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There is no Transit Santa: Expansion will require new taxes

Better transit in Toronto will means lots of spending and, likely, taxes.
Better transit in Toronto will means lots of spending and, likely, taxes.

For Toronto transit nerds, last Tuesday felt a bit like Christmas.

After much anticipation, Transit Santa swooped in and delivered a big pile of detailed reports on an ambitious slate of projects. He gifted us information about plans for two LRT lines along Eglinton Ave., Mayor John Tory’s SmartTrack, the ever-controversial Scarborough subway, and the long-awaited downtown relief line.

Here’s the problem, though: Transit Santa isn’t real, and neither are most of these projects.

Not yet, anyway.

Despite the hoopla, most of Toronto’s transit plans remain unfunded. Even after accounting for contributions from the provincial and federal governments, Toronto comes up short by somewhere in the neighbourhood of $11 billion.

So before Tory and members of Toronto City Council congratulate themselves for supporting transit, they need to take a hard look at another report that dropped last week — the less festive one telling them about all the potential taxes, tolls and fees Toronto could implement to pay for stuff.

No one likes to hear about this part, but there is no avoiding it. Transit projects cost a lot of money. Toronto’s government doesn’t have very much money. Ergo, Toronto’s government needs to implement new taxes.

That means picking from the slate of revenue tools reported on by Toronto’s city manager. There are two that I think are especially worth pursuing.

The first is a tax levy on Toronto’s parking spots. Charging a daily levy of $1.50 per paid on unpaid space would bring in about $575 million per year, according to an analysis conducted by consulting firm KPMG.

The upside is obvious — that’s a lot of money that can go to transit. The downsides are few. Ultimately, a levy on parking might result in fewer parking lots and less free parking. I can live with that.

The other option I like is a municipal sales tax. This is a bit trickier, because it requires provincial approval, but it’s a tool used by most big cities.

Like a parking levy, a sales tax charged to most purchases has significant revenue potential – up to $515 million a year, according to KPMG. It also means the thousands of people who work in Toronto but live outside our borders would start contributing directly to the city’s budgetary needs.

These taxes represent big shifts, I know. But if you’re shaking your head right now, aghast at the very notion, then I’d ask you to consider whether you’re really satisfied with the state and size of Toronto’s transit system. Because that’s about all Toronto’s current tax system will ever deliver.

Christmas miracles may come easy, but transit miracles? Trust me — we have to pay for those.

This post was originally published at on 2016-06-27T00:00:00.000Z

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Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
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