I’ve had many discussions with friends over the last two or three years about the long-term ramifications of Mike Harris’ Common Sense Revolution. A few years back it was starting to become clear that even though Toronto had elected a mostly progressive-minded city council, those folks were going to be responsible for enacting policies that ran counter to their stated political positions: privately-funded street furniture and infrastructure; private-public partnerships for city-run facilities (like the Nike-funded running track at Mother Teresa Catholic Secondary School in Scarborough); constantly rising transit fares; and finally, the power for the city to tax residents.
These acts are a direct result of the downloading of services that the PC Party hoisted upon Toronto in the mid 1990s. If the province was still paying its share of constitutionally legislatively mandated costs, it’s possible none of these policies would be on the table *and* we’d have a properly functioning city. Imagine.
So it was with reluctant joy that I read Ed Keenan’s Editorial Digest in Eye Weekly where he nicely lays out how the province does not need to fulfill the final stages of the Common Sense Revolution and that easing the costs of downloading should be a major election issue.
…This, as intellectual John Ralston Saul pointed out at the time, is a tactic straight out of the neo-liberal textbook: if what you want is smaller government but you don’t want to have an uncomfortable debate about, say, the merits of the welfare state, you shift responsibility for those things to the cities, claiming that they’ll be better administered “closer to home.†You then immediately cut taxes so that any successor who would like to undo those changes will need to swallow political hemlock by raising taxes to do so.
But, of course, funding those programs from the local tax base is near impossible. And so there is, once again, a fiscal “crisis,†requiring “difficult decisions.†Everyone would like to expand transit and policing and welfare, the argument then goes, but who has the money?
And so in this way, neo-liberal governments accomplish the task of gutting the welfare state without any real debate. Following the Xs and Os in this small-government playbook, Harris downloaded provincial programs onto cities while cutting income taxes by 30 per cent.
And look: five years after Harris left office — during, you’ll note, one of the longest sustained economic booms in Canadian history, a period of tremendous prosperity — our cities are neck-deep in a fiscal crisis, faced with the punishing choice of hiking taxes or shuttering services. Toronto faces a “structural deficit†of $1 billion per year, according to the Conference Board of Canada. Surprise! The Common Sense Revolution is alive and well at Toronto City Hall, and our local politicians implement Harris’ plan every time they privatize a street furniture program or threaten to close a transit line.
No one talks about this in these terms, of course, lest they be accused of fighting yesterday’s battles. But this should be a live issue in the provincial election campaign. Dalton McGuinty came into office selling himself as the antidote to Harris’ revolution, not as the guardian of its legacy. He ought to be shamed into undoing the damage of Harris’ years by accepting responsibility for those abandoned programs and, if necessary, inching income taxes back up to pay for them.
editorial cartoon from Jan. 2001, by Graeme MacKay/Hamilton Spectator
23 comments
Damn right! Keenan’s editorial has it spot on that the McGuinty Liberals have completely failed in reversling the Commons Sense agenda and have done nothing but advance it at a slower pace. This slow unloading of municipalities, day cares, hospitals, universities and colleges as well as many other levels with little ability to raise their own funds other than user fees (be it in the form of tokens, the bill for an eye exam or a tuition fees statement) has resulted in costs being increasingly be transfered to those who must relly on government services to live.
Why is it that working mothers, patients, the people on the bus and students have to cover the costs when the province is making money, Ottawa is making money, and the corporation’s profits continue their rapid ascent?
Of course the city is severely limited on just how much it can cover, it is the halls of Queen’s Park and Ottawa that were first to start this spiraling descent and it is them that need to act to reverse, not merely entrench it.
Which is why I think Toronto should hold a General Strike. Like Winnipeg 1919.
Yes, Let’s strike. Sounds good…
Here’s a question…. How much trouble would it be to reverse this Common Sense Revoluton if Queen’s Park one day decided to do so for the sake of the city’s financial troubles?
The city’s budget shortfall is almost always equal to the amount that was downloaded onto the city. $500 million is your answer. And if the 1 Cent Now actually works, Toronto and 21 other major Cdn cities would start to see investment. City-building is dead at the moment in Toronto, even with these big buildings opening.
