The World Forum - July 24th, 2024

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Contentious 'made-in-Toronto sales tax' goes before council


Toronto's grim fiscal outlook takes centre stage at city council today, with a raft of possible new taxes and fees up for consideration to avert the crisis.

All 25 city councillors will get their first chance to debate — and potentially change — measures city staff recommended last month to address what they called an "unprecedented financial crisis." Civil servants have laid out possible tax hikes including increases to the municipal land transfer tax, vacant home tax, and the creation of a parking levy to raise hundreds of millions in new revenue.

Councillors will also be faced with a staff recommendation to create a municipal sales tax, which could generate as much as $1 billion per year for the city. That, however, would require provincial approval and an amendment of the City of Toronto Act.

Mayor Olivia Chow's executive committee endorsed the plan late last month, but must now secure the approval of council to move it forward. On Tuesday, she urged councillors to work together to address the financial crisis.

Toronto faces $1.5 billion in budget pressures this year and those are projected to grow to $46.5 billion in operating and capital shortfalls over the next decade.

Debate about the municipal sales tax could be one of the most contentious parts of the package proposed by staff.

It isn't immediately clear if the province would approve a municipal sales tax for Toronto. Asked recently if the province would allow the city to levy the fee, a spokesperson for the premier's office did not answer directly.

The federal government has been cool to Toronto's recent requests for financial aid.

In 2022, the Liberal government rejected calls for help from former Mayor John Tory. Then, in July, Deputy Prime Minister Chrystia Freeland rejected another request — this one from Mayor Chow — for hundreds of millions of dollars in financial support for Canada's biggest city.

In a letter sent to Chow, Freeland said the federal government had contributed over $6 billion to the city since it was first elected in 2015. And if further help is needed, Toronto should either pull money from its reserve accounts or approach Premier Doug Ford's provincial government.