{"id":30652,"date":"2012-06-04T08:30:39","date_gmt":"2012-06-04T12:30:39","guid":{"rendered":"http:\/\/spacingtoronto.ca\/?p=30652"},"modified":"2012-06-04T00:07:44","modified_gmt":"2012-06-04T04:07:44","slug":"lorinc-terrible-taxes-and-other-ferry-tales","status":"publish","type":"post","link":"https:\/\/spacing.ca\/toronto\/2012\/06\/04\/lorinc-terrible-taxes-and-other-ferry-tales\/","title":{"rendered":"LORINC: Terrible Taxes and Other Ferry Tales"},"content":{"rendered":"

\"\"<\/a><\/p>\n

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When Rob Ford revealed that he intends to move a motion to rename the Toronto island ferry docks in honour of Jack Layton, I\u2019m guessing he wasn\u2019t thinking about the links between gas taxes, new subway cars and the former NDP leader.<\/p>\n

So let\u2019s triangulate: when Layton threw his support behind Paul Martin\u2019s Liberal minority government in 2004, he used that clout to gain approval for a new federal gas tax, the proceeds of which would go towards important infrastructure investments, such as the TTC\u2019s spiffy new subway cars.<\/p>\n

Cause\u2026. effect\u2026? Anyone?<\/p>\n

Ever obtuse, Ford segued quickly from the Layton kumbaya moment to an election-ish stump speech Friday hosted by the Toronto Real Estate Board, in which he re-dedicated himself, in true Don Quixote fashion, to the cause of eradicating the \u201cterrible\u201d land transfer tax, which pumps just over $300 million into city coffers (memo to mayor: that\u2019s the tab for one kilometre of subway) without harming a flea.<\/p>\n

Notwithstanding the brokers\u2019 tedious whining (and relentless lobbying), there\u2019s not a shred of evidence to indicate that the LTT has done anything to dampen the real estate market, as TREB warned ever so darkly back in 2008 when David Miller foisted this thing on the city. Everything is trending up, including brokers\u2019 commissions, so it\u2019s hard to know what makes the LTT so dreadful.<\/p>\n

<\/p>\n

There isn\u2019t even a stable political constituency in favour of eliminating the tax. Sure, TREB\u2019s push polls show support<\/a>, in the same way that Canadian polls still reveal a disturbingly large constituency for the death penalty<\/a>. But that doesn\u2019t make it good policy. Needless to say, TREB didn\u2019t asks respondents to identify the services they\u2019d do without if they were in charge of jettisoning such a huge chunk of change. (As TREB reported, \u201c77 percent of Torontonians who recently purchased a home in Toronto feel that they received little or no added value in City services for the amount of Land Transfer Tax paid to the City\u2026\u201d \u2014 the operative word being \u201cfeel.\u201d)<\/p>\n

In other words, Ford\u2019s promise is the political equivalent of cutting off your nose to spite your face. And if the plot line seems vaguely familiar, we\u2019ve seen this sort of thing before, when Harper government foolishly sliced two percentage points off the GST, in 2006 and 2008 \u2013 a move opposed by respectable economists of every flavour<\/a>. As economists all know, value-added taxes are an entirely defensible way of collecting revenue without killing jobs or denting productivity.<\/p>\n

Various estimates<\/a> have shown that each point of GST nets $4 to $7 billion in taxes annually (just enough, as luck would have it, to build a subway along Sheppard Avenue). If you do the math, uh, conservatively, Harper\u2019s decision translated into at least $35 billion in cumulative foregone tax revenues between 2006 and now.<\/p>\n

That\u2019s one hell of a lot of green, isn\u2019t it?<\/p>\n

Does everyone remember reading the fine print on the Tories\u2019 packaging?<\/p>\n

Didn\u2019t think so.<\/p>\n

With the feds desperately slashing everything but the budgets for F-35s and Vic Toews\u2019 Old Testament criminal justice policies, those dollars certainly would have come in useful today, and also in coming years. Given an aging population and all the associated pressures on public coffers due to rising health and pension costs, there\u2019s little doubt that Harper\u2019s move was short-sighted in the extreme.<\/p>\n

