Tory’s right on ‘revenue tools’

After years of flip-flopping, Mayor John Tory has laid down a clear marker for bringing additional fees or taxes to Toronto. A decision on new “revenue tools” is expected this fall, he told the Star’s editorial board on Wednesday.

It’s vital that the mayor stick to that commitment and deliver bold measures.

Whether these “tools” take the form of a development levy, an alcohol tax, road pricing, a revival of the city’s much-loathed car registration fee, or some other municipal “revenue option,” Toronto urgently needs extra money to pay for much-needed transit and other projects.

City manager Peter Wallace has warned of a looming budget crunch as Toronto exhausts traditional ways of balancing its books: through deferral of important projects, pillaging rainy day reserves, and capitalizing on the soaring real estate market.

Vital projects can’t be left on hold forever. The city’s reserves are drained and it’s frankly irresponsible to keep gambling on an epic real estate boom that must eventually end.

Wallace has forcefully expressed a need for new revenue tools to fix the budget, and he’s right. Fresh sources of money are also essential to fund key infrastructure projects, including desperately needed transit expansion, repairing Toronto’s decrepit public housing, realigning the Gardiner Expressway, and other initiatives. A recent staff report pegged the total value of Toronto’s unfunded capital work as high as $29 billion.

Tory will have to choose from among a dozen possible revenue tools presented by the consulting firm KPMG last month and currently under study by city staff. So far he’s on the record as backing just one. The mayor has met with Premier Kathleen Wynne and discussed obtaining provincial support for allowing Toronto to charge a per-room hotel tax.

According to KPMG, this could raise between $21million and $126 million a year, given a tax rate ranging from 2 to 14 per cent. A key advantage of this particular revenue tool, at least for politicians, is that it would mostly hammer visitors instead of local voters. Unfortunately, it wouldn’t deliver nearly enough to cover Toronto’s needs. Other revenue tools are far more fraught, and Tory refused to reveal his preferences, apart from stating that three — a municipal income tax, sales tax, and a tax on business income — are unlikely to win support from senior governments.

That still leaves plenty of options. The remaining four, not mentioned here so far, are an entertainment tax, parking levy, tobacco tax, and a parking sales tax. It should be possible to pull together a combination of measures that effectively addresses the city’s needs. But bold leadership from the mayor is sorely required. And Tory’s history of flexibility on this issue is less than reassuring.

When he ran for mayor in 2003 he attacked rival David Miller for daring to suggest using tolls to help fund public transit. After losing that race, Tory switched direction, chairing the CivicAction pressure group, where he advocated for new revenue tools, including possible road tolls. When he ran for mayor in 2014 he switched again, declaring himself opposed to a new tax to pay for infrastructure projects. Now Tory favours revenue tools, after all.

The mayor is on the right side of the issue now. Let’s hope he stays there. It would be of immense help if taxpayers could be confident that new money would be wisely invested. But Tory has done himself no favours in this regard by insisting on spending $3 billion-plus for a single subway stop in Scarborough.

Taxpayers across Toronto, as well as Scarborough transit riders, would be far better served by a light-rail system. Tory challenged that view at the editorial board, correctly noting that light-rail advocates, including this newspaper, have repeatedly claimed the province would cover the cost of operating such a line. Tory noted that an agreement signed with Queen’s Park does not explicitly commit the province to picking up this tab, so Toronto would likely have to pay for light-rail operations. Fair enough.

But that still doesn’t justify spending $3 billion on a one-stop subway extension, especially when the city lacks the money it needs for so many other worthy projects.

Tory is on the right track in pressing for new revenue tools, and it’s vital that he succeed. It would help his cause, and the city, if he flip-flopped one more time — on another issue — and dropped the ill-advised Scarborough subway expansion.

Tory is on the correct side of the issue. Let’s hope he stays there.