WiTOPoli Weekly: Friday, October 2

 A roundup of some of the latest news in women, Toronto, and/or politics this week. What stories did you read this week? Tell us in the comments.

  • A Toronto police officer pleaded not guilty to the fatal shooting of 18-year old Sammy Yatim on a Dundas Streetcar in 2013. The trial is expected to last at least 8 weeks.
  • Tension rose during the Munk leaders’ debate on Canadian foreign policy when the three main party leaders debated over citizenship, refugees, security and the Keystone pipeline. Oxfam Canada’s Executive Director pointed out that women’s issues were excluded from the foreign policy discussion.
  • Excluded from another federal election debate, Green Party leader Elizabeth May uses Twitterto participate in the Munk foreign policy debate.
  • woman wearing a hijab was harassed in Montreal this week and reported in to police as a hate crime. In last week’s French language debate, Harper repeated his refrain that women should not be allowed to wear a niqab during citizenship ceremonies, even though the courts have already contested his stance.
  • The Ontario government is seeking to appeal property tax assessments. Mayor John Tory responds with the threat of increasing the rent on properties the city leases to the province.
  • City councillors voted on regulating Uber under city by-laws. Proposals include that the starting fare for taxis be reduced by $1 and that Uber refrain from operating until the regulations are amended. A report is expected this spring.
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Ask Your Candidate: The Economy

By: Seb FoxAllen

Should the City have the right to create a municipal sales or hotel tax?

The Toronto region is a major contributor to Ontario’s overall economy, representing almost half of the province’s GDP. The Province collects revenue from this output through their share of the HST (8% provincial, 5% federal), but also places limits on the ability for the City to consider creating its own sales tax.

A municipal sales tax would work almost exactly like the provincial and federal HST (currently 13%), except the money would go directly to the City. It would be comparatively low, likely 1 or 2 percent, bringing Toronto’s sales tax to roughly where it was before the federal government reduced the GST from 7% to 5% back in 2008. In practice, this would mean that the actual cost of, say, a $2 cup of coffee would rise from $2.26 to $2.30.

The proceeds of the tax could be used for whatever purpose City Council decided, and could even be isolated for a specific purpose, like transit spending or debt reduction.

The implementation of a sales taxes could, however, have drawbacks. Critics argue that new municipal taxes discourage consumer spending, investment and tourism (Data from Austin, TX, which levies hotel, venue, and a sales tax, seems to ease some of those concerns).

More significantly, because sales taxes impose the same rate on everybody regardless of how much money they make, people with lower incomes end up paying a higher percentage of their earnings than people who earn more. In most cases, this is corrected by exempting basic items (groceries, clothing, gasoline, etc.) that lower income consumers spend more of their income on. Some jurisdictions also offer exemptions or credits for lower-income residents (many Canadians receive a quarterly HST rebate cheque depending on their yearly income, for instance).

Sales taxes (and/or hotel and visitor’s taxes, in place in cities like San Francisco, Chicago, and New York) could also be particularly efficient in raising revenue from Toronto’s expanding tourism industry. In 2012, 9.9 million hotel room nights were sold across the region (Toronto hotels do currently actually charge a 3% hotel tax, however all proceeds go directly to the Province’s Tourism Ontario).

Of the $5.1 billion visitors spend annually in Toronto, federal and provincial governments collect $1.8 billion in taxes. Yet, because of the limits placed on municipal revenue options, the City is only able to directly raise $14.4 million.

Outgoing City Manager Joe Pennachetti has been increasingly blunt in his insistence that the current set of options the Province allows Council are not sufficient to sustain the service expectations of Torontonians. “We do not have the revenue tools we should have,” he told a crowd this spring. The provincial government considered giving City Council these new powers as recently as last year, but opted instead to find revenue in corporate and gas taxes.

Ask your candidate whether they support provincial legislation to give Toronto the same range of revenue options available to other major cities across North America and, if so, what types of proposals they would explore if given that power.

With files from Christina Marciano.

Ask Your Candidate: User Fees

By: Seb FoxAllen

User fees are charges people pay to access services the City feels are important to provide but cannot afford to pay for with taxes alone. These can include anything from fees for sports leagues, community centre classes, and zoo admission, to road tolls, TTC fare increases, or a Vehicle Registration Fee. It’s not just so-called “optional” activities that are funded this way: several core City services, including garbage collection and water, are also supported with user fees.

The City of Toronto charges over 3000 different user fees, representing $2.8 billion in revenues each year.

Tom Raftery Licensed under: Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic; https://creativecommons.org/licenses/by-nc-sa/2.0/

Tom Raftery
Licensed under: Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic; https://creativecommons.org/licenses/by-nc-sa/2.0/

In order to keep delivering services at the same levels as today, the City will need more revenue over the next several years. Are new user fees or increased taxes a better way to achieve these increases?

This year, City Manager Joe Pennachetti told City Council that “[i]nflationary rates aren’t going to maintain services into the future.” This means that the next City Council will have to increase the amount of money it collects from Torontonians.

Taxes and user fees represent different ideas for how government should collect money from residents.

Taxes spread the financial burden for providing services across the entire population. They allow the City to collect more money from high-income earners and ask people to indirectly fund even services they don’t use. The result: higher taxes for everyone, but cheaper and more accessible services for users.

User fees are based on the idea of charging individual residents directly for the specific services. This is a less efficient way to collect money, because the money comes in a bit at a time. In addition these fees disproportionately impact groups (including women and low-income earners) that typically use city services. The result: taxes do not need to be raised above inflation, but service-users bear more expensive out-of-pocket costs.

As an example, the TTC is funded by both tax revenue (in the form of a yearly municipal subsidy) and user fees (in the form of fares, metropasses, etc.). Increasing the contribution from taxes would maintain the price of individual fares and metropasses, but require a tax increase for everyone (even for those who never use the TTC). Increasing the contribution from user fees would mean a lower tax bill for everyone, but would significantly increase the cost for TTC users in the form of more expensive tokens and metropasses. In the case of transit specifically, data shows that a user fee model places a disproportionate burden on women, who are the primary users and purchasers of fares and metropasses.

Ask your candidate what types of user fees they support and what, if any, types of services they think might be better-secured by a pooled tax base model.

Are there ways to make current user fees fairer?

A common argument against user fees is that they are harder to apply fairly across different income groups: A computer class with a $50 user fee costs the same for a lawyer as it does for a service worker, even though the $50 represents a much higher percentage of the service worker’s income.

Ask your candidate whether they consider this gap to be a problem and, if so, what kinds of tools (subsidized spaces for low-income participants, youth and senior rates, etc) can be used to apply current user fees more fairly.

Ask Your Candidate: Taxes

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.