And did the economy get a bit of a buzz because of the cuts? None that I can see. Even right-of-centre pundits<\/a> weren\u2019t enthusiastic.<\/p>\n

Which brings me back to Ford and the land transfer tax. Let\u2019s say he convinces voters and bullies a new council into axing the LTT in 2015. That\u2019s akin to the city blowing off $1.5 billion by the end of the next term. If the municipality isn\u2019t bankrupt now (see under: \u201csurplus\u201d), it will be by 2018. And for sure the city won\u2019t be able to maintain assets, deliver services and keep the lid on property taxes.<\/p>\n

The mayor, as we know, has only one party trick, and that\u2019s convincing voters that they\u2019ll be better off if their municipal government costs less money. I don\u2019t expect him to bother developing some kind of rational plan for eliminating the LTT; he\u2019ll just dish more of the content-free slogans that marked his 2010 campaign.<\/p>\n

For Ford\u2019s prospective opponents, therefore, the LTT could become a ballot question, and so the onus will be on them to convincingly articulate the opportunity costs and the financial risks associated with eliminating such a substantial source of future revenue. What\u2019s more, I would also expect the city\u2019s credible business groups (Board of Trade, CivicAction, etc.) to speak honestly about the LTT in particular and the importance of diversifying the city\u2019s revenues in general. Much policy ink has been spilled on this topic, and all those arguments may be put to the test in 2014.<\/p>\n

I\u2019d say there\u2019s some cause for optimism, however. The LTT isn\u2019t like the vehicle registration tax, which no one liked and didn\u2019t bring in a huge sum. Ford\u2019s pledge is nothing less than Toronto\u2019s version of the Tories\u2019 GST cut: ill-advised policy in the service of opportunistic politics. And anyone who doubts it should ask why Stephen Harper\u2019s Canada is going to be wallowing in red ink for years to come.<\/p>\n

\u00a0photo by Miles Storey<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

When Rob Ford revealed that he intends to move a motion to rename the Toronto island ferry docks in honour of Jack Layton, I\u2019m guessing he wasn\u2019t thinking about the links between gas taxes, new subway cars and the former NDP leader. So let\u2019s triangulate: when Layton threw his support behind Paul Martin\u2019s Liberal minorityContinue reading “LORINC: Terrible Taxes and Other Ferry Tales”<\/span><\/a><\/p>\n","protected":false},"author":4051,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ngg_post_thumbnail":0,"_ef_editorial_meta_paragraph_assignment":"","_ef_editorial_meta_date_first-draft-date":"","_ef_editorial_meta_checkbox_needs-photo":"","_ef_editorial_meta_number_word-count":"","footnotes":""},"categories":[2],"tags":[457,425,20204,8866,3184,734,426,665,1439,8107,227,2092,19,247,6801,391,20203],"class_list":["post-30652","post","type-post","status-publish","format-standard","hentry","category-politics","tag-canada","tag-david-miller","tag-federal-gas-tax","tag-gas-taxes","tag-harper-government","tag-jack-layton","tag-mayor","tag-miles-storey","tag-paul-martin","tag-real-estate-market","tag-rob-ford","tag-stephen-harper","tag-toronto","tag-toronto-island","tag-toronto-real-estate-board","tag-usd","tag-vic-toews"],"acf":[],"yoast_head":"\nLORINC: Terrible Taxes and Other Ferry Tales - Spacing Toronto<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/spacing.ca\/toronto\/2012\/06\/04\/lorinc-terrible-taxes-and-other-ferry-tales\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"LORINC: Terrible Taxes and Other Ferry Tales - Spacing Toronto\" \/>\n<meta property=\"og:description\" content=\"When Rob Ford revealed that he intends to move a motion to rename the Toronto island ferry docks in honour of Jack Layton, I\u2019m guessing he wasn\u2019t thinking about the links between gas taxes, new subway cars and the former NDP leader. 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