The tide is finally turning in favour of increased municipal taxes.
The litmus test came last night at a community meeting in the heart of Etobicoke, organized by centre-right councillor Peter Milczyn, and attended by Mayor David Miller.
One after another, 20-odd speakers came to the microphone to confront their mayor. The crowd, overwhelmingly populated by seniors, had a litany of grievances to file with His Worship but at the end of their list, most speakers concluded that they would be willing to pay a little more to their local government.
I did a double take the first time a resident acknowledged that paying more in taxes, while undesirable, is a necessity. Then it happened again and again and again. By the end of the evening, those who insisted that significantly increased taxes aren’t part of the solution to the City’s financial problem were in the minority. And when Miller scrummed with a few members of the media after the event had finished, Chris Eby of CFTO started off his questions in a surprised tone with, “That seemed to go well, didn’t it?â€
Just four months ago, the outrage expressed by Torontonians was unmistakeable. When one of the few real residents who attended the June tax consultations stood up in Scarborough and said, “You’ll raise taxes over my dead body,†he sounded dead serious.
However, last night the room had a distinctly different mood. It could have been that residents felt they were finally getting answers from their passionate — at times even feisty — mayor. (Plus, it helped that the special interests didn’t grandstand, as they had at the consultations.)
One man stepped up to the podium to say that earlier in the day he had written a letter to the Mayor with 10 reasons not to implement the Land Transfer Tax (LTT). But after listening to Miller’s answers to the questions before his, the gentleman’s list was down to just three when he spoke. And when the Mayor had finished responding to the life-long Etobicoke resident’s speech, the elderly man had but one of his 10 points standing — cut snow shovelling because “I can do it myself†— and was ready to accept paying a bit more to the City’s coffers.
But while residents were willing to accept a tax increase, many said that they would prefer a significant property tax hike instead of a municipal LTT. However, my sense after talking to literally hundreds of residents in one-on-one conversations over the weekend is that the aversion to LTT isn’t based on an informed opinion, it’s more out of not wanting a tax they don’t understand (though there were certainly a few who were informed and simply didn’t like the LTT.)
So with three weeks to go before the vote at City Council, Miller is starting peak at the right time. Now he needs to continue to go out to neighbourhoods across the city and not just listen to residents and clarify the City’s record; he also needs to educate the citizenry on what he’s asking of us.
Photo courtesy Mute*’s.
24 comments
The tone is drastically different on the Global news last night. Global’s news coverage focused on the negative responses from the crowd. It also portrayed Miller as ‘not getting the message’ when he expressed that the public is starting to understand the issues. It also hinted that the whole reason why Miller attended the session was to ‘buy Milczyn’s vote’.
Chris
Miller is indeed ‘not getting the message’. The problem with the LTT is it is regressive and unfair. It does not have any desired societal benefit for its unfairness. It is easy to see that hit would hit those in starter homes and townhouses more since they are always bought and sold, even though the rate is less.
Just raise the property tax and get it over with. Along with adjustments to the assessment methods (e.g. only change assessment after sale) this would be better. Toronto taxes are already a lot lower than just about everywhere else but the facilities are also poorer (well, unless you live in a wealthy central area…).
As for the vehicle license tax: how about we tax all the SUVs and vans triple and exempt small cars to encourage some smog reduction while we are at it?
I would argue that the LTT is progressive and of great economic benefit. Most people buy homes once or twice; it is the real estate speculators and “investors” that lose most on it, and they are not impoverished.
It is of economic benefit because it discourages the real estate market getting overheated, bubbling, and popping. With a higher LTT in place, the rise in house prices will be more gradual and less vulnerable to catastrophic collapse.
Speculators, of course, don’t care about eventual collapses as long as they can buy-low-sell-high now.
Wow, amazing what can happen when the Mayor decides to engage with those who disagree with him. Are the days of arrogance and paranoia over?
Chris, I was really surprised to see how this story played out in the Star. Though I have noticed that the Star’s City Hall bureau has taken a much harder line in recent months to the Miller Administration than it has in the past (there are a few newer faces in there so it could be the Royson James influence) while the editorial board has actually been pretty supportive of Miller through recent months. It’s an interesting dynamic within the paper.
