Executive committee votes in favour of asking province for power to introduce road tolls

The city’s executive committee has voted unanimously in favour of asking the province for the power to introduce road tolls and a new tax on hotels and short-term accommodations as a way to boost revenue.

The 13-person committee voted in favour of the new revenue tools following a marathon meeting on Thursday.

A motion was, however, not moved to approve a slew of other taxes and revenue tools contained in an exhaustive report by City Manager Peter Wallace.

Some of the other revenue tools that were proposed in the report included a $120 vehicle registration tax, an alcohol tax, a parking tax and even a municipal income tax.

Earlier in the day, Wallace said that it was “absolutely imperative” that council approve a host of new taxes and revenue tools or scrap some of its long-term capital projects.

Wallace made the comment during an hour-long presentation to the executive committee ahead of the debate over his report, which advocated that council move forward with as many as nine new taxes and revenue tools as a way to fund infrastructure. It should be noted that council could still revive many of the proposed revenue tools in Wallace’s report when they meet next week.

“Council has not been willing to offer a raise in property taxes or a significant reduction in the level of services. In the absence of those it will be absolutely imperative to find revenue from other services,” Wallace said earlier on Thursday. “You as city council persistently tell us to behave in a business-like fashion. Well this is a business-like, fiscally conservative approach. That is more strenuous advice then you usually get from me but it reflects the reality.”

Last week, Mayor Tory announced his support for a tax on hotels and short term accommodations and the introduction of road tolls along both the Gardiner Expressway and the Don Valley Parkway. At the time, Tory said that a $2 road toll on the Gardiner and DVP would raise an estimated $166 million a year for infrastructure while the hotel tax would raise another $20 million.

Addressing members of the city’s executive committee on Thursday, Wallace said that road tolls would be an “exciting” and necessary new revenue source for the city. Beyond that, Wallace said that the tolls are a fair tax that would effectively grow the city’s tax base by generating revenue from drivers who live outside the city. About 40 per cent of the users of the DVP and Gardiner are not Toronto taxpayers, according to city staff.

“It makes no sense to have individually and partly privately financed public transit and then fully subsidize the cost of the roads,” Wallace said. “There is no policy reason why we fully subsidize the costs of roads and partially privatize the costs of transit.”

In addition to approving road tolls and a hotel tax in principal, executive committee also voted in favour of a motion from Coun. Denzil Minnan-Wong to look at a possible per-year cap on the amount of money that City of Toronto residents would pay in tolls.

“Some residents may end up paying $1,000 a year,” Minnon-Wong said. “That is a lot of money.”

Wallace says revenue problems aren’t going to disappear

Wallace told executive committee earlier in the day that the city’s fiscal challenges have left it in a situation where even with record revenues from the municipal land transfer tax in 2016, there will still be a shortfall in the upcoming budget that will be in the millions of dollars.

Wallace said that it would therefore not be “rational or reasonable” to discuss the 2017 budget without also discussing the city’s long-term financial outlook and ways to address revenue deficiencies. It should be noted that the city also has about $33 billion in long-term capital expenditures that have been approved but not yet funded.

“The city has simply not put in place the governance mechanisms necessary for a municipality of this size or importance,” Wallace warned.

More than 30 speakers

More than 30 speakers addressed executive committee today, including members of the public and representatives from real estate associations, labour groups, environmental groups and community organizations.

Some, like Toronto Region Board of Trade President and CEO Janet De Silva, spoke out in favour of new revenue tools in general while others raised concerns about the impact that specific taxes or revenue tools would have on their industry.

Terry Mundell of the Greater Toronto Hotel Association said that the proposed tax on short-term accommodations, for one, would put the hotel industry at a competitive disadvantage and send some guests to hotels elsewhere in the GTA, where the average room already costs more than $75 less per night on average.

Representatives for the billboard industry, meanwhile, took issue with a proposal to hike the Third Party Sign Tax by 25 per cent and offered to open up their books to show how drastic of an impact it would have on their bottom line.

“If you are looking for a way to put us out of business raising the TPST would be a good start,” Steve Wolowich of Outfront Media said.

Councillors split on issue

In addition to the various deputants, numerous councilors also took the chance to speak on Thursday, many of whom expressing optimism around the fact that council is finally taking a hard look at the city’s revenue problems.

Coun. Joe Cressy said that rather than “searching for gravy” council is “growing up”

Coun. Shelley Carroll said that council should not only approve many of the taxes contained in Wallace’s report but should also consider hiking property taxes to bring them more closely in line with the rates taxpayers elsewhere in the GTA face.

“We are the only city in North America where moving into the core city actually saves you money on your taxes,” she said.

While Carroll, Cressy and a number of city councillors have said that the city needs to look to taxes and other revenue tools as a way to fund needed infrastructure, though, some councillors remain opposed to asking taxpayers for any more money.

Questioning Wallace on Thursday, Coun. Giorgio Mammoliti, who had placed a pair of black boxing gloves on his desk in a show of symbolism, called the report a “willy-nilly approach to taxes” and asked whether it makes sense to approve a host of new revenue tools and taxes without first taking a closer look at whether certain approved capital projects are truly necessary.

In response, Wallace said that council has in a way already approved the notion of introducing new revenue tools and taxes by consistently approving capital projects that it has no way of paying for.

“Either tell us to cut those expenditures that you have consistently approved or step up and pay for them,” Wallace said.

Mammoliti also singled out Tory’s road toll proposal on Thursday, saying that it would shift traffic onto local roads and cause “chaos” in some communities.

In a speech later in the day, Mammoliti then accused Tory of “pulling the wool over the taxpayers eyes” when it comes to revenue tools and taxes.

“I think this committee should take a long hard look at what was talked about in the last election and if you still feel comfortable gouging the hell out of Toronto then vote the way you are going to vote,” he said.

Report calls for revival of vehicle registration tax

The report before executive committee today suggested a number of taxes and revenue tools that could be put in place in time for the 2017 budget, including:

• A $120 vehicle registration tax ($75 million in estimated revenue)
• An increase to the municipal land transfer tax to mirror the land transfer tax rates charged by the province ($77 million in estimated revenue)
• The introduction of a maximum rebate that first-time home buyers would be able to receive on the land transfer tax ($5 to $9 million in estimated revenue).
• A dedicated property tax increase of five per cent that would be phased in over five years ($126 million in estimated revenue)

The report also outlines several other taxes and revenue tools that the city would not be able to introduce until 2018 or later due to the need for changes to provincial legislation.

That list includes a municipal income tax ($580 million to $926 million in estimated revenue) and a municipal sales tax ($125 million to $515 million in estimated revenue).

Wallace said that a municipal sales tax, in particular, would make “a tonne of sense” but he cautioned that there would be significant “administrative and policy complications” that make it more of a long-term goal. Similarly, he said that there would have to be “substantial, substantial work” undertaken in order to implement a municipal income tax, particularly in areas around compliance.

“We need to focus in on what we can realistically achieve at least over the next few years,” he said.

Though the taxes and revenue tools contained in the report are not necessarily intended to be adopted as a whole and could be approved individually, city council is being asked to request that the province move ahead with the “legislative and/or regulatory reforms” needed to implement many of the ideas.