You have probably heard that the City of Toronto is dealing with deficit woes and you should be aware of some of the potential ways that are being looked at to fill the budget gap.
To deal with a projected gap of $483 million for 2017, the City is looking at an array of proposed new revenue tools including taxes on entertainment, tobacco and alcohol, road tolls and a municipal sales tax.
Also under consideration are a new parking tax and increased development and land transfer fees which would have significant impacts on consumers and businesses.
BILD has been working with a coalition of business and real estate organizations that is studying the potential effects of these additional taxes on businesses and consumers.
The parking tax would hurt local businesses, plus the complexity involved in administering the new tax would be difficult and likely render it ineffective.
The new parking tax would impose a per day, per spot fee to all businesses who provide parking to their customers across the city. It would be a substantial business tax increase, and in fact a duplicate tax because commercial parking spaces are already included as part of property assessments.
A tax on parking spots could have a detrimental impact on the City’s business competitiveness and economic development. Small businesses would likely be hardest hit, especially those in strip malls. More strain to their bottom line could make it tough for them to continue operating.
The actual process of identifying which businesses require to pay for which parking spaces would be complex and difficult to track. Some spots are shared and others are tax exempt such as spaces belonging to hospitals and other public institutions. It also would depend on the City’s inventory of parking spaces being up-to-date. Overall, a new parking tax is unlikely to be an efficient predictable revenue stream and would more likely become an administrative nightmare.
The City of Vancouver introduced a similar tax in 2006 and of the 29,600 assessment notices issued, 17 per cent were appealed in the first year at a great administrative cost to the municipality.
In 2007, Toronto considered a parking tax but dismissed it due to low projected revenue, administrative challenges and concerns over transparency around the collection of charges and the impact it could have on large malls and other retailers that provide free parking such as grocery stores, shopping centres and strip malls.
The City is also considering increasing development fees and land transfer taxes, which would result in a big impact on anyone thinking of buying a home. Today, these fees are already a significant portion of the cost of a home. People pay provincial and municipal land transfer tax on resale homes and development fees and charges make up about one-fifth of the cost of new homes.
Toronto needs to take a harder look at their long-term vision to be financially sustainable but this should be done in a way that is economically competitive for our business owners, equitable and transparent and does not make the housing affordability challenge worse.
Expect to hear more about this in the months to come. City staff will be presenting their recommendations on the tools to council this fall.