Toronto needs to find new revenue sources

In Ontario cities can’t run a deficit. Unlike the provincial and federal governments Toronto simply has to balance our budget every year.

While our costs grow due to inflation, salary increases and service improvements, our revenues struggle to keep up.

To balance the city’s budget we always start by taking a hard look at what we spend. I know it is now clichéd to talk about ‘gravy’, but there remain opportunities to save money simply by doing things smarter.

Looking for savings will help us balance the budget, but we can’t build social housing, expand transit or offer more childcare spaces by cost cutting alone. Toronto has a revenue problem.

The city is extremely limited in its powers to raise money. Again, unlike the provincial or federal governments, councillors can’t just dream up a new tax and watch the money roll in.

To put the city on better financial footing and to provide the investments we need in transit and housing, we have begun to explore revenue tools for the city to consider levying. Here are some of the taxes that city council will consider this fall:

Alcohol Tax

  • Potential revenue: $21 to 151 million

Toronto has the authority to levy a tax on alcohol. Implementing it would be a challenge however as the city doesn’t have any infrastructure or experience with a sales-based tax (outside of the municipal land transfer tax). Exactly what percent of tax to charge, how much it would cost to administer, and the impact on businesses would need to be determined.

Tobacco Tax

  • Potential Revenue: $5 to 46 million

Like the alcohol tax, taxing the sale of cigarettes would be a so-called ‘sin’ tax on consumers. The threat of residents purchasing their tobacco outside of the city borders could potentially reduce the amount the city could raise from this tax. To administer this tax the city would need to hire dozens of staff to process payments.

Municipal Income Tax

  • Potential Revenue: $145 to 926 million

There are two ways that the City of Toronto could charge income tax: to businesses or to individuals. Taxing either business income or personal income would require permission from the province, a significant delay. The down sides of any locally delineated income tax is the potential loss of jobs and people fleeing Toronto to avoiding paying this tax.

Parking Levy

  • Potential revenue: $171 to 535 million

Charging a daily fee to the owners of parking spots could be implemented relatively quickly and easily. Whether to charge the levy only to surface parking lots and not underground, or only for paid parking spots and not free parking would need to be determined.

One of the benefits of this revenue tool is that it would encourage owners of some large surface lots to redevelop, reducing water runoff and the urban heat island. A similar tax is levied in Montreal, Vancouver, Pittsburgh and Los Angeles.

Hotel Tax

  • Potential Revenue: $21 to 126 million

Many cities across the world charge a tax each night a hotel room is rented. The relatively small number of hotels and motels makes this more easily implemented than some other revenue tools. Another benefit is that citizens of Toronto will not pay the tax. The downsides of this tool is that it could make a city already expensive to visit even pricier, discouraging tourists from contributing to our economy.

Let me know what you think about these revenue tools or anything else happening at City Hall. Call 416-392-1376 or email councillor_mcmahon@toronto.ca.


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12 comments

Why can’t we have a City of Toronto Lottery? Revenue from the Lottery ( minus the cash prize) is invested back into the City. Lotteries are making millions. I think the Province has to approve it and my guess is they won’t because it may affect their Provincial Lotteries. If it were me, I would fight for a City run lottery.

I already play the City of Toronto lottery… its called the “Will I get there on time” lottery, because traffic and transit are so bad that I never know if I have left enough time to get to my destination.

The federal government gave power to the provinces… frankly, the money from the current lotteries are supposed to benefit local communities – most of it to hospitals. http://www.olg.ca/about/economic_benefits/index.jsp and so any money lost to competition from a City lottery would have to be replaced.

Rather than returning to punish the tax payers with more taxes and expenses, we need leaders with entrepreneurial thinking. We need some tenacious innovators on City Council. Leaders with ideas and the ability to implement them. I think we need to de-emphasize the building of a ‘world class city’ and emphasize building a GREAT city. World class city’s come with world class problems.

I think they should charge admission just to enter all public buildings, all court offices, recreation centers, all municipal civic buildings. For example buildings where you would need to enter to pay for a traffic offense, even to discuss about a building permits, property issues. After all you have to pay for ‘PARKING’ just to go to those buildings and the programmed ‘idiot; consumers are paying to see products for sale at so called ” trade show events”. Paying to see next years model vehicles,appliances,other items.
Hey we should have a store entrance tax! Pay tax to enter places of business and then pay double to exit!

I think they should charge admission just to enter all public buildings, all court offices, recreation centers, all municipal civic buildings. For example buildings where you would need to enter to pay for a traffic offense, even to discuss about a building permits, property issues. After all, you have to pay for ‘PARKING’ just to go to those buildings and the programmed ‘idiots; those consumers are paying to see products for sale at so called ” trade show events”. Paying to go to the auto show, the pet show, the home show,etc.etc. I laugh at those because they are the ones that would pay to browse in a store! Just because they call it a ‘Show’ they are well conditioned like the sheep they are!
Yes! we should have a store entrance fee and a hefty tax to go with it! Pay to enter all places of business and then pay double to exit!

I suggest increasing taxes on commercial properties that remain empty for six months or more, this will: raise revenues for the city, make rents more affordable and reduce the number of empty properties on our streets.

What a ridiculous article. More tax? Are you kidding? We already pay twice as much for tobacco and alcohol as people in the US. Typical Liberal government official nonsense. This is the same person that has us wasting money building this unnecessary new entrance at Kew Beach park for significantly more than what was originally sold to us residents.

Toronto generates something like 7 billion dollars of revenue annually. You have condos going up everywhere, generating more and more city tax revenue. And all the surrounding government amenities reap the benefits. There is no issue with revenue generation. The issue is how is that money being spent?

How about we get rid of some of these untenable union contracts that are suffocating our city? How about we get rid of the entitlement that exists with these government workers? Going on strike every other year. Guaranteed jobs, which no one else that actually works for a living has.

You can’t keep coming back and taxing the populous. People have had enough. Just because we can pay doesn’t make it right. Learn to balance your checkbooks. There are plenty of resources.

How much money would be raised by doubling or even tripling permit parking fees? Those fees are ridiculously low (less than $0.50 per day) and don’t come close to covering the cost of the real estate used to provide it.

The interest on the city debt is a huge monthly expenditure after Police Services and TTC. It is the third largest expenditure. The province pays 1 billion a MONTH just on interest and that is an era of low interest rates. Imagine what we could do with ONE BILLION a month to use for social service and education for all. The answer is not to raise taxes and hurt people and have jobs flee, but for the city to start reining in its debts and stop spending beyond its means. And please be honest – stop saying revenue tools. These are new taxes.

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