Thursday, February 16, 2017

John Tory's austerity regime triumphs in latest Toronto budget

Toronto Mayor John Tory's austerity budget passed Wednesday night after a variety of attempts to soften its impact or to increase property taxes above the rate of inflation failed.

This is a budget that is part of a broader austerity agenda and a larger pattern that prioritizes the better off, drivers and homeowners over people living in poverty, tenants, transit users, community housing, community programs and making Toronto a fairer and better place to live for everyone, and that does so in some pretty obvious ways.

Tory and most of council's obsession with keeping residential property tax increases at the rate of inflation continued to much detrimental effect. In fact this longstanding history in the post-amalgamation city of tying property tax increases to inflation or freezing them altogether -- as happened at some points under both Mel Lastman and Rob Ford -- has lead to the increasingly grotesque divergence in increases in these property taxes versus the increase in tolls and user fees of various kinds like TTC fares.

For example, while inflation in Ontario between 2006 and 2016 was 17.65% the cost of a TTC monthly Metropass increased by over 40%. During this entire period increases in the residential tax rate, with the exception of one year, remained either close to or below the rate of inflation. In 2011 they were frozen altogether.

User fee rates for garbage containers, water, community programs, etc, have also seen dramatic increases.

In the 2015 budget, which was supported by all of Toronto City Council's nominally progressive Councillors, this capping of residential tax rates at the rate of inflation led to the annual cost of a Metropass increasing more than annual taxes did for the average homeowner in absolute dollar terms! 

Showing a little more fortitude this time around council's left, led by Parkdale Councillor Gord Perks on this front, tried to push for bigger residential property tax increases but failed:
Councillor Gord Perks, who has long argued that residents can afford to pay more to help the city’s most vulnerable, put forward a 4.26 per cent increase. That motion failed 10-32.
“What I am proposing is that we ask those people in the city of Toronto who have the most wealth to put more money back into the system and the reason I want to do that is so that we can afford the programs that help the people who truly are struggling to live in the City of Toronto,” Perks told his colleagues on the council floor.
His motion would have meant the average homeowner would see their taxes increase by $152.50 this year instead of the approved $90.
Notably his motion was opposed by the new darling of the NDP wing of council -- whose victory was celebrated by Councillors like Mike Layton and others -- Neethan Shan who ran in part on the not terribly progressive platform of towing Tory's line on taxes and supporting the Scarborough subway boondoggle. Likely to appease his alleged allies Shan did, in the end, vote against the budget as a whole despite this, which makes his position on residential property taxes basically incoherent.

The fact is there is no path towards actually building a broad progressive platform around transit, housing, community and social programs without above inflation property tax increases in the present context given what City Council can actually do to raise revenues in a serious way

As the Torontoist pointed out in a detailed article on the subject in 2014, residential property taxes in Toronto (and elsewhere in Ontario) are not, actually, tied directly to the value of an individual property and how it increases or declines in the way most people think. They are tied to the value of any individual property versus everyone else's property set against the municipal average.

If a given residential property increases in value at the same rate as other properties in the city its property taxes will remain the same unless the city raises the overall property tax rate generally.

Ontario's Municipal Property Assessment Corporation, who are responsible for working out the municipal property taxes owed in every municipality in the province, has a handy short video (which apparently almost no one has watched), explaining this:

This is a key point which many people, including Councillors, either do not seem to grasp or do not understand the implications of. Property taxes in Toronto are ultimately revenue neutral over time -- and are based on the total revenue Toronto needs to raise relative to the total number of paying households relative to each other's value relative to non-residential property tax revenue -- unless council increases the general rate overall to fund new expenditures/programs/costs which is part of the reason that raising property taxes at the rate of inflation if Councillors want to expand overall expenditure is a no starter and that freezing them is disastrous.

It will inevitably mean that city council will have to either increase user fees or other taxes/fees of one kind or another, or that it will have to make cutbacks and start down the path towards austerity as Tory did with his cookie cutter idiocy demanding that every city department trim an identical 2.6% from their budgets. If the city wants to increase or expand programs, to create new infrastructure, or even to maintain what it has given expanding population and needs it cannot be done by keeping residential property taxes at the rate of inflation. Period.

It is simply not possible and it is crucial to understand this when discussing property taxes in Toronto.

All talk of gigantic new downtown parks, vastly improving transit, truly dealing with the crisis in community housing, and so on is pure fantasy otherwise.

Both Rob Ford and John Tory have de facto admitted this with the special and supposedly temporary property tax levies that have been put in place to fund things like the Scarborough subway.

And while shelter workers were cut and while community program user fees will rise above the rate of inflation the city will spend hundred of millions of dollars to keep the eastern extension of the Gardiner Expressway in place entirely toll free thanks to the political cowardice of the Wynne provincial government which wants Toronto to continue to be exclusively responsible for paying to maintain this infrastructure without being allowed to decide how to, while drivers in regional municipalities who do not contribute to Toronto's revenues get to freeload when they use them!

But keeping the Gardiner in place still remains a decision that Toronto politicians made and, as Desmond Cole pointed out in the Toronto Star, specifically about the lack of commitment to housing,:
...when the voters who put Tory in office want costly roads and subways, he goes to the bank. Tory is right to say the property tax base was never meant to fund housing, and that Queen’s Park and Ottawa aren’t paying close to their respective shares. But these governments use Tory’s rhetoric against him. They similarly claim a responsibility to fuel prosperity by keeping taxes low, even if people are thrown from subsidized housing as a result.
Metro columnist and city budget enthusiast Matt Elliott told me bluntly this week, “I don’t have any time for politicians at city council who say the city is broke.” Elliott pointed to debt-financing for transit and roads as proof the city is choosing some investments over others. “The money is there if they want it to be, it just comes with trade-offs,” said Elliott.
This is true, of course, though it is also linked with a terribly destructive notion that the goal of government on all levels is to somehow keep life "affordable", a goal that actually applies only to some and that actually makes life less "affordable" or even less basically livable for others.

For when these politicians talk about "affordable" they are not talking about transit users, tenants (who end up paying via their rent for the much higher property tax rates on apartment buildings)  or those who rely on community services or social programs, they are talking about middle, upper-middle and upper class homeowners and car drivers who actually benefit almost exclusively and massively disproportionately from these policies to the detriment of those who truly need government to intervene in the economy, in the building of public infrastructure and in society on their behalf.

And that is a fundamental travesty that is a basic feature of neo-liberal economics and taxation policies.

See also: What is with all the Ontario left ranting about road tolls and Toronto 'elites'?

See also: Full austerity jacket -- The gloves come off in Tory's Toronto

See also: 42-2: John Tory, Toronto City Council and the austerity consensus

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