Toronto proposing higher taxes, parking fees in face of massive shortfall

Toronto officials are floating the idea of a municipal sales tax, higher land transfer taxes and additional fees as a means to help balance the books in the face of the city’s massive budget shortfall.

A new report released Thursday from the city manager and interim chief financial officer outlines options on how the city can increase revenue in the wake of major deficits stemming from the COVID-19 pandemic. City council is facing an immediate $1.5 billion hole and a $46.5 billion budget deficit over the next decade.

The recommendations in the report will be debated next week and include a commercial parking levy, a 911 levy, a higher municipal land transfer for properties worth over $3 million and a land transfer tax for foreign homebuyers.

City officials are also proposing an increase of the vacant homes tax from one to three per cent. The full list of recommendations can be found here.

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While diving into the details of the proposal on Thursday morning, Mayor Olivia Chow said the city would only be covering 40 per cent of its deficit if all the recommendations in the report were explored.

Officials say the remaining 60 per cent would require a new fiscal framework with the federal and provincial governments.

“It’s time for other orders of government to join us to build the kind of city we all deserve,” said Chow.

Chow said Toronto operates 10 long-term care facilities even though health services are a provincial and federal responsibility, and the city is housing increasing numbers of asylum seekers, even though immigration is a federal responsibility.

“We’re asking them to step up and work with us so that we could grow our economy,” she said.

“Because having a vibrant and affordable city means a strong Ontario and strong Canada.”

Chow says they also want to ask for a new municipal sales tax and re-negotiate fair contributions to critical services like transit, housing and shelter.

Budget Chief Shelley Carroll expanded on the idea of a municipal sales tax, alluding to a one per cent tax based on how much a resident spends.

“That’s why it’s the fairest way; you can’t do that with property tax. Property tax is not based on wealth,” Carroll says. “We’ve reached the point where we can no longer just rely on it.

“That one cent on the dollar, imagine the change it would make,” she added.

The city’s executive committee will consider the recommendations at a special meeting on August 24.