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City council will vote next week on a plan to extend subways service in Scarborough. (Canadian Press)

Toronto Mayor Rob Ford has thrown down the gauntlet, declaring on Friday that he is not wavering on his promise to bring more subways to Scarborough — he's even said he's willing to raise taxes.

At issue is a heated debate over whether to replace the ageing Scarborough Rapid Transit line (SRT) with a light rail train (LRT) or subway.

Ford says subways are "what the taxpayers of Scarborough want."

But even though Ford said he is willing to increase taxes by a modest 0.25% to make the dream come true, he also needs the province and the federal government to pay their fair share "or the deal is dead."

Ford rode into office on a mantra of cutting taxes.  But in this instance he said he was willing to raise taxes slightly — by about $5 per household per year — to help finance the subway extension.  He called it "an investment."

Just a few hours before the mayor met with reporters in Etobicoke, city manager Joe Pennachetti released a report exploring the options in the subways vs. LRT debate.

Pennachetti said a decision to build an LRT would not require any action from city council.  The plan already exists in a Master Agreement between the province, Metrolinx and the city.

But if subways replace the LRT, then the report outlines the costs involved in making such a change and how the city might pay for it.  The LRT option would cost $1.1 billion and the subway $2.3 billion, the report says.

Pennachetti recommends a property tax increase, development fee increases and other methods to pay for the subways.

In June Metrolinx asked the city to reaffirm its commitment to the LRT project by Aug. 2. 

City council is now set to debate the issue on July 16. 

Ford says he has the support of TTC chair Karen Stintz and the new deputy mayor.  "We've agreed on a subway for Scarborough," he said.

But where the deal could come unwound is in the financing.

Ford said the province must commit the full $1.8 billion it was offering for the LRT project.  Added to that, he said, must be money from the federal government. But how much money Ottawa might contribute is still up in the air.

"I'm meeting with [federal Finance Minister] Jim Flaherty [Saturday] morning," Ford announced.  On Monday he'll meet with provincial Transportation Minister Glen Murray. 

"This is an investment," said Ford.  Extending the subway to city's eastern borders will drive the city's economy creating high paying jobs he said.

Ford was hopeful when asked if he will have the votes at council to change the Master Agreement and build subways instead of an LRT.

"I hope they'll approve it," he said.

Murray said Friday on CBC's Metro Morning, that dropping light rail in favour of a subway extension is a major undertaking.

"This isn't like moving a lemonade stand from one side of the street to another," he told host Matt Galloway. "If next week I don't see an evidence-based plan … then I think it's going to be a short conversation."