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Toronto's Race for Mayor: The 5.7% Solution Has Got to Go

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posted on Oct, 5 2014 @ 06:01 PM
Remember Sugar Beach and the Toronto Waterfront Revitalization Plan? Tax revenues due to this development flowed as follows:

Accordingly, the three governments have spent, to date, $1.26 billion and the study estimates that this direct investment on public lands generated impacts as follows: $3.2 billion of Canadian economic output, 16,200 full time years of employment and $622 million of tax revenues to government ($348 million to federal, $237 million to provincial, and $36 million to municipal).

Toronto was obligated to pay 33.3% of the cost of this waterfront revitalization project. Mr. Tory advocates the same arrangement for Toronto's share of his transit expansion plan, "Smart Track".

Following Mr.Tory's plan, we will pay 1/3 the cost of "Smart Track" but only receive a return in "tax increments" analogous to the return received from the increments that followed the waterfront revitalization.

There is no reason to suppose that the basic ratio would be different.

That amounted to 5.7% on a project, 33.3% of the costs of which were born by the city.

94.3% of the "tax increments" that would flow from a large infrastructure project like "Smart Track" would flow to the federal and provincial governments as they did and continue to do in the case of the waterfront revitalization.

The federal and provincial governments will recover the costs of their investment in "Smart Track" within a reasonable amount of time. In fact the federal government has already recovered 70% of its investment in the waterfront revitalization project and will certainly, in the not too distant future, make a profit on it. The federal government's profit will only increase going forward, . . . indefinitely.

The City of Toronto, on the other hand, will be digging itself out of a hole related to that project and "Smart Track", if John Tory is elected, for many years to come as well as bearing the costs of "services" that any municipality must bear, like water, hydro, snow removal, garbage pick-up, etc.

Projects like these, where the city pays 1/3 of the costs while having to settle for only 5.7% of the returns, are a bad deal for Toronto.

John Tory's "Smart Track" plan is a bad deal for Toronto. It will place a massive additional debt load on the city that will take forever to pay off.

It is the sort of plan for Toronto that might be designed in Ottawa or at Queen's Park. It guarantees large profits by way of total income tax increments for those levels of government while offering them a very advantageous level of cost relative to profit potential.

Because it is restricted to property taxes and user fees, Toronto's revenue stream from "development" is much smaller.

Our municipal officials should not be entering into deals like the ones described above.

They, Ford, Tory and Chow, should be committing our city only to pay costs commensurate with its ability to recoup those costs, and without creating new imaginative ways to squeeze more taxes out of Torontonians.

"Smart Track" is a good deal for Ottawa and a good deal for Queen's Park, but a bad deal for Toronto.

To date only one candidate has even hinted that more money must be found at the federal and provincial level for transit expansion. That candidate is Doug Ford, but even he has not stated this in an emphatic manner or made it into a campaign platform plank.

Our city, a place that generates 20% of Canada's economic activity, according to The Toronto Regional Board of Trade, must have a modern transit system that is reliable and adequate to the needs of all of its WORKERS, but . . .

the city can't live with a 5.7% solution to a massive debt load.

edit on 5-10-2014 by ipsedixit because: (no reason given)

edit on 5-10-2014 by ipsedixit because: (no reason given)

edit on 5-10-2014 by ipsedixit because: (no reason given)


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