Canada – Toronto to levy new tax on trash

The City of Toronto is preparing to introduce a new garbage tax that would apply equally to every property in the city, regardless of its assessed value.



The Toronto The Globe and Mail reports that although not designed to raise new revenue, the waste-disposal levy will radically alter the way waste services are financed, with many households expected to endure significantly higher costs for the privilege of seeing their garbage disappear once a week.



The official intention of the new tax is to remove the cost of waste services from the city‘‘s overburdened property-tax base while, at the same time, creating new incentives for reduction and recycling. But the net result will be as many losers as winners.



In a reversal of the usual dynamic of the property tax, the likely winners will be those who own small, expensive houses downtown — where garbage is easiest to collect but the amount paid for the service, because it is linked to assessment, is highest. The losers will be those who live in suburban neighbourhoods where assessments are generally lower — and the current cost of garbage collection is discounted accordingly.



As such, the proposed garbage tax stands as the first-ever victory for critics who have long complained that market-value assessment penalizes urban, transit-dependent lifestyles.



It will also be the first of what could become many so-called parcel taxes levied to finance individual municipal services, from roads to street lighting, at a flat rate per “parcel” or property.



As the first large Canadian city to implement a flat tax for waste services, Vancouver endured strong criticism that the measure would favour the rich at the expense of the poor.



Recently, however, the city introduced new features that tie the tax more closely to the cost of servicing individual properties, bringing it closer to a pay-as-you-throw user fee.



Only garbage from city-issued bins is now collected in Vancouver, and householders can choose among four different-sized, different-priced bins, the largest being the most expensive. The result is a fair allocation of costs with “a strong incentive for individuals to reduce waste,” according to a Vancouver city report.



Similar incentives are likely to be an integral part of the Toronto scheme, with its potential to reduce waste a key selling point. But its emergence has already inspired calls for the implementation of similar levies to finance other services, mainly as a way to reduce the city‘‘s dependence on volatile property taxes.



Paying for more municipal services with parcel taxes and user fees will lessen the shock of annual reassessments, according to advocates, because it limits the role of assessment-linked taxes.



In British Columbia, where they are most widely used, parcel taxes can be paid either at a flat rate or, more interestingly, at rates that vary according to the area or frontage of individual lots. As such, they are a form of the area-based taxation — sometimes called unit assessment — that many local reformers urged the province to adopt instead of its current system of so-called current-value assessment.



Local thinking at the time was that the size of a property, rather than its market value, was a better indicator of the cost of servicing it. Torontonians also argued that market-value assessment penalized urban lifestyles while subsidizing high-cost, high-consumption suburban living — creating powerful incentives that ran counter to any number of official policies favouring compact, transit-dependent communities.



Although Queen‘‘s Park rejected those arguments when it imposed the new system a decade ago, the McGuinty government reopened the door with its new City of Toronto Act. The law says no to new sales and income taxes, while saying nothing against parcel taxes.



“It creates