As we all weather the second wave of the pandemic, the City of Toronto is facing a historic $1.8 billion deficit rolling into 2021. COVID-19 has created significant challenges for the City’s earning and spending abilities — it must deal with unprecedented increases in costs of running local programs and services, while facing significant decreases in revenues.
The Federal Government has stepped in to support Ontario municipalities during the pandemic by dedicating $4 billion in emergency funding. This money is part of its Safe Start Agreement, which provides $19 billion in relief funding for all provinces and territories.
The Government of Ontario is disbursing the money to municipalities in two phases. The City of Toronto has already received the first round of funding, but is still waiting on the Province to make explicit the next round of financial supports.
Although it is clear that the City must advocate with the provincial and federal governments for more money and funding stability to help cushion its $1.8 billion budget shortfall and address longstanding funding issues, it cannot rely exclusively on other levels of government. The City must strengthen its own ability to support our path to pandemic recovery.
The City needs to introduce new municipal revenue sources, such as the Vacant Home Tax supported by Mayor John Tory. The Executive Committee will review a report on adopting the Vacant Home Tax on Dec. 10. If the Committee recommends adoption, on Dec. 16–17 Council will discuss and then vote on whether or not to approve the new tax.
The City of Vancouver has raised nearly $40 million per year with a similar tax and invested it in affordable housing. In 2019, the tax also pushed nearly 5,000 condominiums into Vancouver’s rental market. The Vacant Home Tax has been so successful that in 2021 the City of Vancouver is increasing the rate from 1.25% to 3%.
Social Planning Toronto urges the City of Toronto to approve the Vacant Home Tax and dedicate the revenue from the tax toward affordable housing. If Council approves it, the new tax will come into effect in 2022.
A Vacant Home Tax is just one of the many ways the City can make full use of its taxation powers defined in the City of Toronto Act (2006). Toronto will need to explore other existing and new revenue opportunities to successfully support a strong recovery for our communities in the years to come.
Charging commercial parking levies, for example, could earn the City of Toronto nearly $500 million per year. Not only would the levy encourage the use of other forms of transportation such as the TTC, but the money raised could be directed towards vital community programs and services that matter most to those in need.
We explore some of the City’s revenue opportunities — including the Vacant Home Tax and a commercial parking levy, as well as property tax increases, a portion of the provincial sales tax, road tolls, and more — in the first of a series of backgrounders we’re producing on key issues related to the 2021 municipal budget.