Revenue Options for Toronto (and other cities) | What's Left

by Editors (What's Left) last modified 2016-09-26T09:57:27-04:00
For socialists, this time of year is incredibly frustrating. There are many different and rather obvious ways a city (or any level of government) can generate revenue that are simply ignored by (neo)liberals and conservatives. Even more frustrating are the options presented to "solve" the budget crises that just make things worse in future years, making the process that much more painful to watch.

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It is budget time in the City of Toronto. Once again the conservative-leaning council, after being opposed to increasing its revenue stream, are "shocked" by their budget deficit. It appears as though, even after years of Rob Ford's cuts to services and revenue streams, the city still needs to spend more than it takes in. But now there isn’t much left to cut since Toronto, like other municipalities, is legally mandated to provide many services by higher levels of government. The real question is not where to cut, but how to raise more revenue.

Once again, the debate seems to be between raising taxes and selling public assets. The lack of imagination of centrist politicians and interest groups involved in the budget process is something of which many regular people have become weary. Eventually, people tune out because the result of either option just means working people pay more to the city for the same services and the wealthy get off with owning previously public assets.

For socialists, this time of year is incredibly frustrating. There are many different and rather obvious ways a city (or any level of government) can generate revenue that are simply ignored by (neo)liberals and conservatives. Even more frustrating are the options presented to "solve" the budget crises that just make things worse in future years, making the process that much more painful to watch.

For the City of Toronto, these conversations become even more upsetting since most of the options presented are regressive tax "solutions" like road tolls, subway fare increases, electricity rate increases, or the equally expensive reduction in the number and quality of social services coupled with increased user fees to access them. In fact, poverty reduction, increased social services to high-risk communities, and public housing initiatives all save the city more money than it ever costs to invest in their expansion.

There are other options for the city that are ignored from the popular discourse that should be taken seriously. These options range from investment in new publicly-owned services, investments in revenue generating services, leveraging current city assets to generate income for the city, leasing public-financed infrastructure to local businesses, and strategic investments in services known to reduce costs. Some options are presented below.

First, an outline of who is not sharing the tax-load fairly:

  • People from out of town including tourists and folks from outside the city who work and travel here – especially financial services workers.
  • Corporate and finance capital located in downtown Toronto.
  • Large landowners (not renters) such as Loblaws, University of Toronto, Ryerson University, the colleges, and the Ontario Government.
  • Large estates since estate taxes are not fully utilized.
  • Hotels. Toronto is one of the few major cities in the world that does not charge a hotel tax.

Most people do not know that Toronto has legal limits set on what kinds of taxes and revenues they can generate. However, there are plenty of areas of revenue generation that are underused by other levels of government, that could help cities pay for services that are legally mandated from those other levels of government.

What are some sources of (tax) revenue that are currently off limits to Toronto that the province and the federal government do not realize fully?

  • Large estates
  • Corporate income
  • Financial services
  • Commercial vehicles
  • A hotel tax applied through online booking services (e.g., AirB&B)
  • Sharing economy regulatory tax (e.g., Uber)
  • City owned and managed environmental risk insurance offered through a public corporation
  • Rail and truck insurance on dangerous goods offered through a public company
  • Taxes on vaporizers and other cigarette alternatives
  • Development (regulatory) charges for foreign companies which profit from property speculation and drive up rents.

Public companies can generate revenues

As mentioned above, when it comes to insurance there are some rather obvious ways that the city can generate revenue through public/municipal-owned companies. Toronto has a long history of starting well-managed positive revenue generating companies. Unfortunately, as soon as these public companies generate revenue, conservatives use budget deficits as a reason to sell these companies to their business allies. If held onto, they could have been long-time revenue streams for the city. These include recent examples like Enwave which provides deep-lake water cooling for office towers and Cogeco which provided a public internet service through Toronto Hydro.

Here are some new examples that might generate some discussion about public ownership options:

Toronto Hydro could work with Ontario Power Generation (OPG) to invest in public charging stations using the municipal Green P parking lots and street parking. These charging stations could provide free overnight charging for electric cars acting as a storage medium for under-utilized wind electricity generated at night that we currently generate at a loss. In the day time, they could provide fee-based parking & charging stations for out-of-town electric car owners. These same parking lots could be built-up into multi-story buildings that provide rental and/or corporate lease opportunities. This lease revenue would help run the public towers, but also provide income back to the city and relieve some housing issues.

A potential solution to the exploitation of contract cleaners and a new source of revenue could be solved through regulation, taxation, and the creation of a municipally-owned room cleaning services company. The city could levy a fee for hotel and short-term room rentals that would apply to all accommodations. A public cleaning service company (through services like AirB&B) that would be free-to-use for extra-room rental services paid through a portion of the levy. The city would essentially have a cohort of public, unionized cleaners maintaining a standard level of cleaning services across the city.

Finally, the mandate of the Toronto Community Housing Corporation could be expanded to provide opportunities for low-income rental housing. The city should be investing in public housing, not divesting from it, and there is nothing that stops the TCHC from providing universal housing services -- except access to investment funding. This new investment program could operate in conjunction with Green P to support rental and corporate development along the TTC and Go Transit lines providing a basis for planned community development. And, all resulting in more revenue for the city.

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