No one can ever accuse Toronto City Council of being asleep at the switch when it comes to new ways of bringing revenue into the city. So it came as no surprise when Councillor Norm Kelly came up with the idea of adding two (count ‘em--two) new taxes for Toronto’s already overtaxed residents.
Kelly intends to go to the Policy and Finance Committee and suggest that the city ask the province to allow city council to impose both a municipal sales tax and a municipal income tax. Lucky us! The councillor is also proposing that if these new taxes are enacted, property taxes would be slashed in half.
Some of Kelly’s ideas sound good if you don’t really think them through. But when deciding on the merits of sales and income taxes, you have to keep in mind that the majority of Toronto’s elected representatives have yet to find a special interest group that isn’t worthy of money from the overtaxed residents of the city. We are governed by a bunch of politicians who simply cannot stop spending and have never met a tax or a user fee they didn’t hike.
Kelly’s proposal would be fairer to those who are on a fixed income such as seniors. These are the people who worked hard all of their lives, purchased, improved and maintained their own homes, only to see the assessed values increase at a time in their lives when their income has become fixed. Not only do these people face higher property assessments but have to listen every year to a council that brags about how they held property tax increases to "only three per cent".
a sales tax would be fairer; those who have more discretionary income and therefore spend more will bear a larger proportion of the tax burden. and income taxes are such that those who are more able to afford higher taxes will be paying more.
Kelly is correct when he says that the tax base will be broadened. Sales tax will be paid not only by the city’s residents but by tourists and those coming into Toronto from surrounding regions. People who live in the 905 area but who work and spend time in Toronto would end up, through the imposition of a sales tax, contributing to infrastructure costs that they use on a daily basis but do not now contribute to.
If sales taxes and income taxes are imposed, business taxes could be slashed as well. This would result in making Toronto more competitive with the suburbs and would stem, if not completely reverse, the flow of businesses that are currently leaving Toronto for the 905 region and beyond.
Kelly has said that although municipal sales taxes and income taxes have been discussed in the past, his proposal is different because prior proposals did not include property taxes being cut in half. as a result of this feature, Kelly feels that his proposed system is workable.
Despite the fact that there are a lot of positive aspects to Kelly’s system of taxation it would be an unmitigated disaster. If the Canadian dollar is high, price increases caused by the sales tax would discourage foreign tourists from coming to Toronto. and many people, especially high income earners, would leave the city rather than pay a third tax on their income. But these are minor compared to the real flaw in the Kelly proposal.
Kelly’s scheme is that it will give Toronto City Council three taxes to increase instead of just one. and, along with death, tax increases will be inevitable. You can almost picture David Miller bragging about how property taxes have been cut in half and then whine about how the province and the federal government is not giving him enough money to run the city. Before you know it, property owners would be seeing double digit property tax increases instead of the current three per cent. Before long, property taxes would be close to what they are now and that would be in addition to the sales and income taxes.
Sales and income taxes would be harder to increase than property taxes but far from impossible. Kelly’s system might work if the city was governed by people who were fiscally responsible, but of all levels of government, including the corrupt federal Liberal Party and their lying cousins at Queen’s Park, Toronto City Council is the least fiscally responsible.
Kelly’s proposal, as much that comes out of Toronto City Hall will benefit the council, not the public.
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