By: Seb FoxAllen
In elections, candidates use taxes as an easy way to position themselves as opponents or defenders of the size of government. Lowering taxes costs residents less, but the lost revenue also means that existing services need to be cut (or supported by a user fee) in order to balance the books. Raising taxes can equip the city with more revenue to provide services, but some residents wonder whether that money is being used effectively in ways that matter to them. The City of Toronto earns tax revenue through two main streams: Property taxes (39.4% of total city revenues) and the Municipal Land Transfer Tax (3.6% of total city revenues).
1. Can Toronto afford to maintain property tax rates lower than the regional average?
One of the central municipal revenue tools is property taxes. In 2014, the average Toronto resident will pay roughly 25% less in property taxes than those in nearby municipalities like Mississauga and Richmond Hill.
Property taxes are not only paid by homeowners; they are also factored into monthly unit rental prices. If a candidate refers to Torontonians as “over-taxed” or struggling under an unfair tax burden, ask them why Toronto does not require the same revenue levels as other cities.
2. Would you consider increasing taxes over the inflationary rate?
Taxes are raised by a small amount each year to adjust for inflation. When candidates talk about cutting taxes, they are often proposing an increase smaller than inflation.
Recently, City Manager Joe Pennachetti told City Council that “[i]nflationary rates aren’t going to maintain services into the future,” arguing that even keeping taxes at current levels will require cuts to programs and services. Pennachetti also stressed that the types of small internal “efficiencies” often used to cut costs have been exhausted.
Ask your candidate whether they would support collecting larger revenues from property taxes and, if not, what new revenue streams (user fees for services, privatization) or cuts to programs they would use to counter the lost income.
3. How can the City make it easier for renters to understand their property tax contribution?
Many renters are not aware that they pay property taxes as part of their rent. In many cases, renters pay even more in property taxes than other types of tenants. Ask your candidate whether they have ideas (like expanding the Rent Reduction Program) on how to better inform renters of their property tax contributions.
4. Do you support maintaining the Municipal Land Transfer Tax (MLTT)?
The MLTT is paid when purchasing new land or a new home. Ask your candidate whether they support maintaining it, and if not, how the City would offset the $340 million the MLTT generates.