The City of Toronto, more than any other government, provides the services that enhance our quality of life. From police and fire services to the TTC and roads. From parks, shelter and housing to recycling, recreation facilities, libraries and so much more.
There is, however, a major funding gap between what Toronto can afford to do and what it must do to remain economically vibrant and a place where people want to live, work and play. In 2005, the Conference Board of Canada concluded that Toronto faces an annual $1.1 billion gap in infrastructure and operating expenses versus revenues. This means there is a significant backlog of infrastructure maintenance and investment in new projects needed to support the City.
That’s why our city needs one cent of the existing GST NOW! – to maintain these services and invest in new ones as our population increases.
Toronto – and other cities across Canada – are asking the federal government to return one cent of the existing GST as a reliable and permanent source of funding that grows as the economy grows. An investment in our cities is an investment in Canada.
Cities – like Toronto – keep our economy strong, create jobs and attract investment. This benefits us all, yet cities suffer from severely limited revenue sources.
The federal and provincial governments have revenue sources that grow when the economy grows, such as:
- sales tax
- income tax
- corporate tax
- resource tax
- import duties
These revenues are not available to cities; and property taxes – the major funding for cities – can only go so far. It can’t support all that cities must do to remain economically and socially healthy – maintaining services, building new roads, improving public transit – while still paying for things such as social services once paid for by the province. This has placed an unfair and unsustainable burden on Toronto and its taxpayers.
What do you mean by one cent?
We pay six cents in GST on every dollar we spend. The campaign asks for one cent of that six cents. For example, if you purchase an item for one dollar, you pay six cents in GST. We are asking for one cent of that six cents to be given back to Canadian cities. If you spend two dollars you pay 12 cents in GST and that would mean that two cents is given back to Canadian cities.
Why one cent of the existing GST?
One cent of the existing GST will provide our city with approximately $410 million a year. This permanent and predictable source of money will pave roads, build transportation projects, help Toronto become cleaner and greener and support services such as recreation centres, parks and other city facilities.
The federal government has said there is room to cut the existing GST. Toronto – and other major Canadian cities – believes that if there is room to cut, then there’s room to invest one cent of the existing GST into improving our cities.
Is one cent of the existing GST enough?
Canada’s cities, including Toronto, are asking for a stable and permanent source of money that grows with the economy. The existing GST is such a source. And others agree!
For years organizations such as Boards of Trade and business associations have argued that Canadian cities are under-funded, over-burdened, and need a permanent source of money that grows with the economy. One such organization is the Conference Board of Canada. See the report: Mission Possible: Successful Canadian Cities.
What services does the City provide and how are property taxes spent?
From police to the TTC to fire services and shelter and housing. From social services to forestry, parks and recreation to transportation and waste management. These are just some of the services brought to you by the City of Toronto.In 2006, the average residential taxpayer paid $2,093 ($5.74 a day) in property taxes. See how property taxes were spent in 2006.
What does the City need to deal with these issues?
There are three things that Toronto – and other major cities – have asked for to permanently fix these funding issues:
- A share of revenues that grow with the economy – such as one cent of the existing GST to help cities maintain services and invest in new ones as our population increases.
- Funding municipalities to meet their responsibilities – for Toronto this means having the province pay the true cost of the programs they previously delivered or paid for and which must now be funded from the property tax. Toronto pays more than $750 million for programs once delivered and paid for by the province.
- A national transit strategy – Canada is the only G-8 country without a national transit strategy. Permanent long-term funding for transit is needed to pay for large-scale infrastructure projects such as rapid transit.
The federal and provincial governments already provide money. Why isn’t this enough?
The Federal and provincial governments do provide some money to cities. There is, however, a major funding gap between what Toronto and Canadian cities can do – compared to what they need to do – to keep themselves economically strong and attractive to investment.
The federal and provincial governments recognize that the money they provide is not enough. The patchwork of year-to-year programs has created a “cap-in-hand” Canada. Toronto – like many other cities – has to choose between supporting local programs and fixing roads, while still paying for the new infrastructure required by growth.
The federal government has given cities some financial assistance for transit by phasing in sharing of the gas tax (1.5 cents in 2006 and two cents in 2007-08) and rebating the GST for items purchased by municipalities.
The Ontario government increased its contribution for transit, ambulance services and public health, shared a portion of its gas tax and provided some one-time limited funding to help Toronto with year-to-year budget issues caused by programs once delivered and paid for by the province.
The City and the province continue to talk about addressing the issues surrounding the programs once delivered and paid for by the province. In the meantime, property taxpayers and the City continue to pay for them.
The federal government already has said ‘no’ to Toronto receiving one cent of the existing GST. What makes you think their answer will change?
The federal government cannot afford to ignore the legitimate needs of people living in Canada’s largest cities. In fact, Ottawa eventually recognized the fairness of sharing a portion of the gas tax, something it said “no” to when it was first proposed.
