Ontario municipalities call for sales-tax hike to fund local projects

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Ontario municipal leaders are calling for a 1-per-cent hike in the HST that would raise $2.5-billion a year for local infrastructure.

After several months of internal debate, the Association of Municipalities of Ontario officially launched a campaign Monday in favour of the idea at a convention in Ottawa.

The proposal would see Ontario raise its share of the Harmonized Sales Tax from 8 per cent to 9 per cent. The federal share would remain unchanged at five per cent, raising the total sales tax to 14 per cent.

"This is what we feel is the best option," AMO President Lynn Dollin, who is also deputy mayor of the Town of Innisfil, said in an interview.

The proposal is in response to a specific request that Ontario Premier Kathleen Wynne made to the organization at last year's AMO conference in Windsor. At that time, the Premier urged municipal leaders to have an internal discussion about what type of "revenue tools" they may need in the future.

"What we will say to all the parties is 'this is our best idea,' " Ms. Dollin said. "If you've got a better idea, let's hear it."

But just hours after Ms. Dollin promoted the plan on stage at the conference, it was rejected by the Ontario government.

"We will not be increasing the HST," said Jessica Martin, a spokesperson for Ontario Finance Minister Charles Sousa, in an e-mail. Ms. Martin said Ontario has already promised to double its gas-tax transfers to municipalities beginning in 2019.

"With more money coming down the pipes each year, municipalities can better plan and invest to meet their local needs," she said.

According to the AMO, the alternative to raising the HST would be a major increase in property taxes over the next decade just to maintain existing services.

On Tuesday, Ms. Wynne, Progressive Conservative Leader Patrick Brown and NDP Leader Andrea Horwath will all address the conference and are expected to be asked for their opinions on the HST proposal, as well as the general call from municipalities for more funding. The next Ontario election is scheduled for June 7, 2018.

Earlier this year, the Toronto Sun reported that the Ontario Liberal government's Ministry of Finance surveyed Canadians in March, 2015, for their thoughts on raising the HST by 1 per cent, provided that the federal government dropped its share by 1 per cent. The poll found only three in 10 supported the idea and that most Ontarians said a tax increase would be unacceptable.

On Monday, the AMO released a Nanos poll that it commissioned showing that while Ontarians do not support a higher HST to fund the Ontario government, they would support a hike if the money went to municipal infrastructure.

The poll found 74 per cent oppose and another 10 per cent somewhat oppose raising the HST for the Ontario government to spend as it sees fit. However, when asked whether they would support a 1-per-cent HST increase if the revenue is to be solely dedicated to municipal governments for infrastructure, 54 per cent of respondents said they support the idea and a further 19 per cent said they somewhat support an increase.

The random telephone survey of 1,000 Ontarians was conducted between June 2-13 and has a margin of error of plus or minus 3.1 percentage points, 19 times out of 20.

Federal Infrastructure Minister Amarjeet Sohi, who spoke at the conference Monday, said it is not up to Ottawa to comment on how Ontario should handle its component of the HST. He noted that Ottawa has increased its share of funding for major projects in order to alleviate some of the pressure faced by municipalities.

"I cannot go into the provincial and municipal relationships," he said in an interview. "We are trying to help municipalities as much as we can to relieve pressure on property taxes."