Toronto mulling a parking tax as it faces major financial challenges

Toronto's financial update from city staff this week painted a grim picture for the city's outlook, including for investments in public transit, and among the possibilities to improve it is a parking tax.

Among the 29 policy options presented in a staff report released Thursday is the option of implementing a commercial parking levy. The tax would be applied to all non-residential parking in the city, with certain exemptions, and could include a higher tax rate in the downtown core. 

According to the report, such a levy could raise up to $490 million in annual gross revenue for the city. 

"[The] report is really good news," said Shelagh Pizey-Allen, a spokesperson for the advocacy group TTC Riders.

The group has been calling on the city to implement a commercial parking levy in order to boost funding for transit. But not everyone is on board with the idea. 

Small businesses 'will bear the cost': board of trade

The Toronto Region Board of Trade has been vocal in its opposition to a commercial parking levy in the past. CEO Jan De Silva said the board "will be in touch with the city staff just to remind them of the concerns that we have expressed." 

De Silva said a tax on commercial parking spaces will flow through to tenants and hurt business. 

"This means your nail salons, your doctor's office, your convenience stores. Those owner-operators would all bear the cost," De Silva said.  

"This is just layering on another commercial tax at a point in time when many of these businesses are trying to still recover from the pandemic."

Climate targets 

As well as raising revenue, the staff report notes that a parking levy could encourage transit ridership, and is in line with its climate targets. 

Beth Savan, a lecturer emeritus at the University of Toronto's school of the environment, said there is also an equity argument for a parking levy, since cars cause much more "wear and tear" on infrastructure than pedestrians, cyclists or transit riders.  

"There an equity consideration that those who cause the most cost in terms of maintenance to the city should contribute to that cost fairly," Savan said. 

The staff report notes that there is a precedent for a commercial parking levies, with similar fees imposed in Montreal and Vancouver. It's also a policy the city can act on without involvement or approval from the province. 

If the city does move ahead with a parking levy, it won't be in place overnight. City manager Paul Johnson said revenue likely would not kick in until 2025. 

"We're told it's 12 to 18 months to implement, and that's why it's 2025. We'll try and expedite that on the 12-month side of things, but we're just not confident that we should be placing any hope on that for 2024," Johnson said. 

Major long-term financial challenges 

Overall the city is facing a projected $46.5 billion in budget pressures over the next decade. Even if the city acts on all the options presented in the report, staff said that would not be enough to address the city's long-term financial challenges.

Mayor Olivia Chow said the city needs new funding agreements with the provincial and federal governments — something the city has long been pushing for. 

Both federal Finance Minister Chrystia Freeland and Ontario Premier Doug Ford have repeatedly declined previous requests from the city for additional funding to address its budget hole.

On Thursday, a spokesperson for the premier's office said the province is providing "unprecedented financial support" to cities and will continue to do so.

"We are working with Toronto on the third-party review of their finances to ensure taxpayers receive maximum value for money and the best possible service," spokesperson Caitlin Clark said in an email.