By Natalka Falcomer

Stories about Toronto’s booming real estate market dominated the headlines of 2019. Here’s hoping that stories about investing in Toronto’s infrastructure dominate the headlines of 2020. If not, we may end up in the unenviable position of New York City where crumbling infrastructure has led to an increase in taxes, which has led to a flight of jobs, followed by a flight of talent and followed by both a real estate market decline and higher rent rates.



The Greater Toronto Area came second to Dallas-Fort Worth-Arlington as the metropolitan area with North America’s fastest-growing populations. Unlike Dallas-Fort Worth-Arlington and other U.S. cities with a booming population, however, Toronto’s growth was not because of birth rates, but due to net migration from other parts of Canada and the world. This distinction is important because people are coming here to work and, unlike children, pay taxes.

This is good news for Toronto. But this good news won’t last very long – Toronto’s newcomers have yet to start their own families and, once they do, the stress on our infrastructure and services will truly be felt. And it may be too late to effectively alleviate the problem.

Mayor John Tory is trying to get ahead of the tsunami of infrastructure demands roaring towards Toronto’s shores. He’s doing this by raising property taxes. While that is a simple “clean” solution, it may not work, because it will cause people to “vote with their feet”. In other words, the businesses and residents that come to Toronto because of the city’s affordability (yes, we’re still more affordable than other financial hubs in the world), would relocate to other cheaper jurisdictions. That would erode the very tax base upon which our government is relying to build the city’s hospitals, schools and roads. My depiction of what might happen isn’t just a fictionalized scare tactic – it’s already taking place in New York City.

Similar to Toronto today, New York City was a mecca for banking, finance, media, advertising, fashion and other industries. If you want be a player in your field and earn better wages, you had to be in the Big Apple. But this has changed. Now, technology, meal delivery services and on-demand shipping make working and living away from a city centre not only convenient, but also desirable.

In fact, companies and high-income earners, according to Jack Kelly, contributor to Forbes, have chosen to move away from New York City in order to pay “substantially lower taxes, have more available jobs, larger homes for cheaper prices, fresh air and a nice, easier life.”  As a result of expensive real estate, taxes and slagging infrastructure, corporations and high-income earners packed their bags and left behind a crumbling city, as well as a New York City government with a smaller tax. New Yorkers, essentially, did something no one predicted, except for maybe 1950s economist Charles Tiebout: they voted with their feet, thereby shrinking the population by 39,523.

If you’re a homeowner, you should be alarmed by New York City’s rise and fall because it contributed to a housing market Torontonians haven’t seen in years: sellers slashing their prices and houses sitting on the market for months and, in some cases, even years. If you’re a renter, you should be equally alarmed as rental rates have hit record highs because landlords are charging greater rents to make up for their increase in property taxes.

I fear that the Big Apple’s reversal of fate will happen to Toronto if we rely upon property taxes as a solution without understanding the full impact of such a levy. What’s more, I fear that more taxes will be tantamount to putting water in a bucket filled with holes, as the bigger drains on public funds are not just the people – it’s poor government project management causing significant cost overruns; it’s the costs associated with government-created and then government-investigated scandals; and it’s the opportunities lost to build and improve our city and province due to interjurisdiction power struggles.

If we don’t fix these inefficiencies first, then one does not need to be a clairvoyant to see that the greatness of Toronto will deteriorate.

7 COMMENTS

  1. “it’s the costs associated with government-created and then government-investigated scandals,” – would be funny if it wasn’t so true.

  2. Five things are essential – the latter 4 flow from the first:1) The GTA/GGH, the Economic-Ecologic (ECO-ECO) commuter watershed must become the first Special Administrative Zone (tantamount to a province, but with no change in ConFederal representation); 2) Barrie, Kitchener/Cambridge or London, and Kingston must be encouraged to be Big Cities within Ontario (perhaps a few others will want to in other jurisdictions too); 3) without a big share of its Income Tax, a Big City cannot carry the socio-econ burdens of the nanny state locally, while also being expected to subsidize the nanny state across the country(NB the ConFed gov’t has no money- just your money); 4) a government in waiting must rise up and suggest that Canada cannot continue to pretend it has 10 equal provinces when the 10+3 (nevermind 604 Nations) are blatantly UNequal. The small ones “feel” they are as poorly-regarded as do the Big ones! Canadians live in, near or far-from Big cities NOT in provinces. 5) Follow through on section 94 of BNA Act 1867 — create “Uniformity of all or any of the Laws relative to Property and Civil Rights in” the Common Law jurisdictions — https://laws.justice.gc.ca/eng/Const/page-4.html#h-22

  3. Interesting article and I can agree. Just driving around Toronto recently requires and off-road vehicle just to navigate the massive potholes, lane closures for construction and repairs and of course the lack of any real options into the city besides the DVP or 427.

    The city just seems to not be able to keep up but I am glad they are trying. I also agree with Rod who stated “Toronto’s taxes are lower than any municipality around it.” People will pay more but as you noted if they don’t see the benefit of their dollars they will cash out while they can and move however I doubt it will be anytime soon so Toronto still has time.

  4. Toronto’s taxes are lower than any municipality around it. Hardly think raising taxes would cause people to leave. I live north of Toronto and our taxes have gone up almost every year since moving here in 2004. From $2200 in 2004 to $4800 now on $450,000 mpac. I pay more property tax than many of my friends in Toronto whom have properties that would sell for more than double mine, not to mention all the services in the city. Everyone who moved here from Toronto now realize how good they had it in the city.

    • Yes the Toronto tax rate is indeed lower than that of other municipalities. However, when making a comparison it is very misleading to just look at the MPAC values. A Toronto property that is assessed at $450,000 does not resemble your “north of Toronto” property! In order to do a proper comparison you would need to look at properties that are similar in terms of their overall lot and building size, style, quality of construction, condition, and last but not least the desirability of the specific neighbourhoods being compared.

  5. Exactly , Fix the politics and the problems will fix themselves. Moving some departments to the private sector may be a good start. It seems the only thing politicians are good at is flushing tax dollars down the toilet. And asking for more money. Just like a spoiled kid. Soon the toilets may not even be working. But to compare Toronto to New York City , in my opinion , has been more of a Toronto Wanna Be thing, rather then a good comparison. New York still happens to be one of the busiest, if not the busiest, shipping port in the World. And home to almost triple the population of little TO.

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