City Council Proposes New Revenue Strategies Amid Billion-Dollar Deficit and Refugee Crisis

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In an effort to address an impending billion-dollar budget deficit, the city council substantially supported a suite of revenue-generating strategies. These include implementing graduated hikes on Municipal Land Transfer Tax for luxury homes valued above $3 million and removing the five-dollar cap on on-street parking. The council has also opened discussions on the feasibility of initiating additional options like a monthly mobile phone levy for 911 costs, a commercial parking levy, and further amplification of the vacant home tax.

Furthermore, the council has propositioned the provincial government to grant them the authority to introduce a municipal sales tax on goods and services retailed within Toronto. Accordingly, the new land transfer tax structures would be applied to high-value residential properties and vary from a 3.5 percent tax on properties priced between $3 million and $4 million to a 7.5 percent tax on properties valued over $20 million.

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Addressing the city’s long-term financial plan, Mayor Olivia Chow highlighted two key dimensions. “One aspect is what the city can do… We are asking people buying luxury houses, and individuals who leave their apartments empty amidst a housing crisis, to contribute more,” Chow remarked. “The other aspect is what we are obligating of the federal and provincial government.” These discussions encompass revenue strategies beyond the city’s jurisdiction, like sales and gas taxes.

Additional financial pressures stem from the city’s transit ridership not rebounding to pre-pandemic levels, higher inflation rates, and increasing shelter costs. City officials have cautioned that none of the proposed financial strategies will suffice to entirely alleviate the city’s financial challenges.

The refugee crisis, housing, and the long-term financial blueprint are all intertwined issues laid before the city council, according to Chow. City Manager Paul Johnson presented an overview of the city’s shelter system to the council, highlighting the tremendous influx of refugees and refugee claimants. “In barely two years, we have escalated from housing 537 refugees in our shelter system to over 3300, which is unprecedented,” Johnson explained.

Internal projections anticipate that by year-end, the city might be sheltering up to 4500 refugee claimants, almost half of the current shelter capacity. Given the full occupancy of the city’s shelter system, Johnson reported that extraordinary measures have been undertaken to avail space in non-traditional settings. Notably, over 10,000 individuals find shelter in Toronto every night, albeit this is not a viable long-term solution.

City officials endorsed a formal appeal to the federal government that it fully reimburse Toronto’s expected costs of $200 million in 2023 to support refugee claimants in shelters. This includes a previously announced $97 million. The council is also requesting an ongoing commitment to provide the anticipated $250 million needed in 2024 and subsequent years until the demand stabilizes.

Additional proposals include soliciting a hike in the Canada-Ontario Housing Benefit, that would also commit an investment of $6.6 million for Toronto. Chow emphasized that to resolve the housing crisis, support the influx of refugees, and manage the budget deficit, Toronto needs financial assistance from upper governments. The ongoing refugee situation has significantly strained the city as it lacks sufficient funds to manage the crisis.