Global News is a different animal. If you ever come down to City Hall and watch one of the Mayor’s press conferences, Global is the one that blows everything out of proportion. There are a number of media outlets that I find to have less than desirable coverage but none of them try to do the Fox News bit like Global (I don’t even mean the political slant, just the need to make everything the Biggest Story of the Year.) As I listened to last night’s scrum, it became very clear very quickly how the Global reporter was approaching things. My guess is Global reporters are given fairly specific instructions on how to handle these kind of stories because her approach was identical to her Global colleagues, like Catherine MacDonald.
Dave, I’m not sure what you’re basing your “regressive” comment on, especially in light of the gross inadequacies of the property tax system. Also, we may have lower property taxes here but the consequence of hiking them just to save real estate agents and land speculators a few bucks is forcing people on a fixed income — often seniors and people with a disability — out of their home. That just doesn’t seem fair to me.
…The reason that particular classes of vehicles outside of motorcycles and mopeds are not taxed differently under this scheme is that gray areas come into play that aren’t easily dealt with in the short-term. For example, what constitutes an SUV? For me, it’s an “I know it when I see it” kind of thing but that doesn’t fit into the provincial administrative system. So last night the City’s CFO said they’re going to keep working on this part of the VRF to figure out a way to do that and to include commercial vehicles so that it applies equitably.
Global has news?
The Toronto Star is the one with the problem. With some exceptions, they are apologist for the Mayor. During a Q & A about Toronto’s Vital Signs report, they ignored completely asking the single most important question! Why is Toronto moving in an opposite direction with regards to jobs, as the surrounding municipalities? And what are you going to do about it? The Star frequently laments about downloading on Toronto yet, only recently has talked about the huge difference in tax rates between the 416 and the 905, in addition to the $2,100 extra per household that the province gives the city compared to the 905.
Toronto’s problems lie with the myth that you can get something for nothing. It is one that was perpetuated by the Mayor during the election. The non residential tax base is either leaving or has left. The province is already giving Toronto more than any other municipality. The sooner Toronto faces up to reality the sooner it can return to greatness.
LTT is unfair as it overly taxes low-mid income families who move often. Affordable houses undergo constant turnover on the market while older high-end properties are rarely on the market. I live in an area that has both: it is night and day. So who are we taxing with this tax? Is the tax based on ability to pay? No. Is the tax based on impact on services? No.
Property value assessment is a wealth tax and thus is fair. You are only affected by changes if your home increases in value relative to the rest of the city. For years, tax payers in the older parts of the city got a free ride while enjoying the bulk of the services.
I think the often-mentioned senior being forced out of their home isn’t all that common. The seniors I know in homes are sitting on substantial wealth and assets that would be the envy of most.
You can easily pay 50%-100% more in property taxes if you live in the GTA outside of Toronto. Torontonians should stop complaining and pay for the services they are demanding.
Dave> Low income families can’t afford to own a home and tennants would not be directly hit with this tax (though I’m sure it will be passed on in a minor way through the cost of renting.)
In the neighbourhood that I grew up in, I saw a similar trend (lower cost homes turning over faster than higher end homes) but the reason it existed is that young families would need something larger five or 10 years after moving in. So they’d take the equity built up in what was commonly their first home and use it to purchase something a bit bigger. When they would make the move, they would obviously have all of the closing costs, which included the provincial LTT. The money gained from selling their house would be used to pay off those costs, as well as to put a down payment on the next home. The municipal LTT would just add one more component to the closing costs.
The current value assessment system used to calculate property tax, on the otherhand, assumes that because a homeowner’s property has increased in value, they have the money to pay the property tax. In many cases, that assumption is entirely wrong. The LTT ensures that people are asked to pay more when they actually have the money, not some hypothetical wealth that, depending on the strength of the housing market, could melt underneath them.
I find opposition to the LTT bizarre. It’s a one time tax (per purchase, but how often do people buy houses), and it’s just 1-4 mortgage payments extra. If it’s a big burden, people can forego wood flooring or premium appliances. If I remember correctly, it had breaks for first time buyers and low income earners. It’s virtually victimless and I can’t find anything wrong with it.
