprawl…
David Miller has resisted this idea because it would be unfair to folks in places such as Scarborough or Etobicoke where our transit is not nearly as comprehensive, or fast, as in the core.
I agree. However, we should be charging people to enter the city from the suburbs in their vehicles. The money raised from these tolls (which could begin small – 50cents, for example, raising 25 cents or 50 cents per year for some time while people adjust) could then pay for transit capital project that expands our network, particularly of subways, to the outer reaches of the city and even into the nearby suburbs (Pickering, Markham, Richmond Hill, Vaughan, Brampton, Miss).
TTC riders should no longer have to pay increased fares because the city won’t raise revenues by other means, meanwhile suburban commuters use our infrastructure and services without paying for it every day.
Only once we have a quick and comprehensive transit system, which at this point is still many years away, can we implement a congestion tax in the core. It’s just not fair to low income people who work service jobs (i.e. Tim Horton’s) on Bay St. Clearly these people can’t buy a condo on the Yonge line, they need to live further out and cannot afford congestion taxes. That would squeeze them out of a job AND a place to live!
This is an essential conversation, either way. I think it’s one of the best ways to address the city’s capital needs, to clear the roads of excessive car use, clean up the air, get people on transit, and get the suburbanites to chip in their fair share.