
When politicians ask us how we'd pay for transit, we don't always give a single, simple, one-line answer. That's because we support a smart, diverse and balanced approach in evaluating funding options, preferably using revenue tools (taxes) that best reflect our guiding principles:
- That they are progressive, equitable and socially just;
- That they promote environmental sustainability;
- That they are financially effective, meaning they raise sufficient amounts of money, and it’s not expensive for us to collect that money;
- That they are publicly beneficial in keeping assets publicly owned and maintained.
With this in mind, here is a list of actions we support to pay for public transit.
A. In the Province of Ontario
These are actions that Premier Kathleen Wynne, Minister of Transportation Steven Del Duca and the Liberal government could take immediately [1].
1. Raise corporate taxes
The provincial government could raise revenue by reversing the corporate tax cuts.
The Ontario corporate tax rate has dropped from 15.5% in 1999 to 11.5% in 2013. According to the Ontario Ministry of Finance, restoring the corporate tax rate to 14% (which was the tax rate in 2009) would bring in $2.4 billion.
In addition, between 2007 and 2010, the Ontario government eliminated its corporate capital tax. The Ministry of Finance projects that this tax break reduced annual revenues by $1.6 billion.
Together, these two tax cuts cost the government $4 billion in revenue per year. This amount of money would enable Toronto to improve its transit system and leave ample money for other regions in Ontario to have their public transit systems improved as well.
Corporations can afford a tax hike. Canada's largest corporations—are making 50% more profit and paying 20% less tax than they did a decade ago.
The business community stands to benefit from transit expansion. In fact, the Board of Trade is leading efforts to raise revenue for public transit. The board regularly cites the statistic that the region loses $6 billion in lost productivity due to traffic congestion annual. It’s time for the business community to step up.
For example, if we raised corporate taxes by 3% in Ontario, we could raise approximately $550 million per year for transit.
2. Increase the gas tax
Gas prices are low and the gas tax hasn't gone up in twenty years. We currently pay 14.7 cents per litre. We support the Golden
report, which recommends a five-cent per-litre gas tax increase. This type of implementation could raise approximately $340 million per year for transit.
3. Raise taxes on high income earners
Doctors for Fair Taxation
has called for a provincial tax increase of 1 per cent on incomes above $110,000, a further 2-per-cent tax increase for the 1 per cent of Ontarians with incomes above $215,000, and a further 2-per-cent increase on Ontarians with incomes above $500,000.
If Ontario implemented these modest tax increases, we could raise $270 million per year for transit, and more in future years.
B. In the City of Toronto
These are actions that Mayor John Tory, TTC Chair Josh Colle and Toronto City Council could take immediately.
1. Introduce a parking levy
According to CCPA contributor
Sheila Block, a
non-residential parking fee in Toronto would raise
$175 million per year.
2. Increase property taxes, preferably collected in progressive ways
Toronto has the lowest property tax rate in the region. Housing prices have skyrocketed, homeowners have gained considerable capital that has never been taxed. Yet property taxes increases have not kept up with housing price gains at all. A 2.5% property tax increase would raise $65 million per year.
Despite our support of increased property taxes in principle, the way in which property taxes are collected is often regressive for low-income or first-time homeowners. We'd support a variety of ways to make property taxes more progressive:
3. Re-introduce the vehicle registration tax
According to the Toronto Star, a $60 vehicle registration tax would raise $66 million per year.
4. Increase development charges
Development charges are fees that housing and condo developers pay so the city can build infrastructure for new residents. Toronto has the lowest rates of development charges in the GTA. They should be raised so they pay the true costs of providing public transit. Currently, development charges do not cover the full cost of building new transit lines. Nor do development charges cover the cost of operating the transit system. They should.
According to a Metrolinx study, a $2,000 to $3,000 per unit development charge associated with a $3.5 billion project could raise up to $50 million per year.
Conclusion
If our governments implemented all of the revenue tools described above, we'd generate an additional $1.5 billion per year, enough to fund the public transit we need to get our city moving.

Our list of revenue tools is not intended to be prescriptive, and it's just a start -- we'd support a variety of other revenue tools, provided they meet our guiding principles. The point is, John Tory's tax is a start, but it's not good enough. It's no secret that the TTC has been chronically underfunded for decades. If we want to build a transit system that works for everyone, we must get serious about paying for it.
Footnotes
[1] For all calculations, we assume that the Province would give Toronto the fraction of tax revenue from these revenue tools that is dictated by our population (2.8M / 13.6M = 20.6%).