23 Nov, 2016

New taxes for Toronto and other large Canadian cities

New Perspectives paper from the Institute on Municipal Finance and Governance considers the pros and cons of new taxes for Canada’s major cities.

Toronto, November 23, 2016 – As cities like Toronto face tough decisions about how to fund the complex and growing demands on local government, a newly released IMFG paper argues that additional taxes are entirely appropriate and necessary for Canada’s major cities to continue to thrive.

In the IMFG Perspectives Paper (No. 15) released today, New Tax Sources for Canada’s Largest Cities: What Are the Options?, municipal finance experts Harry Kitchen and Enid Slack review the advantages and disadvantages of a range of potential new taxes including income, sales, fuel, parking, road toll, and hotel taxes. The paper, based on a longer report released earlier this year, makes a number of recommendations:

  1. Decisions on public spending need to be linked with revenue decisions, to create greater public accountability and public trust.
  2. The residential property tax is a good tax for local government and there is room to increase it in most cities.
  3. Cities cannot rely on the property tax alone to fund the increasing and complex demands on local governments.
  4. User fees bring in necessary revenues and play an important role in altering economic decisions.
  5. Personal income taxes have the potential to generate considerable revenue for large cities.
  6. Cities should set their own tax rates, in order to remain accountable to taxpayers.

“The challenges facing Toronto and other major Canadian cities have been growing steadily over the last twenty years and yet the revenues available to address them have remained largely the same,” says Enid Slack, one of the report’s authors. “Canadian cities need access to more taxes, comparable to what other large U.S. and European cities have.”

Access the paper


Harry Kitchen is Professor Emeritus in the Economics Department at Trent University. Over the past twenty years, he has completed more than 100 articles, reports, studies and books on issues relating to local government expenditures, finance, structure, and governance in Canada. In 2013, he was awarded a Queen’s Diamond Jubilee medal for policy analysis and research contributions to municipal finance, structure, and governance in Canada.

Enid Slack is Director of the Institute on Municipal Finance and Governance, and an Adjunct Professor at the Munk School of Global Affairs at the University of Toronto. Enid has been working on municipal finance issues in Canada and abroad for 35 years. She has published books and articles on property taxes, intergovernmental transfers, development charges, financing municipal infrastructure, municipal governance, municipal boundary restructuring, and education funding. In 2012, Enid was awarded the Queen’s Diamond Jubilee Medal for her work on cities.

For more information, please contact:

Selena Zhang | Manager, Programs and Research
Institute on Municipal Finance and Governance, University of Toronto
selena.zhang@utoronto.ca | 416-978-2168