As we head into a period of political uncertainty in Ontario, how about a little fresh thinking on the subject of new funding to improve city infrastructure and keep it from crumbling around us?
From the aging energy grid to the challenge of renewables and the need to update water supply networks, sewage treatment, LRTs and bus routes for a clogged Toronto, we’re heading into emergency territory with no new fiscal resources in sight.
It’s easy to see how much we’ve been coasting if you consider that countries in Europe spend 5 to 7 per cent of GDP on infrastructure, both maintenance and expansion, and some emerging nations like China and others spend close to twice that. In North America, we’ve been investing in the 2 to 3 per cent range.
Ontario has an infrastructure deficit of around $150 to $175 billion from years of under-investment, but as the province climbs out of the most recent economic downturn, new commitments are likely to be iffy.
Today, roughly 50 per cent of Ontario infrastructure is under the jurisdiction of municipalities, a share that’s grown dramatically in the last 30 years, the result of downloading, new demands from increased population and enhanced regulation.
By necessity, Toronto has become expert in providing cost-effective infrastructure tailored to local needs. So why not give T.O. and other municipalities new taxing authority to get the job done? (Currently, the City Of Toronto Act only allows for a vehicle registration and land transfer tax and other minor taxes.)
What if T.O. were given the right to levy its own gas tax, like Montreal’s 3¢ a litre add-on to drivers’ gas tabs? Many states in the U.S. even allow municipalities to take a percentage of the state sales tax.
The advantage of these approaches is that they don’t lean on the already overburdened property tax base instead, they spread costs in new ways. The only caveat is that new revenues shouldn’t be used to supplement existing spending, but for dedicated projects, as Quebec’s gas tax law stipulates. As well, new levies would need to be decided by council, meaning they would involve public discussion by elected reps.
Other options include a portion of income tax (as in New York City and many European cities) or a payroll tax like the one used in France for transportation. Tolls and parking surcharges could also be considered.
But the province could go further. It could create special-purpose bodies and give them the power of taxation. Imagine the TTC or Metrolinx being given free rein to tax directly. School boards used to be able to do this, and the Greater Toronto Airport Authority can effectively levy fees for airport upgrades. Around the world, there are many examples of agencies given these powers.
If the province did allow these new powers, it would give more control to local populations and their reps to build services they know they need – and Toronto would finally have the resources to provide the basis for a 21st-century city.
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