News / Toronto

Toronto report backs sales, gas tax and parking levies to pay for transit

Toronto city staff is recommending a gas tax, sales tax and parking levy, as well as increased development charges, as the best ways for the city to contribute its share of regional transit expansion funding.

But Mayor Rob Ford, who has already expressed his vehement opposition to transit taxes and tolls, immediately dismissed the recommendations.

“I’m not supporting any of those revenue tools. People can’t afford these taxes — that’s all it is, tax, tax, tax,” he told reporters at city hall.

“The city’s expensive enough to live in. We don’t need extra taxes,” he said.

His opposition means Toronto’s participation in a regional scheme will likely depend on whether a majority of city councillors support the charges.

A staff report based on consultations with citizens mostly agrees with the taxes that have been endorsed by the Toronto Region Board of Trade. It, however, preferred tolling high occupancy vehicle lanes to development charges.

A 5 to 10-cent/litre gas tax would add $3 to $6 per fill-up and raise $330 to $660 million. A sales tax of .5 to 1 per cent would cost $275 to $450 per household and raise between $700 million and $1.4 billion, according to the report.

A commercial parking levy of between 50 cents and $1 a day per space would be worth about the same as the sales tax.

An increase of 7.5 per cent to 15 per cent on development charges would add between $50 million and $100 million to the transit pot, says the report.

Tolling HOV lanes, other highway tolls and a vehicle registration tax, something Ford eliminated in Toronto, are recommended once the first wave of Metrolinx transit projects is complete.

The report rejects other options, including some that were short-listed by Metrolinx such as an employer payroll tax, land value capture, transit fare and property tax increases.

It also rejects utility bill levies, property tax, a land transfer tax (a charge that Ford is trying to eliminate in Toronto) and transit fare increases.

The use of the tools should be contingent on 25 per cent of the revenue being allocated to transit priorities designated by the city, says the report.

“It’s a mixed bag. There are good and bad things in the report. I’m delighted that the city manager has recommended that a quarter of all the revenue go to local municipalities for the investments they want to make. That’s a great step. Without that step, I can’t endorse any revenue tool,” said Councillor Gord Perks.

“It’s very simple. If they’re going to collect the tax locally and regionally only, some portion of it should be spent on local and regional projects. We have transit expansion needs right here in the City of Toronto. The TTC is bigger than Metrolinx will ever be. If we’re going to be funding transit out of sales tax, we’re going to need some of that for the TTC and this recommends that a quarter go to local municipalities for local projects,” said city councillor Gord Perks.

“There is a deep contradiction. In the text of the report, they talk about the need for fairness and yet they recommend against the only two fair taxes, the income tax and the payroll tax,” he said.

The report is to be considered at Tuesday’s Executive Committee.

Metrolinx is set to release its final recommendations for funding transit to the province on May 27. Premier Kathleen Wynne has said there will be another round of consultations after that investment strategy is released.

Metrolinx is recommending the region pump $2 billion annually into transit expansion

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