Ontario's Liberal government will not consider raising the provincial sales tax to pay for infrastructure projects in various municipalities, the premier said Tuesday.
Kathleen Wynne flatly rejected the proposal from the Association of Municipalities of Ontario, which said its members are facing a pressing lack of funds to both maintain and improve bridges, roads and transit.
The association issued what it described as a bold proposal at the beginning of its annual conference in Ottawa this week, saying Ontario should raise the provincial portion of the harmonized sales tax by one per cent.
Ontario residents already pay eight per cent in provincial sales tax and Wynne said she would not entertain raising that figure any higher.
"That's not something that I'll consider," Wynne told The Canadian Press in an interview before she was to address the AMO conference. "We're right now trying to help people get ahead ... People are having a hard time making ends meet, so this is not something that we would consider."
Property taxes can't meet need
Wynne touted the government's previously announced plan to spend $190 billion on infrastructure over the next 13 years, noting that the federal government has also promised billions of dollars to address the province's aging systems.
The AMO did not acknowledge those plans in announcing its tax proposal, but said it expects municipalities across the province will struggle with infrastructure funding over the next decade.
It said it estimates municipal governments will face an annual shortfall of $4.9 billion to maintain current infrastructure and fill gaps where more is required.
"We've done our homework, and it's clear that property taxes can't keep up with growing local needs," AMO president and deputy mayor of Innisfil, Ont., Lynn Dollin said in a statement. "Municipalities have been funded the same way for decades. Obviously, times have changed and if we want to build communities for the future, municipal governments need a greater local share of tax dollars."
The AMO said raising the provincial sales tax by one per cent would generate an additional $2.5 billion in revenue, money it suggested should be specifically earmarked for infrastructure projects and distributed among Ontario's municipalities.
It cautioned that trying to address the funding shortfall through property taxes alone could see those rates double over the next 10 years.
Projected figures still under review
Wynne said she had not yet reviewed the AMO's projections and did not know the details of the shortfall they were forecasting.
She said she suspected some of the provincial funding, plus funding promised by the federal government, would go some way to addressing their needs. She also said she's open to having future discussions with the AMO or its members to discuss funding options other than provincial sales taxation.
Wynne said previous conversations have centred around revenue tools such as those in place in Toronto, which include the right to charge tax on vehicle registration or land transfers.
Revisiting those options, she said, is still on the table.
"There was going to be a robust discussion about that over the past year, and that hasn't happened," she said. "What I will be talking to the president about is, 'what happened to that initial conversation? Let's talk about what's going on in your communities. What are the people in your communities willing to take on in terms of further investment tools for municipalities."'