The following article appeared in the October 24 edition of the Guelph Mercury:
A day after Toronto City Council passed two new taxes in a bid to solve its budget woes, councillors in Guelph were reflecting on the landmark decision and what implications it may have on the fiscal autonomy of other municipalities in the future.
In two close votes Monday, Toronto city councillors approved the introduction of a land transfer tax and a personal vehicle ownership tax.
The municipal levies, which will be implemented next year, will generate $175 million in 2008, but still leaves Canada’s largest city with a budget shortfall of $239 million.
Guelph Councillor Maggie Laidlaw said Toronto’s tax move this week is a good interim step, but it certainly isn’t a solution to the budget crisis that is widespread across the province.
Like Toronto, Guelph is facing its own challenges in improving its transit service and infrastructure.
Recently released statistics from the Municipal Performance Measurement Program found that just half of Guelph’s roads met a standard of good or very good. The average Ontario city has about three-quarters of roads meeting that standard.
“The biggest problem municipalities have at the moment is the downloading,” Laidlaw said.
“We’re still suffering from the Harris downloading,” she said, referring to the transfer of provincial services to cities by the Conservative government in the 1990s.
Laidlaw said cities as large as Toronto should be able to be part of the tax-revenue stream. But for her, consumption taxes aren’t the path to sustainability.
“In general, I think we should be doing away with those taxes. We should have municipal income taxes,” she said.
The provincial government gave Canada’s largest city taxation powers earlier this year with legislation that put much of Toronto’s economic future into its own hands.
Unlike other Ontario cities, Toronto no longer needs to rely only on the property tax base.
It’s permitted to introduce new levies, with the exception of sales, income and capital tax.
Guelph Coun. Ian Findlay said while those powers are useful, creating a sustainable fiscal framework should ultimately be the responsibility of the provincial and federal governments.
He added that’s started with the McGuinty Liberals’ recent announcement to upload the Ontario Drug Benefit and the Ontario Disability Support Program.
“But really, the province has a reasonably significant surplus in the budget. The federal government has a healthy surplus in the budget. Cities are the backbone of the Canadian economy and we need to have the funding available to operate our cities.”
Coun. Karl Wettstein said it’s better for cities to work with the province to create a better fiscal framework.
“Personally, I think that’s a better way of going instead of municipalities getting involved in additional taxing,” he said. “I personally would like to see a deal with that side first.”
Stuart Green, a spokesperson for Toronto Mayor David Miller’s office, said other cities including Hamilton and Sarnia want taxation powers. Outside of the province, Montreal is also contemplating a move in that direction.
Green said while the ability is helpful, it’s not the solution.
“We’re still at the table (with the province) to talk about the uploading of other (costs),” he said.
Michael Ptolemy, manager of the tax and revenue policy branch for the Ministry of Municipal Affairs and Housing, said giving other municipalities taxation power would be a decision of the government and requires a review of the Municipal Act. No review is planned.
William Robson is president and CEO of the C.D. Howe Institute, a non-profit organization that “aims to improve Canadians’ standard of living by fostering sound economic and social policy,” according to its website.
He said Toronto’s move to introduce a vehicle tax and a land-transfer tax will act as a setback for other municipalities that want revenue-raising powers. Specifically, car owners should not be taxed universally, he said. A more sensible solution would be to introduce toll roads.
“We should be taxing things we don’t want like driving and congestion,” Robson said. “What they’ve done is utterly backwards.”