Adam’s version of how the meeting went is simply too one-sided in favour of the Mayor. I give mayor Miller full marks for attending the meeting, listening carefully to all the comments, and finally enagaging directly with the public on the tax issue.
Etobians are a very polite lot so even stinging criticsm of the Mayor was delivered politely and respectfully. But criticsm there was. Most people who attended the meeting I believe left with a better understanding of the City’s fiscal position but they also left behind a clear message to the Mayor and Council. Do more at City Hall to reduce expenses before we raise new or exisiting taxes.
Adam’s fawning comments and questions at the end of the meeting were the sole exception of the night in terms of preaise for the Mayor and the status quo.
I, too, was at the meeting that evening and I tend to agree with Adam’s assessment. Indeed, there were members of the public who were opposed to the proposed new taxes. However, many, if not most of them, argued that they would much rather pay higher property taxes than a land transfer tax. Everyone is entitled to their opinion, fair enough.
I feel it’s also important to note that, even after the presentation by Councillor Milczyn and the city’s CFO (the mayor was delayed for the presentation, but heard most of the comments), there were many residents that weren’t well-informed of the issues. Some held firmly onto their misconceptions in making their comments. Others didn’t.
I would offer the opinion that this is just how it goes when you consult the public, on any issue no matter how important. You’ll never win everyone over to your side, you will always have fanatics of every shape and colour. You will always have to contend with people who are more concerned with proving you wrong than the issue at hand. I feel that many of the people to which Councillor Milczyn refers in his post fall into that category.
Adam,
You said; “The current value assessment system used to calculate property tax, on the otherhand, assumes that because a homeowner’s property has increased in value, they have the money to pay the property tax. In many cases, that assumption is entirely wrong. The LTT ensures that people are asked to pay more when they actually have the money, not some hypothetical wealth that, depending on the strength of the housing market, could melt underneath them.”
That is a little disengeneous. The only time an increase in value induces an increase in taxes is when it is greater than the average market. In a 0% tax increase budget, if property values across the city rose 15%, the mill rate would fall accordingly. The result would be a zero sum.
Thanks for taking the time to comment, Councillor Milczyn.
While I appreciate that Etobians  and all Torontonians  tend to be a respectful bunch, the tone and attentiveness of attendees at Monday’s meeting was very different than what I’ve witnessed over the past months. Indeed, there were many people who told the City to take measures like an across-the-board cut of 3%. But after an explanation by the Mayor and CFO, many understood that that’s essentially what the cost containment measures are (when provincially mandated programs are removed from the equation.) There were other suggestions and complaints too, though at least 90% just didn’t hold for one reason or another (the City is already doing what they suggested, their suggestion didn’t comply with relevant legislation, etc.)
Of course, there were the exceptions in the room who didn’t want any taxes. One gentleman wanted to raise a Doug Holyday/Rob Ford flag (literally) and got mad at the Mayor for pointing out that it was Holyday who was the deciding vote to keep golf passes for Members of Council. And another simply wouldn’t accept any answers  though he was one of the attendees kibitzing with Councillor Minnan-Wong before his 15 minutes at the mic so my sense is that he was a rather partisan voice. But, overall, there seemed to be a general understanding and acceptance of the fact that Toronto will need more revenue. It was even part of your opening remarks, Councillor. (For those not in attendance, Councillor Milzcyn also pitched slashing $5 million from the grants budget, rolling back councillor salaries, limiting non-union staff salaries to Toronto CPI, eliminating councillor perks and a couple other items that added up to somewhere in the neighbourhood of $20-30 million.)
Regarding my own comments: I made three points on Monday evening. First, as I move toward a stage of my life that may include children, I want to ensure that they have great public parks and public spaces, a clean environment, libraries to learn to read in and community centres to play in  taxes pay for that and I’ll pay a little more to ensure those services are maintained and improved. Second, my father will one day not too far from now be moving on to a fixed income and I would hate for him to be forced to sell his home because of a spike in property taxes  a LTT will ensure that doesn’t happen. And, third, I believe that Toronto needs to take control of our immediate future because politicians like Prime Minister Harper, who announce billions of dollars of surplus and visit our city only to say “no†to our requests with a big smile, shouldn’t get the pleasure of watching our quality of life suffer. However, in my post, I didn’t suggest that such opinions were held by anyone in the room.
