|Toronto Sales Tax (TST)
By Charles Moffat - March 8th 2007.
Recently the Toronto Mayor David Miller has been pushing for Canadian Prime Minister Stephen Harper to give municipalities one cent of the GST (Goods and Services Tax). That one cent would mean over $5 billion per year for Canada's towns and cities to make improvements, including over $400 million for Toronto that could be used to significantly improve Canada's largest city and the source of most of Canada's industry.
Unfortunately Stephen Harper doesn't care about Toronto or the rest of Canada's towns or cities. He has no intention of giving Canada's municipalities that 1 cent of the GST.
But what neither Toronto or the rest of Canada seems to realize is that local municipalities have the power to create their own sales tax. So in the case of Toronto we could have a Toronto Sales Tax for 1 cent.
After all, we're already used to paying 15% tax on everything, the minor drop to 14% in 2006 was only a mathematical nuisance. It wouldn't bother us that much to go back to 15%.
And if Stephen Harper reduces the GST to 5% then we can raise the TST to 2% simultaneously.
The trick to sales taxes is that it really targets rich people. Poor people don't spend very much because they have other concerns to worry about (rent, electricity, etc) and they don't spend as much on luxury items. A poor or middle class person might spend $200/month on goods, resulting in $28 in taxes. However, an upper middle class or wealthy person could be spending anywhere from $2000 to $20,000/month on items and luxury items, resulting in $280 to $2800 in taxes.
You see my point? For poor people that extra 1 cent would only cost them an extra $2/month, but for rich people it would cost them an extra $20 to $200.
Lets say two people buy a car. The poor person buys an used car from a friend and doesn't pay taxes at all. The rich person buys a new Lexus for $100,000 and pays $14,000 in taxes!
So should Toronto make their own sales tax? (Obviously such a tax would only effect people in Toronto, not the rest of Canada.)
I think they should.
That money could be used to help create more jobs, boost tourism, fix the aging roads, improve the transit system and subways and improve Toronto's overall economy. And when the economy goes up that means even more tax revenues.
Because how else would we raise money for such things? Land taxes would hurt common Canadians (especially poor people who rent), income taxes on the poor would increase poverty, and income taxes on the rich will make the rich want to go elsewhere (because they can afford to).
After it works it would only be a matter of time before other major cities consider doing the same thing: Montreal Sales Tax, Vancouver Sales Tax, etc.
Mayor David Miller wants the federal government to give municipalities one cent of every six cents of goods and services tax collected in their communities.
That would mean handing Canada's municipalities $5 billion of the $30 billion in GST collected a year.
If the federal government agrees, Toronto would get $410 million a year, while $437 million would go to the 905's 24 municipalities.
Part of Miller's strategy seems to be to rally other cities and towns to press Ottawa for the funds.
But the idea isn't being wholly endorsed by Mississauga, the GTA's second-largest municipality.
During a council meeting last week, Mississauga councillors argued the proposal doesn't address their city's real problem. They believe that the province must remove the funding of social, health and education from the property-tax base.
However, Brampton councillors joined Miller's call and are preparing to show their support with a one-cent campaign of their own.
And York Region Chair Bill Fisch also backed Miller, pointing out that local governments desperately need more money for infrastructure.
One Cent on a roll
Support is growing for Mayor David Miller's "One Cent Now" campaign but more community leaders must get aboard if the federal government is to be successfully pressured into doing the right thing.
Miller and other big city mayors want Ottawa to give Canada's municipalities one cent from every six cents gathered through the Goods and Services Tax. That would raise about $5 billion yearly for cities.
The money is desperately needed. Communities that generate much of the nation's wealth are struggling to repair their crumbling infrastructure and maintain existing services. Moreover, they face growing public pressure to introduce "green" initiatives designed to reduce global warming.
Miller officially launched Toronto's campaign last week. It involves spending more than $100,000 on a website, pins, bumper stickers, posters and petitions to generate public support.
That has led to some criticism from Councillor Karen Stintz and others who want the campaign debated, and voted on, by city council.
Some argue that Toronto's main lobbying effort should focus on Queen's Park, not Ottawa, and that the city would be better served if the province could be persuaded to upload the cost of social services. This is a short-sighted view.
In fact, cities need both a one-cent share of the GST and respite from the unfair burden of social service costs. But the best time to lobby the province will come later this year, as an October election looms.
The time to press Ottawa is now, as speculation grows of a spring federal election. Miller's One Cent Now campaign aims to squeeze federal candidates of every political stripe into taking cities' needs seriously. With Toronto's 23 seats potentially determining victory or defeat for the Conservatives or Liberals, this city can count on getting a hearing.
Prime Minister Stephen Harper's announcement of a $1.5 billion plan to expand Toronto's subway system, ease gridlock and reduce greenhouse gases shows that the government is vulnerable to public opinion.
But public pressure eases, to some degree, every time civic leaders like Stintz break ranks and challenge the One Cent Now campaign. Instead of undermining this effort they should follow the example of Brampton politicians, who endorsed the campaign, and York Region Chair Bill Fisch who is also backing it.
Miller campaigned for office on winning GST money from Ottawa. And he was elected by a large majority of voters, so there is no reason for Toronto councillors to question this initiative now.
Instead, they should enthusiastically back the campaign. If it works, a better Toronto will result.