I’ve tried explaining to Carroll that the act of privatization is just a perpetuation of the same policies that got the City into this mess in the first place, but she answers with her usual Thatcher-esque there-is-no-alternative response. To her credit, she’s aware of the irony.
The city’s budget shortfall is attributable to the property tax freeze imposed by Lastman and Miller’s refusal or failure to reverse it.
Who will charge the cars? Will any party? left or right?
If the province was still paying its share of constitutionally mandated costs
Um…. there are no “constitutionally mandated” costs.
^”Um”, thickslab, so they’re not “constitutionally” in the sense of that document sitting in Ottawa, but I think we all know what we’re talking about here. If you want to be the officious corrector, why don’t you add a bit more and explain what the proper way of terming it is when you are officiously correcting?
Should have read legislatively. Watching too much CNN these day.
Rami: the property tax freeze is obviously related to the budget shortfall, but putting it as simply as you have done implies that it was exclusively responsible.
Raising the property tax would be, as they say, regressive. The fairer choice is to get more revenue from income tax  not co-incidentally, the very income tax that was vote-tastically reduced post-“download”.
Even user fees would make more sense, though of course someone using city services while owning property in an exurban community would prefer that city residents do the paying…
That was, of course, the work of the editorial board of Eye Weekly, of which I am a member. But I must say, the line that read “no one talks about it in these terms, of course” should have been followed by “(except Spacing publisher Matt Blackett).”
You almost certainly deserved a little credit there, Matt. Sorry for the omission.
And Rami, the property tax freezes were not a great idea given the circumstances, but really — regressive property taxes that punish longtime homeowners for the gentrification of their neighbourhoods and disproportionately target tenants (among other things) are a terrible way to pay for social service programs. Progressive income taxes spread across a broad base (so that areas that deliver most of the services by virtue of their urbanity aren’t saddled picking up the welfare tab for virtually the entire province) are a far better solution.
One Cent Now or a one-per cent hike in the PST dedicated to cities might be an adequate second choice, though since poor folks spend nearly 100 per cent of their income on things they need to keep living while rich people invest and save, sales taxes are pretty highly regressive too.
But of course the City of Toronto can’t levy either of those kinds of taxes, so we’re all left blaming city politicians for failing to jack up the property tax or levy new schemes like the land transfer tax.
And Hamish: yes, please. I’ve written (or, um, co-written) four or more editorials in four years asking for road tolls or congestion taxes or some kind of user fee on roads. Left, right, doesn’t matter: you know the only people who don’t like the sound of a toll booth on the QEW? People who live in Mississauga. It’s way past time, budget crunch or not. And while we’re at it: let’s tax gasoline inside city limits a little more heavily. That SUVs look like an attractive option to the middle class and that driving rather than walking to the corner store is something people consider worth it and that traffic is snarled on the DVP during rush hour every day is the market’s way of telling us gasoline is way too cheap.
*Yawn*
Another call for more taxes. The voters of Ontario (that is, the entire province, not just downtown Toronto) elected Mike Harris on a very clear plan – twice. He executed that plan. His plan led to years of unparalleled economic growth.
As much as leftist intellectuals/Eye Weekly columnists abhor Harris and demand a more tax-intensive nanny state, the fact remains that he was carrying out the will of the electoral majority of Ontarians. How else would you have us run our province?
tdotg >>
Harris was not acting out the will of the majority of Ontarians, just parliamentarians. He only had the voter support of 44% in 1995 and 45% in 1999. Most Ontarians decided they wanted another political party to run the province.
This post, nor editorial, was a call for more taxes. Its a call for the proper government, that has the taxing power that is tied to economic growth, pay their share of bills. I’d rather the city not tax us anymore, but it has been left with no choice.
And to answer your question on how else would would we run the province? I dunno, maybe with an eye to the ramifications of your decisions, instead of concentrating solely in power, no matter the costs the public has to endure.
*Your* wallet may have done well during Harris, but his government increased the amount of poor people in the province, and has nearly destroyed Toronto (and many other small municipalities) in order to fulfill ideological goals instead of pragmatic, realistic and humane goals. I think our debate rest more in what type of government you want, not in the details of Harris or McGuinty or Miller.
