Revenue Options for Toronto (and other cities)
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.
Selling Toronto Hydro is a terrible idea
Last week, politically right-of-centre Toronto Mayor John Tory announced that the city was looking at options to “unlock the value” of the 100% Toronto-owned, non-profit utility that distributes electricity to residents. In current political speak, this means privatization. This was a shock to no one as privatizing the 100-plus year old Toronto Hydro has been a common theme during previous budget discussions.
However, while privatization has been raised before, the current context should make people take the suggestion seriously. The provincial Liberals (and Progressive Conservatives before them) have been on a long-term program of privatizing the electricity system in Ontario. Our public system has been eroded through the privatization of electricity generation, the subsidization of private for-profit wind and solar generation, the privatization of the provinces’ transmission company Hydro One, and the reliance on privately operated nuclear plants.
The mayor and his ideological allies have been trying to turn people against public ownership of Toronto Hydro by pointing to specific outages and “decaying” infrastructure. This is an act right out of the provincial Liberal’s play book – pointing to the need for infrastructure investment has been the go-to response for the Wynne government while selling Hydro One. Of course, it makes no economic sense to sell a utility that generates revenue for the province or municipality especially if infrastructure spending is required.
It is important to note that Ontario residents are strongly opposed to privatization. Poll after poll shows a sizable majority of electricity consumers (home-owners and corporations) understand the issue and are opposed to privatization.
The Society of Energy Professionals released a poll in June of 2016 showing 64% of Toronto residents think that electricity should be provided through a public utility with even more (over 70%) are opposed to selling Toronto Hydro.
The public’s opposition to selling Toronto Hydro comes from the belief that electricity rates will go up if it is sold. This is an obvious visceral response to the privatization of a non-profit, public utility. And they are right to feel that way. Evidence shows that electricity rates are almost always higher when the utility is private. However, this is not the only problem with the privatization of Toronto Hydro.
Analysis from the Canadian Union of Public Employees’ research branch shows that in addition to higher electricity rates, when local utilities like Toronto Hydro are private, they experience significantly longer and more frequent blackouts.
The budgetary impact of selling Toronto Hydro is severe. While there would be an infusion of money from the sale into the current year’s budget, the city would lose millions of dollars of investment return and dividends paid to the city each year.
For example, a 10% sale of Toronto Hydro could generate a one time amount of about $168M, but cause (at a minimum) cost Toronto $80M more over ten years, and $10M a year after that compared to the cost of borrowing $168M.
A 2016 study showed that the return on equity (the value of the company) of Toronto Hydro is about nine per cent. Of this, the city gets dividends (direct cash to the city from Toronto Hydro) of over four per cent each year. This is one of the best investments a city (or anyone) can have. Privatizing the company would mean the loss of this revenue. This makes even less sense when you consider the millions of dollars that would have to be paid to the province in any sale.
All said, it is rather disingenuous, if not an outright lie, to suggest that selling Toronto Hydro would solve any budgetary issues for Toronto or lead to better services. All it would mean is higher taxes, higher electricity bills, and more frequent and longer power outages.
October 1 is a chance to capture hearts and minds
Next Saturday, October 1, workers will gather at Queen’s Park for the Rally for Decent Work. Unions have coordinated buses from all over the province and the rally is likely to attract a good crowd. The timing of this rally is important: the province has undertaken the Changing Workplaces Review, a process to modernize labour laws and hopefully make changes for its precarious workforce. But the voice of business is strong in Ontario, and the rally aims to be the first show of force that workers are united and will be holding the government to account. In addition to fair labour laws, demands made from workers during this process have included a \$15 minimum wage, paid sick days, easier rules to join unions, and other items that would increase fairness at work.
One aspect of the upcoming rally worth noting: don’t expect a regular union rally where labour leaders take centre stage. The speakers who will be holding the mic next Saturday are all impacted directly by the precarious nature of the workforce in Ontario. They will come from diverse sectors and will share their experiences of trying to make ends meet by working contract, temporary, and freelance jobs.
This provides an opportunity for labour and left activists: the movement for decent work needs to grow beyond the precarious labour community. A hopeful, exciting, and unconventional rally can be a chance to inspire those who are supportive but have difficulty connecting to this struggle.
If we are to think of this Saturday’s rally as a festival and a show of unity, it is worth turning our minds to the people around us who might want to be part of it. What community groups are you a part of? Where do you spend your weekends? Which groups would get excited about making a banner and marching as a group? Who can you march with and how can you make them feel welcome?
Decent work affects everyone: the old and the young, parents and children, immigrants of first, second, or third generations, and more. This Saturday should be a vibrant, colourful coming together of all branches of the workers’ movement.
New immigrants good for schools
Higher concentrations of immigrant children at schools result in less bullying, better student mental-health, and better educational outcomes.
According to a recent study, this is because immigrant families tend to be more tolerant and more likely to help others.
ARTS & CULTURE
30 years of the Handmaid’s Tale
In 1985, Canadian author Margaret Atwood published The Handmaid’s Tale. The book would go on to win the Governor General’s Award for English language fiction that same year and further establish her as a prominent writer. The Handmaid’s Tale anticipates a world where the government of the United States has been overthrown by a religious dictatorship enforced by a military structure. It is set in the near-future, where characters navigate the treacherous waters of a new order while remembering episodes of their previous lives. categories: [“What’s Left”]
The Handmaid’s Tale is a brilliant way to recognize Atwood’s important contribution to the genre of speculative fiction, and to come face to face with the her political imagination. The Citizens’ Press marks 30 years of this novel by reviewing it from the perspective of a first-time reader.
Indian high court enforces copyright exemption for education
In India, the Delhi high court has ruled that a university providing photocopied textbooks for its students has not violated the copyright act, since the photocopies are being undertaken for educational purposes.
In many countries, including India, Canada, and the United States, exemptions to copyright laws exist when the use is educational. For instance, students are able to photocopy parts of books in order to further their studies. This exemption exists because there is a common understanding that copyright exists as a means to encourage further creativity and innovation, so while there should be an incentive to create works (the right to earn revenue from copies of those works) there should also be exceptions so that society benefits as well as the individual.
It is often argued that the educational exemption is used too restrictively, and educational institutions actually have much more flexibility in using copyrighted works than they make use of. In India, a judge has held this to be true, stating that the educational exemption also applies to the university photocopying the textbooks itself and making them available to students.
The judge concluded that, “Copyright, specially in literary works, is thus not an inevitable, divine, or natural right that confers on authors the absolute ownership of their creations. It is designed rather to stimulate activity and progress in the arts for the intellectual enrichment of the public.” categories: [“What’s Left”]
Corbyn Dominates UK Labour Party Leadership Contest
Jeremy Corbyn, the popular socialist leader of UK Labour Party, has seen off a coup attempt by the right-wing of the party. 62 per cent of the 506,438 members who voted for Corbyn. He won all categories of voter and is actually an increase since the previous leadership contest less than a year ago.
The entrenched elite of the party in conjunction with those in the press did all they could to attack Corbyn, but it seems the Party’s active membership, growing now to over 650,000 were having none of it. The new party base is engaged and active. It will be a formidable force come the next general election.