Finally, Councillor, while I appreciate that you have your own agenda that you want your residents to support, to dismiss your residents’ understanding of the need for additional revenue in this forum by saying they were just being polite out of respect is disingenuous.
From the 8,200 Ward 5 residents who cast their ballot for Mayor Miller less than a year ago, giving him a healthy 2,000 vote “win†in Ward 5, in spite of the generally conservative nature of Etobians, it seems clear to me that Etobians also understand the importance of city building  their comments on Monday evening, though stern, reflected that, too.
Adam,
Are you really suggesting that the 8200 people in Ward 5 who voted for Mayor Miller were aware that he was using city reserves to cover up shortfalls? Are you suggesting that a promise to hold property tax increases to the rate of inflation was not one of the reasons they voted for him? I believe that it is more likely that residents were not expecting this magnitude of a shortfall. They feel that it was concealed by Mayor Miller and as such have little to reason to trust him now.
To be clear, I do agree that the city needs to raise revenue. I think that it is about time that taxes reach the same levels as the surrounding regions, along with commercial and industrial taxes falling to the same levels. So the city can stop the flow of jobs to the 905 region.
Where the LTT should be used is a means to allow those whom cannot afford it, a way to defer it. This would be the most honest, predictable and equitable way. As it stands now, what would happen if the real estate market depreciated by 25% ? There is no revenue certainty in the current system. But Toronto is becoming a Mecca for Poor Policy, so it should be of little surprise.
Glen > I won’t argue your last two points, but there has been absolutely no concealment of the reserve funds. That was started under Lastman and continued under Miller. Raiding the reserve funds has been an issue and widely reported on by the media each year at budget time. If people voted for Miller and didn’t know about hte reserve funds, that is their own fault for not keeping an eye on city hall issues.
Glen,
On reserves:
Reserves have been used to cover municipal shortfalls since the ’90s — it’s the only way Mel Lastman was able to freeze taxes. Around budget time, this fact is always in the media.
On taxes:
Under the original Miller plan, property taxes would have stayed at the rate of inflation (widely understood to be in the 3-4% range, not simply Toronto CPI.) Depending on what sort of compromise is worked out later this month at Council, Miller may or may not be able to maintain his property tax promise. Miller was also very clear during the election that he would evaluate the CoTA to determine what powers the City might choose to exercise. At the time, no reports were available on the LTT or VRF so pegging those as solutions to the fiscal gap wasn’t an option.
On the shortfall:
No shortfall was concealed. The next year’s expected shortfall is always announced by the CFO during the current year’s budget deliberations and reported in the media. Did Miller make $575 million a key message during the campaign? No. But the information was readily available to anyone who wanted it and Miller was clear that a sustainable solution to the City’s financial position was essential for Toronto to move forward.
On your proposal:
Because there is a first time buyer rebate in place for the municipal LTT and the Liberals are also expanding the provincial first time buyer rebate to resell homes, no one will go into the housing market unable to afford the tax. And if you’re already in the market and want to move up to the $450,000 home but because of the LTT can only afford $440,000 then I suggest that person save up a little longer or deal with it. It really isn’t much of a burden when you’ve already built up equity in your home.
Overall, however, I’m sure that many Ward 5 residents who voted for Miller aren’t pleased knowing that they’ll be asked to pay a bit more. However, my point is that during the election, Miller laid out a vision for Toronto, explained that the status quo was not sustainable and is now asking residents to contribute a little extra to their city. That’s why residents — most of whom voted for Miller’s vision — are beginning to shift their attitude toward the taxes, even if paying more doesn’t make them especially happy.
The biggest shame of the whole LTT debate is that it’s drawn attention away from a far more important issue: what taxation policies are best for the city and its citizens.
The LTT is being implemented because it’s easy and the city needs money. Nothing more, nothing less. It’s made for lousy politics so far and it’s going to make for lousy policy.
