The Real Tax Bogeyman

A local anti-tax advocacy group responded to the news of an updated $248 million surplus as proof that we are ‘very, very over-taxed.’ taxburden1It’s a sentiment that pretty much parrots the thinking of Mayor Ford who saw the surplus as a sign he could begin trimming the Land Transfer Tax in order to make partially good on his campaign promise to eliminate it all together. It wasn’t a promise out of line with most of his opponents. George Smitherman talked of how the city was nickel and diming residents. Joe Pantalone — David Miller’s deputy mayor – hopped aboard the anti-tax boat mid-stream, pledging to ditch the vehicle registration tax he’d helped to usher in.

It’s hard to be a tax-and-spender these days.

Why? BECAUSE IT’S MY MONEY, DAMMIT!! Unlike the streets, the schools, the police, etc., etc. taxationisthefttax money goes to providing for everyone.

This anti-tax pressure is especially acute at the municipal level.

Why? Because municipalities in this province are forced to rely so heavily on one form of taxation as its primary source of revenue. Property taxes.

There’s something really visceral about paying property taxes. It’s like an attack on your home and hearth. An article flagged by Rowan Caister today about the 35th anniversary of California’s Prop 13 which severely restricted the state’s ability to utilize property taxes as a source of revenue suggests to me that it was the source of a generation’s groundswell of anti-taxation fervour. Not to mention an important factor in the steady erosion of California’s economy over the past three+ decades.

(And doesn’t Howard Jarvis, the proposition’s point man, bear the same classic phenotype as almost every other anti-tax, anti-government zealot who has come after him?)

howardjarvis

Since property taxes make up such a big slice of Toronto’s revenue pie, it’s intuitive to then assume we’re paying too much or are being gouged. Nearly 40% of the city’s revenues came from property taxes (page 28 of PDF) in the 2013 budget. That’s a lot of taxes we’re paying, right?

Well…

Here in Toronto we still pay lower residential property taxes than any other municipality in the GTA. Even factoring in property values, the city winds up right in the middle of the pack. (Check out Joe Drew’s excellent analysis.) taxmanSo when someone claims that we are very, very over-taxed, I have to ask: Compared to… ? Not our municipal neighbours, surely. What then? The 1950s?

This is not a call necessarily to raise our property taxes although I will call bullshit on anyone claiming ours are too high already. Property taxes are not the ideal revenue tool for adapting to changing economic situations. They tend to be years behind reflecting reality. They’re relatively inelastic, I think the economic term is.

We need to diversify how we generate revenue. Consider how other municipalities around the world are equipped to do so. Check out Table 2 in Enid Slack’s  A Report to the London Finance Commission. In addition to property taxes, there are sales taxes, land transfer taxes, hotel taxes, beer and liquor excise taxes, income taxes, payroll taxes. Tokyo even has something called a ‘hunter tax’. taxesareevilA hunter tax?!

Of course, for Mayor Ford and all his acolytes, this has never been about reforming Toronto’s system of taxation. We were heading in that direction with the power bestowed in the City of Toronto Act. The Vehicle Registration and Land Transfer taxes (hardly unique by international comparison) took steps toward revenue diversification but were roundly defeated in the 2010 election campaign.

The only good tax is a dead tax, it seems. And I ain’t talking an estate tax neither. Councillor Doug Ford summed up the ghosts of Howard Jarvis sentiment perfectly last year when he declared all taxes to be evil.

Such short-sighted selfishness has held sway for too long now, and much to the detriment of our crumbling infrastructure and sorry lack of recent transit building. It just isn’t good enough anymore to cross your arms and shake your head no. It doesn’t get subways built or roads paved.

texaschainsawmassacre

It simply sponges off the sacrifices made by previous generations and stiffs future ones with the bills we were too cheap to pay.

freeloadingly submitted by Cityslikr

5 Responses to The Real Tax Bogeyman

  1. joedrew says:

    Here in Toronto we still pay lower residential property taxes than any other municipality in the GTA.

    Incorrect, as your very next sentence, referring to my data, says. And if you look at my followup post on property tax levied per person, we’re actually at the high end.

  2. joedrew says:

    (Of course, that’s not to say that Toronto’s revenue doesn’t need diversification. But I’d like people to stop thinking that Toronto’s property taxes are abnormally low—they aren’t.)

  3. Greg Banks says:

    You know I find it interesting R Ford keeps harping about reducing the MLTT….interesting because he is relying on it more and more on it to balance the operating budget…..2011 reliance 200M vs 2013 reliance 321M a 60% increase….

  4. Jim Rootham says:

    Apartment residents in Toronto pay taxes at almost 3 times the rate of homeowners (see link to tax rates in blog post linked to above).

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