Could a municipal sales tax be the solution for Toronto’s financial woes?
Posted August 18, 2023 6:34 pm.
Last Updated August 18, 2023 6:44 pm.
As the City of Toronto considers how to fill an immediate $1.5 billion hole in its budget, reaction is flowing in on the list of revenue-generating options that are now being considered.
Amid soaring inflation, taxes may not be the most popular move but a one per cent sales tax is now being considered along with hiking existing revenue tools such as the land transfer tax on luxury homes and parking fees. Even then, the city says implementing those measures would only cover 40 per cent of its deficit.
At least one business group believes these measures will only drive people away.
“People will just go outside the City of Toronto to buy their goods,” says Jay Goldberg of the Canadian Taxpayers Federation. “A commercial parking tax, that’s going to hurt small businesses. I think looking for savings is the number one way to go.”
Political science professor Myer Seimiatycki believes a sales tax would be a big part of the solution.
“That is the single matter that would make the most difference in providing Toronto with the revenue it needs,” he tells CityNews. “This is standard practice in large American cities. There is nothing radical or pioneering about this.”
RELATED: Toronto proposing higher taxes, parking fees in face of massive shortfall
According to the staff report released Thursday, there will be consequences if Toronto does not start generating more money. The city says it will not be able to house more refugees, expand long-term care beds or tackle the housing crisis. Services would be cut and capital projects like transit expansion would be cancelled.
But the sales tax option needs provincial approval and it’s unclear where the Ford government stands.
“I think the city is being frank and being honest and I think the City of Toronto is saying we are ready to do our share,” says Seimiatycki. “It’s Premier Ford who has to make this decision and I think he runs the risk of being seen as abandoning Toronto.”
The provincial government did not respond directly to our questions about the possibility of a sales tax, telling CityNews it is working with Toronto on a third party review of their finances to ensure taxpayers receive maximum value for money and the best possible services.
The city’s executive committee will consider the report’s recommendations at a special meeting on August 24.
