Transit infrastructure costs money to build. Public money. It says much about our current political environment that achieving consensus around that point was considered an accomplishment.
The next hurdle to building transit involves selecting precisely which public funding mechanisms would be best suited for this purpose. But it’s no less ideological a debate.
At the Toronto Region Board of Trade on Monday morning, Ontario NDP leader Andrea Horwath broadly laid out the types of charges her party would support.
The short version of her stance: the only acceptable taxes or fees would be those that are “fair and balanced” and not felt by household budgets. That is, she does not support the range of revenue tools that are now the focus of public discussions – and effectively leaves only business taxes on the table.
She contrasts the many kilometres of subway built between 1965 and 1995 with the scant handful of kilometres laid down since. “Now, I don’t think it’s a coincidence that in that same period, tax rates were reduced dramatically,” she says.
Today’s combined corporate income tax rate, she points out, is nearly 50 per cent lower than the average between 1960 and 1990. Commercial property taxes are lower, too. “These [business tax] reductions may have helped us become more competitive in a global economy, but they’ve also reduced our fiscal capacity. In other words, we have less money to actually get things done.”
For some reason, she believes tapping this source would be politically simpler than bringing in a tax or a fee that would affect the average person. “A plan that’s imposed on unwilling and resentful citizens will not work in the long term,” she says, “and it will plunge us into a political gridlock that makes Toronto’s traffic gridlock look like a walk in the park.”
The awkwardness of the simile mirrors the first-draft nature of the party’s current strategy on the issue: toss out platitudes that are superficially coherent but make little pragmatic sense. (Unless, of course, Horwath decides to make significant restructuring of the tax base the price of supporting the Liberal budget, which she has so far not given any indication she will do.)
The big question is whether, as the debate continues, she will feel moved to modify her stance so that transit planning doesn’t stall, particularly in light of the Liberals’ tenuous minority situation and the Conservatives’ firm opposition to transit taxes and fees.
Certainly, there are some levies that are fairer than others. Income taxes – the rates of which are proportional to an entity’s ability to pay – are progressive. Sales taxes, flat fees and the like – which are set at the same rate for everyone – have a disproportionate impact on those who are the least well off, and are thus regressive.
But Horwath never puts her demands in terms of progressive vs. regressive taxation, despite its being a straightforward and perfectly defendable approach. She uses coded language – “fair and balanced,” “balanced and fair” – without explaining what fairness or balance would actually look like.
At the moment, the NDP’s preferred dialectic is households vs. businesses, which sort of misses the point. Economic justice gets sacrificed to generic populism.
Asked in a scrum whether her objection is to taxation in general or to regressive taxes in particular, Horwath brings it back to her talking points about “everyday families.”
“Well, of course New Democrats are not supportive of regressive taxation in the first place,” she says, “and as I mentioned in my speech, we’ve seen over the last number of years the revenue integrity of this province be reduced through decisions that were made in terms of taxation. And so we need to be very, very careful going forward about who’s picking up the burden and how that burden is shared.”
She goes on to say that people are having a hard time paying existing taxes in a recession, but that on the other hand, there’s been “a reduction in all kinds of taxes for the business side of the equation, and we think that that’s reduced the capacity of this province to get some things done.”
To Councillor Gord Perks, a social justice advocate and staunch NDPer, the only genuinely progressive method of funding public projects is through income taxes. From his point of view, the “whole revenue tool discussion is a very cleverly, unbelievably successfully implemented, brilliantly designed piece of political hocus-pocus to make us forget that the only reason we can’t afford to build transit is that the province stopped paying for it.”
Until 1998, the government of Ontario chipped in half the TTC’s operating funding and three-quarters of its capital funding. Perks resents being told that he has to choose among various regressive options “when we had a perfectly good and completely successful way of paying for [transit] progressively through provincial contributions that were funded by the income tax.”
At least as important, however, is that when Perks weighs the pursuit of tax justness against the urgent need for transit investment, the latter ultimately wins out.
While he emphasizes a strong preference for funding infrastructure through income taxes, and intends to “advocate for it up until the very last minute,” Perks also makes it quite clear that he will “not block any consensus that emerges around some other reasonable method.”
Perhaps foreshadowing her own reluctant concessions, Horwath’s speech gets one thing absolutely correct: “We can’t let diversity of views lead to a polarization of debate and stagnation, when we desperately need to get moving.”
jonathang@nowtoronto.com | @goldsbie