Sweet, Ralston Saul and I think alike! It’s the same old Grover Norquist “Starve the Beast” idea. I think the Tories have the same thing in mind with the funding of religious schools (apart from pandering to religious-conservative voters). Imagine, so many currently private school being brought under the public system. I wonder what essential social services will be cut to fund this ridiculous scheme.
I see harris and lastman. who is the other monkey?
“regressive property taxes that punish longtime homeowners for the gentrification of their neighbourhoods and disproportionately target tenants (among other things) are a terrible way to pay for social service programs.”
And regressive land transfer taxes that punish immigrants, internal migrants and young Torontonians who aren’t fortunate enough to own a home or a home large enough to accommodate growing kids while their “longtime homeowner” neighbours pay nothing are a terrible way to pay for infrastructure and other city costs. But the Eye editorial board supported them anyway.
1). The land transfer taxes were mildly progressive (no taxes on homes under $250,000, 1 per cent on homes up to $400,000, 2 per cent on homes above that  while the poorest in society, who rent, pay no taxes at all).
2). There was a rebate provision for first-time home buyers that significantly softened the blow.
3). The simple economics of the Real Estate market, I believe, would see prices adjust nearly seamlessly to incorporate the new taxation rate. This is why Real Estate Agents were so steadfastly opposed, because they are the only sector of society who would be hurt by a slowing of inflation of official closing prices (well, them and those cashing out of the market entirely and those trying to flip houses) while actual all-in after tax and legals prices remained stable. Those of us buying houses would simply factor the price into the offer we were prepared to make, and since the entire market works on an auction principle and everyone in the entire city would be facing exactly the same tax rate, the market would adjust.
4). The province recently cut the provincial land transfer tax from 2 per cent to one per cent, so for houses under $400,000 we’d only be returning to the taxation rate we had in Toronto very recently.
5). Ask anyone you know how much they paid in land transfer taxes the last time they bought a house. Go ahead. On Adam Vaughan’s advice, I’ve been asking people just that and I’ve yet to encounter anyone who remembers. It’s all lumped into legals in most people’s minds.
So yes, Mark, we supported land tranfer taxes. And no, they aren’t an ideal solution. But they’re among the best available to the city right now.
Sorry, that post was off the top of my head. Just realized I need to check exact numbers re: provincial rate and cut and progressive brackets. But the principle remains.
This is why I work in print  I get to look back at my research notes before I press print:
The provincial rates vary from 1-2 per cent, of course, and I can’t find any evidence of a recent cut (though the 1 per cent GST cut affected prices of NEW homes and condos, of course). My fault. Someone at City Hall who should have known better mentioned it to me recently and I threw it in for good measure.
So I retract point (4) and would also point out that in the run-up from the first proposal to the deferral vote, there were a flurry of different percentages thrown out for the City rate (from 1.5 per cent across the board to .5-2 per cent for the range). My point was that the taxes in their final proposed form were to be mildly progressive. That is true.
The argument as a whole stands.
Edward
the Ontario first time buyer rebate *only applies to those who buy new properties* to a maximum of $2,000 – which would be all the tax in rural Ontario where prices are lower but not in Toronto. So if you buy a second hand house rather than a condo you don’t get that rebate.
As for your point five – I don’t need to ask anyone else – I paid $2,750 in OLTT for my first-time-buy second hand house in 2005, which would have been $5,500 under Miller’s plan. When you buy a second hand house and then have to renovate it, $2,750 is a lot and $5,500 is a lot more.
As for your point on the real estate market – sure it would be nice to see the real estate people reduce their commissions but while there is net migration into Toronto there is going to be upward pressure on house prices. Commission reduction is a laudable goal but the aim should be to determine what a fair commission is rather than deem the agents “make too much”. The difference between a real estate agent and the City is that the agent has to put work into selling a house – the sale of a house doesn’t cost the City a dime.
Renting “to avoid LTT” is all very well but in the end you’re just paying someone else’s mortgage, property taxes and their profit margin – and new landlords will just roll the LTT into their mortgage and set rents accordingly.
Mark, if the tax measures are passed by Council, the rebate would apply to all first time buyers. That change was made at Executive Committee because the original staff report only provided a reprieve for first time buyers of new properties.