Raising taxes to build Toronto is not just good — it’s necessary

Posted on December 10, 2019 in Governance Debates

Source: — Authors:

TheStar.com – Opinion/Contributors

Mayor John Tory’s plan to increase property taxes is good news for Toronto. If approved by city council, Tory’s plan would help the city raise $6.6 billion to build transit and affordable housing. Ratepayers will see an eight per cent increase in their tax bills by 2025, all going to the City Building Fund.

Toronto needs this new spending desperately, for reasons both economic and social.

The GTA is the economic engine of Canada, and Toronto is its core. We can’t let that engine be gummed up by overloaded transportation systems that waste everyone’s time. For businesses, time lost in traffic is money lost in traffic. For people, good public transit creates new opportunities for work and education. It means more time with their families. It reduces greenhouse gas emissions.

No major city can succeed without it.

On the housing front, it is now clear that there is no market-based solution to sky-high rents and back-breaking mortgages: the market itself is the problem. Publicly financed affordable housing is the only way to solve it.

Toronto’s big problems have been obvious for some time, and no level of government has much to brag about when it comes to solving them. Transit expansion has been a story of delay after delay after delay. Housing costs have risen steadily since the mid-1990s, and today it takes an average wage of $33.70 an hour to afford to rent a two-bedroom apartment within city limits. A full-time minimum-wage worker can’t afford to rent in the city at all.

If, as the city agrees, “all residents should have a safe, secure, affordable and well-maintained home,” then serious action is needed. Now. Targeting new spending at housing and transit makes good sense: in Toronto, the two are inextricably linked. How many Torontonians surrender their lives to endless commutes because the only housing they can afford is far from their work? Too many.

It is, of course, easy to criticize the mayor’s tax plan: it has been too long in coming. It is not ambitious enough. It does nothing for child care, or recreation programs, or other high priorities.

These are all fair criticisms. But from a policy perspective, the principles behind the tax hike are important. The first principle is that if we want to live in a thriving city, we need to build, and if we want to build, we need to pay. The second principle is that the proper way to write a budget is to raise revenues to meet public need, not to pare down needs to match current revenues.

For much of Canada’s history, politicians saw economic and social progress, strong public investment, and healthy government revenues as bound together. But in more recent decades, “respect for taxpayers” has meant nothing but cuts to public investment and public services.

In recent years, our leaders have tried every trick in the book — and dreamed up new ones — to avoid collecting the revenues needed to build the country. They’ve sold off profit-making public assets, giving up long-term revenue streams for one-time capital gains. They’ve embraced public-private partnerships (P3s), paying extra to build infrastructure but hiding the cost off the public books. They’ve taken on more debt.

Perhaps most of all, they’ve cut public spending, hurting people and the economy, often while further draining public coffers through unaffordable tax cuts.

None of these strategies is sustainable — not for people, and not for the economy.

According to Ontario Ministry of Finance projections, Toronto’s current population of just under 3 million people will be 4.3 million by 2046. The GTA as a whole, with 7 million people today, will have over 10.2 million that year.

That’s just one generation away. If we want to ensure that life then is at least as livable as life now, we must build now, and fast. If we want life to be better for the next generation — as we should — then we must do so even faster.

Mayor Tory’s tax-increase plan will not raise all the money we need to deal with the problems we face. But it is a step in the right direction. For the good of the city, it’s a step Torontonians should support.

Randy Robinson is the Ontario director of the Canadian Centre for Policy Alternatives.

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