The Ritual of the Cash-Strapped Megacity

It is no secret that our country’s largest city has been facing a slew of financial woes over the past few years. Although not the only Canadian city experiencing such problems, Toronto, through its continuous attempts to architect policy solutions, has definitely been the most prominent.

Such recurring financial shortcomings have become evident simply by looking at the city’s social problems. Between 1981 and 2001, the city commonly referred to as Canada’s economic engine experienced a 69% increase in families living under the poverty line, compared to just a 15% increase in the number of families overall . In 2003, it was calculated that one in three children lived in poverty in Toronto . It doesn’t end there: a recent Pembina Institute study  ranked the City of Toronto 24th out of a sample of 27 communities in Ontario for livability, due to poor ratings in terms of park space, community centers, social housing, child poverty and income inequality. (The two highest-ranking communities, Sarnia and Stratford, are classified as low population centers and consequently face different levels of social challenges.)

Isn’t it in the Provincial Government’s mandate to deal with these issues? Well, that’s not so simple anymore. Over the years, Ontario cities have seen their traditional responsibilities expand to include social and poverty alleviation services, without gaining sufficient access to the required revenue sources. Megacities such as Toronto are the hardest hit by this irresponsible downloading. This past year, more than $729 million was diverted from Toronto’s property taxes to pay for these provincially mandated programs.

Image by Cristian S. Aluas

The situation hasn’t been entirely hopeless. Although limited in scope and profitability, the Province of Ontario has granted the City some additional taxation abilities, such as taxes on land transfers, vehicle ownership, road usage, alcohol, billboards, tobacco, amusement activities and parking. Miller has even attempted to implement two of these taxes (for land transfers and personal vehicle registrations), which would amount to over $350 million in revenues per year for the city.  However, this hasn’t come to fruition after City Council recently voted to delay the decision. Councillors opposing the taxes expressed concerns over their local economic impact.

Implementing these taxes could have helped the City achieve substantial improvement in maintaining its expenditure responsibilities. But it’s not just that: it would also have increased the city’s financial autonomy while diversifying its revenue sources - a process which could have encouraged the province to extend these taxation abilities to other cities. In the long run, it also would have helped Canadian cities gain access to more lucrative taxation sources, such as a general income or sales tax, which are already being employed by cities all over the US and Europe.

More than 30 years ago, the Canadian Federation of Mayors and Municipalities sent warnings about the financial resource disparities cities face. But, as the Toronto City Council keeps stepping away from the plate, and while our provincial and federal governments still refuse to acknowledge the problem, the ritual of fiscal crisis amongst Canadian cities lives on.

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