Thursday, July 14, 2005

The shapes of things to come?

The last few weeks have borne witness to a flurry of activity on the Toronto political scene.

We've seen a report from the Toronto Office Coalition documenting how the City's stratospheric commercial and tax rates are pushing businesses to locate in the suburbs. While the substance of the report is not news, the coverage received - even in The Star - has been surprising.

Highly-related to this has been a proposal drafted by the City Finance dept/committee that would see a gradual transfer of the tax load from the commercial sector and onto home owners. Surprisingly Mayor Miller made a number of grunting sounds indicating that the tax gap between the city and the burbs is a real problem.

Thr trouble is that the proposal will come close to doubling the real tax rate payed by home owners. The press around the proposal claims that it will keep residential tax rates increases below 5% a year for the next 15 years. Well, 5% a year for 15 year doubles the rates. It isn't clear whether the 5% is the rate of increase including inflation - or whether this is above and beyond inflation.

Meanwhile, of course, the City has caved into its unions again. Overall payroll costs will continue to outpace revenie growth. Miller has promised that there will be savings from productivity improvments. I'm not holding my breath!

On the back burner is the work towards a new City of Toronto act. Will the act cure the City of its fiscal lunacy. Again - fat chance.

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