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Tory's Toronto

Metro's Matt Elliott, formerly of Ford For Toronto, keeps the light shining on Mayor John Tory's city hall.

Seeking relief from the property tax corkscrew: Matt Elliott

Other big cities have a Swiss Army knife of revenue options available to them: income taxes, sales taxes, road tolls and other fees. But not Toronto.

Yonge Street business south of Bloor are struggling under the pressures of tax increases.

Eduardo Lima / Toronto Staff

Yonge Street business south of Bloor are struggling under the pressures of tax increases.

Around the world, most major cities have access to a range of revenue sources.

They’ve got a Swiss Army knife of options available to them: income taxes, sales taxes, road tolls and other fees.

But in Toronto, most of these tools are off-limits. Our local government’s Swiss Army knife holds pretty much nothing but a corkscrew.

The corkscrew, in this case, is the property tax. Toronto’s government relies on property taxes for 33 per cent of total revenue, and nearly half of own-source spending. That’s more than most other big cities.

Madrid relies on property taxes for 29 per cent of revenue, according to a new report by the Institute of Municipal Finance and Governance at the University of Toronto. New York City? 27 per cent. Berlin? Just three per cent.

The inevitable result of Toronto’s overreliance on the property tax corkscrew? People get screwed.

For proof, look no further than Yonge Street south of Bloor, where windows of storefronts are now plastered with signs pushing the “Yonge Street ‘tax revolt.’”

Those businesses are fuming over property tax bills coming in with future increases of up to 500 per cent. Elliot Books (no relation to me) and the House of Lords hair salon have already announced they will close, blaming increasing costs.

Their complaints follow a similar still-unresolved story from earlier this year, where the owners of 401 Richmond Street, a building dedicated to providing affordable space for not-for-profits and art organizations, raised the alarm over skyrocketing tax bills.

Some business owners are urging customers to call Mayor John Tory, but Tory has no control over these increases. They are entirely due to reassessments of property value conducted by the independent Municipal Property Assessment Corporation (MPAC).

On Friday, MPAC agreed to reassess the value of Yonge Street properties in September – a move that could offer localized short-term relief, but isn’t likely to fix the problem permanently.

Instead, a lasting fix requires us to talk about arcane tax policy. The major reassessment increases are due to a so-called “highest and best use” policy that builds the potential for redevelopment – big condo towers – into the calculation of property value. That could be changed, though reforms require the provincial government to take action.

If the province doesn’t deliver, the mayor and council could opt to shift the property tax burden from businesses to well-off residents. But as much as I might like to see someone try it, it’s unlikely any politician wins office on a platform calling for Rosedale homeowners to pay thousands of dollars more every year.

So maybe instead of reforming the way the corkscrew twists, time would be better spent demanding Toronto get access to the same kind of tools other big cities get to use.

That won’t be easy. Last week, all three major provincial party leaders quickly rejected a call by the Association of Municipalities of Ontario to raise the HST to pay for municipal infrastructure. But new taxes, tolls and fees are the only solution that provide budget room to offer permanent property tax relief to businesses.

They would also give Toronto a stronger fiscal foundation — one that isn’t so reliant on the sharp turn of a corkscrew.

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