Mayor Rob Ford's Executive Committee appointed the city's new budget chief on Tuesday. The job, formerly held by Coun. Mike Del Grande, went to Coun. Frank Di Giorgio. It's an odd choice.
In his new position, the veteran councillor from Ward 12 didn't get off to great start. Scrumming with the media, he immediately agreed that the city could cut the municipal land transfer tax by 10 per cent (or more) next year. He also gave the impression that a property tax freeze in 2014 — something the mayor has pushed for — might be doable.
In other words: he suggested digging a very big fiscal hole.
The math is pretty simple. A 10 per cent cut to the municipal land transfer tax would mean that the city would forego at least $32 million in annual revenue. That's a huge chunk of change.
And there's not really any indication that the tax cut would have any measurable impact on Toronto's real estate market or the larger economy.
For the average home buyer, the savings after the tax cut would amount to only a few hundred dollars off their purchase price — not really enough to inspire people to run out and start snapping up property they wouldn't have bought otherwise.
As much as the real estate industry has campaigned against the tax, no one has made a fair argument as to why the city should reduce or remove it. And “because people don't like it!” doesn't count.
As for the floated property tax freeze, that just means the city's revenues would fall even further behind inflation. Under the safe assumption that inflation next year will work out to 2 per cent or so, a freeze would put Toronto in the red by about $46 million.
That's the hole: approximately $46 million in foregone property tax revenue, combined with about $32 million in lost revenue from the land transfer tax. Let's call it $80 million for easy math. If you think the city can find $80 million in savings without gutting things like libraries, transit and social services, you're more optimistic than I am.
Di Giorgio, it should be noted, backed off his claim that he'd consider a property tax freeze later in the day on Tuesday. He said his comments has been misunderstood. Let's take his word on that.
But then Di Giorgio followed up his earlier budget musing with an even more distressing statement. In an interview with CBC Radio, he responded to a question about new revenue for transit by saying that he “personally will not be supportive of a lot of the tax increases that will come forward as potential tax increases to pay for transportation.”
So it would seem Toronto's new budget chief isn't likely to support the revenue tools necessary for building a transportation system that doesn't suck.
Another misunderstanding? I guess we'll see.
This post was originally published at http://www.metronews.ca/views/toronto/ford-for-toronto-matt-elliott/2013/02/07/on-first-day-torontos-new-budget-chair-ponders-digging-big-budget-hole.html on 2013-02-07T00:00:00.000Z