CPI gives fuel to tax critics
Jennifer Lewington - Globe and Mail
The city’s inflation rate, itself a matter of dispute, is giving ammunition to critics of Mayor David Miller’s proposal for a 3.75-per-cent residential property tax increase this year.
At issue is Mr. Miller’s 2006 election pledge to hold property tax increases “in line with inflation,” calculated by Statistics Canada as an annual average of 1.9% for 2007, or 2.4% in December, 2007, over the same month a year earlier. These rates fall below the tax rise suggested for homeowners, but are above that of 1.25% for business.
“It is more than breaking a campaign promise,” Councillor Denzil Minnan-Wong (Ward 34, Don Valley East) said yesterday. “It speaks to a more fundamental issue about how livable the city is for people on fixed incomes and young families.”
Budget chief Shelley Carroll (Ward 33, Don Valley East) contends the mayor’s position is “defensible,” not least because of what she says she heard from residents over the past six months. “We have heard multiple times, ‘I will pay for good services.’ ” She points out that part of the proposed 3.75-per-cent tax increase for homeowners will pay for new spending of $12.4-million.
At this week’s budget launch, Mr. Miller defended his promise.
“I think people understood when I made that commitment it was a modest property tax increase,” he told reporters. “I am pleased to have been able to keep that commitment.”
Mr. Minnan-Wong says the mayor’s stand “is a huge misstatement,” urging him to “step up and say he broke his campaign promise.”
To further complicate the debate, chief financial officer Joe Pennachetti said the consumer price index that calculates prices on a basket of household goods fails to reflect the true inflationary pressures on the city from salary increases for municipal workers (currently pegged around 3%), fast-rising construction costs and double-digit increases in fuel over the past year.
“Any business right now would not be looking at a CPI index,” he said. “I humbly disagree with that comparator.”
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