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City of Toronto sales tax? Sure, Why not??
| quote: | Shelley Carroll, the city budget chief who is considering a bid for the mayoralty, suggested yesterday that Toronto should levy a municipal sales tax.
“We will soon be the only city of its size in North America that doesn’t have a sales tax,” Councillor Carroll (Don Valley East) told a breakfast discussion at the National Club. “We are missing an opportunity to build it into the HST.”
Is Ms. Carroll actually saying she wants to run for mayor on the program of bringing in a new tax? This seems a kamikaze act, a point I made yesterday as a panelist with Ms. Carroll during the discussion, “Toronto’s Budget: Priorities for 2010.” At the same time, it is hardly a revolutionary idea.
“There is one thing that stopped New York City from going broke in the early 1960s, and that was the sales tax,” Ms. Carroll said, adding that Chicago, too, uses proceeds from its sales tax to fund its transit system. “If it’s not a part of the discussion then you’re just fooling yourself.”
This idea goes even further than Mayor David Miller’s famous “One Cent Now” campaign, which he splashed all over bus shelters two years ago, asking Ottawa to fork over to cities 1¢ of the GST. Mr. Miller wanted the money, not the power to collect the tax on hamburgers and haircuts. His idea did not fly in Ottawa.
Ms. Carroll calls a city sales tax a prerequisite for Toronto’s success, and even suggested that Mr. Miller was willing to carry the ball for a local sales tax -- as part of the HST rollout next year -- before his abrupt decision to not seek a third term as mayor.
“Every global city has two things we don’t,” she said. “A stable formula for sharing operating costs of public transit with the federal government, and revenue sources that grow with the economy.”
Ms. Carroll has some fans with her tax plan. Glen Murray, the former mayor of Winnipeg who now heads the Canadian Urban Institute in Toronto, has long been a fan of city sales taxes. Mr. Murray, considering his own bid for the Toronto mayoralty, notes that major U.S. cities benefit when tourists visit, for example, by collecting sales taxes on the tourists’ purchases, whereas Canadian cities end up subsidizing tourists’ transit rides without realizing any benefits. He did not return calls yesterday.
The Toronto Board of Trade, whose director of policy Brian Zeiler-Kligman also joined the panel yesterday -- organized by Global Public Affairs -- dodged a question about a city sales tax, saying he’d wait and see whether any politician had the guts to actually ask for that tax authority. Toronto right now has power in the City of Toronto Act to levy a hotel tax and a liquor tax, but has not done so.
What is the right level of taxation? Toronto did last year impose a vehicle registration tax and a land transfer tax. Yesterday a city council committee discussed a new tax on billboards. We also pay separately for water and garbage.
“Holy mackerel,” said Councillor Doug Holyday (Etobicoke Centre), when told of Ms. Carroll’s tax idea. “Those other taxes that were supposed to save our ass are only paying half of the subsidy for the TTC.”
He noted that the city subsidy to the TTC operating budget has leapt from 14% to 29% over the past few years, and suggested Toronto should spend less rather than tax more.
Right now, the city budget is a messy document, with money coursing in from Ottawa and Ontario -- from the gas tax and elsewhere -- and flowing out the other end; a city sales tax, if it’s not a new tax grab, has the potential to clarify the role of each level of government. Toronto, however, always seems to spend every penny it gets -- and then look for more.
“We are now getting $600-million a year more from the federal and provincial government,” Mr. Zeiler-Kligman told the panel yesterday. “The problem is that the city budget has grown by $1-billion in that period.”
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Many American cities have sales taxes, including these four:
• New York City
4.5% sales tax on many goods and services, including hotel rooms, food and beverages at restaurants, and admission charges.
• Chicago, Illinois
1.25% sales tax.
Five-cent bottled water tax.
9% fountain soft drink syrup tax.
3.5% hotel tax.
0.25% restaurant tax.
• Denver, Colorado
3.62% sales tax, which includes entertainment and telephone services.
10.75% lodger’s tax.
4% food and drink tax.
• Phoenix, Arizona
2% sales tax.
5% hotel tax (2% for non-transients).
2% restaurant and bar tax.
2% rental tax. |
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