Toronto to consider increased taxes as city faces $46 billion budget shortfall

The city of Toronto said Thursday that it is facing a $46.5 billion budget shortfall over the next 10 years, for which it needs to consider steps to enhance revenues, including possible changes to municipal sales taxes.

In a staff report, the city said a special executive committee scheduled to meet on August 24, will consider higher rates of land-transfer tax on homes valued at $3 million and above. The city may also increase the existing vacant homes tax from one to three per cent.

Toronto also faces an immediate budget deficit of about $1.5 billion for the 2024 operating budget and $29.5 billion in capital needs. In January, the city increased its residential property tax rate by 5.5 per cent for the 2023 operating budget, costing the average homeowner an additional $233.

“Provincial legislation limits City revenue options almost exclusively to the taxation of property and its related uses,” the release said.

The city will also consider increasing on-street parking fees, the implementation of a commercial parking levy and selling off surplus real estate assets.

The city staff also said that despite the recommendations given to the executive committee, funding from federal and provincial government is also required to prevent “significant tax increases” and cancellation of housing and transit projects. Similarly, the report noted that “property taxes cannot fund provincial and federal responsibilities.”

The report said that approximately 22 per cent of the city’s annual property tax revenues reduce the financial burden for other orders of government, stating that Toronto receives only limited funding from higher governments.

The executive committee will be urging the provincial government to authorize new funding for the city, including municipal sales tax on the purchase of goods and services in Toronto.

“Left unchecked, the City’s financial challenges will result in reduced investments, job losses and reduced income taxes,” the report said.

In the absence of a new funding model by the province, the committee will consider informing the federal government that Toronto will will be required to reduce essential service levels and cancel capital projects – including housing, transit, refugee response and climate action.

Rahat Sandhu