Why is it that instead of looking at progressive, enlightened solutions to very solvable problem (essentially a 5% budget shortfall) readers are getting the heat and blather of Miller said this, Minnan-Wong said that?
Why is it that instead of encouraging discussion on congestion taxes, the merits of two-rate/ split rate property taxation, or alternate funding visions for the city, blogs like this are mirroring the MSM and sticking to the simplistic LTT v. no new taxes argument?
Adam, there is a world of difference between Lastman using 99 million a year from reserves compared to 273 million (160 + 113 from Hydro).
Cut and pasted from some of my other postings here……..
In 2003, under Lastman, the cost of PM/CS programs was 660 million. Toronto received 10 million by Provincial loan repayment deferral, and one time funding of 64 million. Reserves were drawn down by 99 million.
In 2006, under Miller, the cost of PM/CS programs was 727 million. Toronto received 20 million by Provincial loan repayment deferral, and one time funding of 145 million. Reserves were drawn down by 160 million, and hydro reserves by 113 million.
By 2006 expenses for PM/CS programs increased by 66 million. Provincial grants and deferrals increased by 165 million and the raiding of reserves increased by 174 million. So, 66 – (165+174), according to the budget, Toronto is spending 273 million more today in operations (not capital). Excluding mandated and shared programs, than it did 2003.
Miller knew full well that the Province had restricted increases to non residential properties, so with spending increasing by 4% per year and property tax increases on residential properties only, he would needed to have been higher than the pegged increases. Of course Miller lobbied to Province to ease the restrictions on the non res. base. Which the Honorable member from Vaughan allowed. In effect, giving Toronto even more rope to hang itself with. Which would further the exodus to the 905 region.
This really is an argument about semantics. I am just sick of the politics as no one has the guts to say Torontonians pay far less tax than they should.
As far as Miller’s Vision, Transit city, Employment…… Lets see…….
Using figures from the Vital Signs report published by the Toronto Community Foundation, it is hard not to conclude that a large portion of the job growth in the 905 region must be filled by Toronto residents. In the 905, the employment base grew by 28% while population grew at 9%. Using historical employment figures (jobs = 50% population), the 905 went from having an employment base of 2,341,448 million in 2000 to 2,973,638 in 2006. This gives an increase of 632,190 jobs in the 905 region. At the same time population grew by 430,252 persons. Again using the 50% historical average that means that 417,064 of those jobs must have been filled by people living outside of the 905 region. I think that it would be a fair assumption that more than half of those were filled from Toronto.
Until Toronto reverses this exodus it will continue to find itself in a worsening position, as the commercial / industrial base is what subsidises the residential base.
This is a fundamental problem, that unless addressed will render any plans moot. I refer you to the findings contained in Toronto’s Long-Term Employment Land Strategy report. The report found (as of Jan 2007) that it is not economically feasible to build commercial or industrial space in Toronto. This despite the fact that it is feasible in the 905 region, even with land cost being 55% more in the 905. The very fact that land cost more is in itself surprising. This is the result of Toronto’s tax climate towards non residential properties. It is like buying the healthiest plants at the nursery only to bring them home and have no soil to plant them in. Why bother? How can there be any reasonable expectation that the lakefront will be redeveloped in this climate? Why increase public transit in the city while at the same time jobs are leaving to the 905 region? How can people, whom cannot afford cars, go to work in the 905 region when they cannot utilize public transit? Toronto residents pay among the lowest tax rates in the province while at the same time commercial / industrial taxes are the highest in the province. The cities only attempt to address the issue has been through the adoption of the Enhancing Toronto’s Business Plan, which limits increases of property taxes to 1/3 of residential increases. Though by looking at how the proposed land transfer tax disregards the ratio along with the common refrain of not being able to ‘access the whole property tax base’, one must wonder how sincere the city is.
J. Walter Weatherman,
“Why is it that instead of looking at progressive, enlightened solutions to very solvable problem (essentially a 5% budget shortfall) readers are getting the heat and blather of Miller said this, Minnan-Wong said that?”
My problem is that the way the current situation is unfolding removes from debate the decision that led to its very creation. Fair wage policy, contracting out, land fill purchase, street car purchases, etc.
