Mayor John Tory is proposing a significant tax hike in order to fund billions of dollars in investments in transit and housing, a move that he says is necessary to ensure the city continues to prosper and doesn’t begin to “strangle itself” amid continued growth.

During a speech to the Canadian Club on Wednesday morning, Tory made the case for hiking the annual levy for the existing city building fund as a way to pay for needed infrastructure.

If supported by council, Tory’s plan would see the levy increased by a cumulative nine per cent over the next six years, beginning with a 1.5 per cent increase in 2020.

The increase would in turn help the city raise $6.6 billion that could be put directly towards affordable housing and TTC state of good repair work.

“If we don’t make these investments the one thing I can promise people for sure is that this city will not be able to maintain the incredible success we have had over the last five or so years as a magnet for investment and smart people,” Tory told reporters following the speech. “The city will start to strangle itself on things like congestion, we won’t achieve our environmental objectives and people won’t have an adequate and affordable place to live. Those are results for the city that I am not willing to accept.”

The city building levy was first introduced in 2017 and was supposed to be increased by 0.5 per cent each year until 2021 when it would max out at a cumulative 2.5 per cent.

Tory, however, now wants council to approve additional increases of 1 per cent in 2020 and 2021 and 1.5 per cent in 2022, 2023, 2024 and 2025. That will add up to a cumulative increase of 10.5 per cent, rather than the 2.5 per cent increase that was proposed when the city building fund was first introduced.

During his address to the Canadian Club, Tory said that the city building levy is really the “only way” that Toronto can raise the “billions of dollars we need to invest in the future of this city.”

A 1.5 per cent increase would cost the average homeowner an extra $43 a year but once fully phased in the cost to taxpayers will be much higher, likely in the hundreds of dollars. .

“When you are running a government you don’t want to announce an alteration to taxes that cause people to have to make an additional contribution but you do what you think is right and in this case I think what I have found across the council is a general understanding that you can’t stand up and say to the other governments that we need billions from you without doing something yourself,” Tory told reporters.

Tory had promised to keep tax hikes to around the rate of inflation

Tory campaigned on keeping any property tax increases to around the rate of inflation, going so far as to classify the most recent election as a choice between a “mayor who will continue to keep property taxes low” and one who may allow taxes to “soar.”

The first major announcement he made during the 2018 election was, in fact, a commitment to keep property tax rates to around the rate of inflation.

At the time, he told reporters that “you can keep taxes low and make new investments in bigger and better services for people because we have done it for the last four years.”

His apparent pivot, however, will mean that homeowners will regularly face total tax increases that exceed the rate of inflation for the foreseeable future.

For his part, Tory contended that the increase is “not something new and is really just the extension” of an existing levy. His office has also said that his campaign promises only applied to the property tax rate and not the city building levy, which is collected through property taxes.

“The operating budget that will be passed by council in February or so, certainly the one I will vote for, will have the property tax increase at the rate of inflation but we have introduced several years ago and will continue with a special levy to build transit and housing,” Tory said during a subsequent interview with CP24 on Wednesday afternoon.

Money will go to transit and housing

The announcement of the increase to the city building levy comes one day after Tory announced a plan to approve 40,000 new affordable rental units over the next decade, about half of which would be paid for with contributions from the federal and provincial governments.

It also comes on the heels of a fire that broke out in the subway tunnel near Dundas West Station on Monday morning, disrupting the commute of thousands of Torontonians.

Speaking with CP24, Tory said that fire was a “perfect example” of the importance of making a significant investment in transit now.

“As best as they know right now the fire was caused by wooden covers being over a lot of the electrical equipment in the tunnels and they are sort of partway through a program of replacing those with fiberglass that won’t burn. It is a perfect example of what this money is going to go to,” he said. “If we want to make sure that we don’t have that kind of thing happening that affects the reliability of the service than we are going to have to pay for it.”

‘Long overdue’

Tory said that he has already spoken to a number of colleagues on council and has found that they are generally supportive of his plan.

That support likely includes several members of council’s left-leaning faction, who have typically not supported Tory on taxation.

In a message posted to Twitter on Wednesday morning, Toronto Centre Coun. Kristyn Wong-Tam called the idea “long overdue” and applauded Tory for changing course “after years of holding taxes at the rate of inflation and watching infrastructure, housing and TTC crumble.”

Parkdale-High Park Coun. Gord Perks also weighed in, calling the increase “the right thing to do.”

Perks, however, pointed out that a number of members of council have been lobbying for higher tax increases to fund infrastructure for years and have largely been dismissed by Tory.

“If you have ever told anyone that you would rather pay more taxes than watch the city decline, today is your victory. Be proud, you've changed the way the mayor thinks and put the city on a better path. Now, on to the next struggle,” he wrote.

In a statement issued on Wednesday afternoon, the Toronto Region Board of Trade said that it sees an increase to the city building levy “as a responsible and necessary step in light of the City’s urgent need to address transit repair, affordable housing and social housing repair which for too long were left unattended by previous governments.”