Canada - Businesses back tax plan

Toronto city council is poised to approve controversial new taxes after a flurry of endorsements from high-profile business leaders.

Early yesterday, Mayor David Miller stood in his office and brandished a letter of support from major Toronto developers who said the city needs new taxes to build for the future. Late in the day came word that the Toronto Board of Trade also had endorsed a compromise tax plan hammered out over the past few days.

Together, the letters are expected to give huge comfort to politicians who might have been reluctant to vote for new taxes at Monday's council meeting.

"I worked all day, I worked all week, back and forth with the board and the mayor to get wording on these resolutions," said Councillor Mark Grimes (Ward 6, Etobicoke-Lakeshore), a normally low-key politician who took centre stage this week by leading the compromise effort. "There was give and take on both sides ... and I'm very encouraged by that."

In a statement, Board of Trade president and CEO Carol Wilding said the city had no choice but to introduce new taxes.

"We never want to see taxes go up and oppose the land-transfer tax in principle," Wilding said. "We have said that taxes should be a last resort to resolve Toronto's financial crisis. Toronto has reached that last resort."

Wilding said there isn't enough time for the province to upload costs shifted onto the city, to review the city's spending or make other moves in time to help with the city's budget shortfall for next year.

Wilding's group has more than 10,000 members and bills itself as Canada's largest chamber of commerce. They haven't always seen eye-to-eye with Miller, so yesterday's news marked a significant change.

Niall Haggart, vice-president of the Daniels Corp., said he and the other developers who signed the letter to Miller felt they can live with the new land-transfer tax.

"If we stop investing in the city, the city will crumble and potential purchasers we depend on so much are not going to want to live here," he said.

Miller said he's happy to see a consensus building for both a land-transfer tax and a vehicle-registry tax for Monday's council meeting. But he warned yesterday that the land-transfer compromise will reduce revenues by perhaps $50 million and that he'll need help from the province to keep Toronto's motor running.

Miller is asking Queen's Park to issue its report on uploading of municipal costs by the end of this year instead of next February, and said he wants the province to offer cash to run the TTC. Two years ago Queen's Park gave the city a one-time grant of $100 million to help the TTC for a two-year period.

It doesn't appear the province is willing to work any faster on the uploading report, however, and it's also far from clear whether there will be any added TTC cash.

Toronto staff have said the city faces a shortfall of about $500 million for next year. They're hoping to find $85 million in cost savings, which would bring the shortfall down to about $413 million.

Miller's staff yesterday said they can't know for sure but that the vehicle-registry tax and the compromise land-transfer tax might raise only $200 million to $220 million next year; far less than originally expected. That, in turn, could mean a shortfall of $195 million to $215 million for next year.

Miller said yesterday he'd like to hold next year's property tax hike to something close to inflation but that it will be tough to do.

The compromise land-transfer-tax plan, which Grimes helped draft, calls for a rebate of up to $3,725 for first-time home buyers for resale or new homes. On purchases other than those by first-time buyers, the tax would be one half of 1 per cent on properties sold for up to $55,000. Properties sold for between $55,000 and $400,000 would face a 1 per cent tax, and those selling for more than $400,000 would face a 2 per cent tax. In addition, all agreements of purchase and sale that have been entered into prior to Dec. 31 of this year would be exempt from the tax.