“Why is it that instead of encouraging discussion on congestion taxes, the merits of two-rate/ split rate property taxation, or alternate funding visions for the city, blogs like this are mirroring the MSM and sticking to the simplistic LTT v. no new taxes argument?”
I have not argued in an either or position. As far as congestion taxes are concerned, as someone who has worked downtown for over twenty five years, I can tell you that the city is dying. Traffic is far lighter than ever before.
Glen,
On the lack of debate, I think we’re in full agreement here. I’d love to be reading and debating fair wage policy, the merits of contracting out (or not), land fill purchases, street car purchases and you can add goofy indemnifications to the list (what did the City pay the TPA when they cancelled the bridge to the airport?)
I’ve worked downtown for 15 years and have the opposite feeling on traffic – short haul cab rides take way longer than they used to; getting in/out of the core to go to clients in Burlington and Markham is awful, bordering on horrific; and even my late-night beer league hockey games in northern Scarborough reveal full roads.
I would love to see traffic survey data on this…
J Walter Weatherman,
Outside of the Financial district, traffic is certainly lighter. I should clarify my remarks though. The massive movement of jobs from Toronto to the 905 region has altered traffic patterns. In itself this movement has stratified commuting in Toronto. Those going towards downtown are increasingly more likely to use the TTC (as ridership shows) while at the same time the loss of jobs in Toronto has made the use of the TTC impossible for others. To those who go to the 905 from Toronto, the transit systems in the 905 can rarely get them from point to point. This necessitates the use of autos. So the current tax policies of the city which have driven jobs to the 905 region has made car use near mandatory.
As far as your observations go, I am not discounting them at all. What might explain it though, and correct me if I am wrong, is that using bottlenecks to gauge volume is perilous. If you are referring to getting on the Gardner , or DVP, little has changed. Go to Yonge and Bloor at 2pm, or Dundas and Bathurst, King St. from Spadina to Bathurst. Outside of rush hour they are, IMO, much quieter.
Here are some links for you……
http://www.thestar.com/News/GTA/article/232205
and page 6 here
http://www.jpint.utoronto.ca/PDF/MRC_Cordon_ExecSum.pdf
Hasn’t anyone twigged that the LTT is just Miller’s stab at re-election? He would prefer to raise money by hitting fewer people for more, simply in order to give himself a better chance at re-election.
Next, his fairtaxes.ca site (which only allows you to write in favour of his proposals to your councillor) shows that large U.S. cities make up the difference in revenues from property taxes with income taxes and consumption taxes – so why doesn’t he propose those instead? Again the obvious answer is that he doesn’t want everyone to pay, just a few.
It’s also no good exempting first time buyers only, what about those who’ve lost property from divorce, job loss, or other misfortunes, who after many years of saving are finally able to consider purchasing their residence? The LTT, because it is paid in full at closing, cannot be lumped into a mortgage – it has to come from available cash, so if you have saved enough for a 25% downpayment and you want to buy a ‘cheap’ Toronto house for $400,000, the 2% ($8,000) LTT reduces not only reduces your cash but reduces by $32,000 the amount or a mortgage that you might qualify for.
Miller’s suggestion that the LTT hits people at a time when they can most afford it is simply absurd – anyone (apart from lottery winners of CEO’s perhaps) who’s bought a house in Toronto in the last few years knows that their financial resources are going to be stretched to the utmost.
Miller: have the guts to share the taxes around. You might be surprised to find that people support you.
There are plenty of other revenue-raisinig alternative, I won’t bother to list them. Again, surely it’s obvious that Miller is only concerned with his chances of re-election.
I don’t think Jeff gets it — buyers do have the money when buying a house. You have sold your house, hopefully and most likely, for a profit thus you DO have cash in hand. Yes, you will be stretched a little more, but if you’re buying a $400,000 home you can afford your 2%.
And, if Jeff had been paying attention to city hall debate on taxes, there has been lots of discussion other taxes. One Cent Now would remove the strain on our property tax base, while other things like a tax on parking spots and realistic development fees have also been discussed. LTT is just the first stage of moving Toronto’s revenue off of the property tax base.