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U of T experts on why Tory's tax plan is not enough

It's a good start but more revenue is required for infrastructure, researchers say

“We have dramatic needs for infrastructure investment,” Matti Siemiatycki says (photo by Ashton Pal via Flickr)

Toronto Mayor John Tory’s plan to introduce a property tax dedicated to public transit and social housing infrastructure is a good start, University of Toronto experts say – but just a start.

Tory announced on Nov. 2 that he will be seeking an annual “city building” tax of 0.5 per cent added to property tax bills, for transit and housing. It would start in 2017 and add about $13 to the average property tax bill of $2,654.50.

Enid Slack, director of the Institute on Municipal Finance and Government at U of T’s Munk School of Global Affairs and one of Canada’s foremost experts in municipal finance, said Tory’s plan “shows that the city recognizes it has a revenue problem,” not a spending problem.

The Institute did a study before the last municipal election in 2014 on the fiscal health of problems of Toronto that showed it has not been increasing property taxes very rapidly, and has huge infrastructure needs.

“Increasing the property tax is a good start,” Slack said, “but it may not be enough. It’s not a lot of money coming in, so I think they may still have to think about other things to do, perhaps increasing borrowing.” 

Dedicating the tax increase to transit and infrastructure for housing “makes it a bit more palatable for taxpayers,” she said, noting that such infrastructure lasts for 30 or 40 years and citizens can reap the benefits at the same time the city is paying back loans over the same period.

Matti Siemiatycki, an associate professor of geography who focuses on municipal infrastructure and transit, echoed Slack’s views. 

Siemiatycki pointed to a report from city manager Peter Wallace this week that City Council has planned $23 billion in capital projects without identifying any sources of funding.  

“We have dramatic needs for infrastructure investment,” Siemiatycki said.

Tory’s plan “is the beginning of a recognition that we have to come up with ways to pay for all of this. If you want to have it, you have to pay for it,” Siematycki said, suggesting a “variety of other” taxes could be needed.

Borrowing for infrastructure projects is a good thing, he said, as long as the right projects are chosen. They should be ones that “drive the economic engine and create jobs.”

The report released by the institute last year made three basic points: Toronto’s residential property tax is relatively low compared to other cities and growing slowly, and actually declining in real terms; the city can’t manage its infrastructure deficit without new revenue tools and Toronto’s debt load “is modest and manageable for a growing city.”

Slack said that Tory’s plan shows the city is starting to address the problems outlined in the report.

(See the original of the photo above at Flickr)