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How does Toronto’s Fiscal Autonomy Compare to Other International Cities?

July 25, 2017

New paper from the Institute on Municipal Finance & Governance compares fiscal autonomy of eight global cities – Toronto has fewer tax options than almost all others.

Toron­to, ON – Major cities across Cana­da have been ask­ing for more fis­cal auton­o­my so that they can “con­trol their own des­tiny.” But what exact­ly is fis­cal auton­o­my and why is it impor­tant? A new Per­spec­tives Paper released today by Enid Slack, direc­tor of the Insti­tute on Munic­i­pal Finance & Gov­er­nance at the Uni­ver­si­ty of Toronto’s Munk School of Glob­al Affairs, attempts to answer these ques­tions by ana­lyz­ing the munic­i­pal finances of eight inter­na­tion­al cities.

Local fis­cal auton­o­my is the extent to which local gov­ern­ments rely on local­ly raised rev­enues for fund­ing and their abil­i­ty to set their own tax rates. A com­par­i­son of Toron­to, Lon­don (UK), Paris, Berlin, Frank­furt, Madrid, Tokyo, and New York reveals that Toron­to is less depen­dent on inter­gov­ern­men­tal trans­fers than many oth­er major cities but, with the excep­tion of Lon­don, it has few­er tax options.

Fis­cal auton­o­my is a piv­otal ele­ment of a city’s fis­cal health – among oth­er ben­e­fits, local gov­ern­ments are more like­ly to spend respon­si­bly if they have the auton­o­my to raise the rev­enues to pay for their expen­di­tures. Fis­cal auton­o­my means that cities take respon­si­bil­i­ty for set­ting their own tax rates on any new tax­es such as income or sales tax­es, rather than ask­ing the fed­er­al and provin­cial gov­ern­ments to increase their tax rates and trans­fer rev­enues to cities.

This study con­cludes that Toron­to and oth­er Cana­di­an cities would ben­e­fit from greater fis­cal auton­o­my. “Toron­to and oth­er Cana­di­an cities are respon­si­ble for a wide vari­ety of ser­vices, includ­ing fire and police pro­tec­tion, water, sew­ers, garbage col­lec­tion, roads, and tran­sit,” says Enid Slack. “To con­trol their own des­tinies, and to be effi­cient and account­able to tax­pay­ers, they need access to a greater mix of tax­es, and the abil­i­ty to set their own tax rates.”

Access the paper


About the Author

Enid Slack is Direc­tor of the Insti­tute on Munic­i­pal Finance & Gov­er­nance, and Adjunct Pro­fes­sor at the Munk School of Glob­al Affairs at the Uni­ver­si­ty of Toron­to. Enid has been work­ing on munic­i­pal finance issues in Cana­da and abroad for 35 years. Before estab­lish­ing IMFG, she was a con­sul­tant spe­cial­iz­ing in munic­i­pal finance. Enid has worked with the World Bank, the Inter­na­tion­al Mon­e­tary Fund, UN Habi­tat, the Asian Devel­op­ment Bank, and the Inter-Amer­i­can Devel­op­ment Bank in coun­tries around the world. In 2012, Enid was award­ed the Queen’s Dia­mond Jubilee Medal for her work on cities.

About the Insti­tute on Munic­i­pal Finance & Gov­er­nance (IMFG)

The Insti­tute on Munic­i­pal Finance & Gov­er­nance is a research hub and think tank that focus­es on the fis­cal and gov­er­nance chal­lenges fac­ing large cities and city-regions. It is locat­ed with­in the Uni­ver­si­ty of Toronto’s Munk School of Glob­al Affairs.

For more infor­ma­tion, please con­tact:

Sele­na Zhang | Man­ag­er, Pro­grams and Research
Insti­tute on Munic­i­pal Finance & Gov­er­nance, Munk School of Glob­al Affairs, Uni­ver­si­ty of Toron­to

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