Nearly 80 per cent of all Canadians live in cities, with Toronto being the country’s largest city. It is also considered Canada’s economic engine. It contributes billions more in revenue to the federal and provincial governments than it receives back in services.
The possibility that the federal government could ignore this request is what makes the One Cent NOW! campaign so important. If there is a federal election in the near future, residents and businesses need to ask candidates where they stand on this important issue. Regardless of this campaign’s outcome, Toronto will continue to seek the funding it needs to support growth and maintain services.
Why can’t Toronto pay for its own needs?
The property tax was never designed to support the services now being paid for by Toronto. For each one per cent increase in property tax, the City is only able to net $18 million. Why? Because property taxes are tied to real estate value, not to a person’s ability to pay. It is a person’s ability to pay, as a consumer, that fuels the economy – and cities need revenues that grow with the economy.
On the other hand, provincial and federal income and sales taxes increase with inflation as the economy grows. Over the past few years, it is estimated that the PST and GST revenues collected in Toronto have each increased by more than $100 million each year.
Unlike the federal and provincial governments, Toronto’s revenues have grown very little in the past several years. Yet, Toronto competes for business and tourism with US and European cities that are supported by a combination of local taxes and charges AND with revenues that grow with the economy. Successful cities need a wide mix of revenues to maintain the infrastructure required by major cities and Toronto’s sources of operating revenue are limited. Does the new City of Toronto Act give Toronto the power to raise the money it needs?No. The new Act is designed to give the City the flexibility it needs to provide Toronto with a better and more accountable government. There are some taxation powers but they could never raise the amount needed to permanently fund programs once paid for by the province and now paid for by the City, and the approximate $1.1 billion gap in infrastructure and operating expenses the City faces.
What revenue issues are facing the City?
Of all the taxes you pay – federal, provincial, and property taxes – only about eight cents of your tax dollar comes back to your local city. From this eight cents on the tax dollar, municipalities must pay for several critical local services, such as police, transit, fire and emergency services, roads, parks, recreation, waste management and recycling, to name a few.
As Canada’s largest city, Toronto feels this financial crunch more than most. Our revenue doesn’t keep pace with other governments, but we are the number one destination for immigrants to Canada. Toronto is the country’s financial centre and is expected to be a worldwide tourist destination for Canada. The city’s population is approximately 2.6 million but on a day-to-day basis, we have more than three million people in our city-people who are working or travelling here, relying on our infrastructure and using our services.
Why not increase the size of the City’s debt to pay for what it needs?
The cost of paying interest on the City’s debt is the second highest cost on the property tax bill; the first is policing. In fact, 37 per cent of the City’s 2007 capital budget is being paid by debt financing. This means approximately 13 cents of every property tax dollar goes to paying interest costs and debt. More debt means a greater burden for property taxpayers.
In 2007, Toronto’s total debt is projected to be $2.4 billion.
See Toronto’s capital budget plan.
Why can’t the City use reserves to fund infrastructure?
Cities cannot run an annual deficit and that’s why reserve funds exist. They provide the city with money needed for major equipment purchases or a city emergency.
The City has relied on reserve funds in the past to offset the pressures of programs once paid for by the province and now paid for by the City, while still maintaining infrastructure. But the use of reserve funds has reached its limit.
In 2007, 11 per cent of the capital budget plan will be paid from reserve funds. This, despite the fact that Toronto’s reserve funds are far below the provincial average and are estimated to be under-funded by more than $4 billion.For more information about City reserve funds please see the City’s five-year fiscal plan.
Why doesn’t the City cut other costs to pay for infrastructure?
Since amalgamation, the City has cut 1,476 full-time positions. Provincial programs now paid for by the City, also need staff to operate them. The province also mandated new levels of services within specific programs, again adding to the cost. And, as the population has grown, more police officers, more public health nurses and inspectors and more TTC drivers and maintenance staff have been needed to keep Toronto, safe and efficient.
What can I do to support the campaign?
There are several ways to voice your support. You can:
- Sign our petition
- Write your MP, the Prime Minister or the Opposition leads. Let your MP know that you support having one cent of the existing GST returned to your city.
- Order a bumper sticker, wear a pin or get a mailbox sticker, and
- If there is a federal election this year, ask all the candidates about their support for one cent of the existing GST NOW!
How much does this campaign cost?
The budget for the campaign is approximately $150,000. All of these costs are for printing, production and distribution of campaign materials.
Toronto, like the other cities that support the campaign for one cent of the GST would, of course, prefer not to have to do the campaign at all. In fact, we are taking the step of seeking the direct participation of residents and business in this campaign to ensure that the message is delivered directly to the other governments. The campaign will give residents the opportunity to demonstrate support for their city through an online petition or by sending a letter to parliament. Toronto will also provide residents and businesses with a sticker for their homes or a pin that can be worn to demonstrate support for the One Cent NOW! campaign. There will also be advertising in the City’s free advertising spaces to promote awareness of the campaign.