TORONTO -- A tax hike that is expected to raise billions of dollars for transit and housing has been approved by city council following an hours-long debate.

On Tuesday afternoon, council voted 21-3 in favour of Mayor John Tory’s plan to increase and extend an existing levy on property taxes known as the city building fund. Councillors Anthony Peruzza, Stephen Holyday and Michael Ford voted against the item.

The levy, which was first introduced in 2017, was supposed to max out at a cumulative increase of 2.5 per cent by 2021 but it will now be hiked an additional 1 per cent in 2020 and 2021 and 1.5 per cent in 2022, 2023, 2024 and 2025. That will add up to a cumulative increase of 10.5 per cent once fully phased in.

The vote on Tuesday came after Tory told reporters that he hoped councillors would show “courage” in supporting a tax increase that he said was vital to the city’s future.

“This is the best way forward given the current political climate and the true lack of revenue tools realistically available to us to raise billions of dollars for transit and housing,” Tory said. “There was no real choice given the limitations imposed upon us on how we can raise revenues and doing nothing on these vital multibillion-dollar transit and housing plans was never an option.”

The 1.5 per cent hike to the levy in 2020 will only cost the average homeowner an extra $43, though that number will go up to $280 starting in 2025.

By increasing and extending the city building levy, the municipality will in turn be able to borrow up to $6.6 billion.

That money will then be solely used to pay for transit and affordable housing with a large chunk of it expected to go towards the city’s share of a new 10-year affordable housing plan, which will also be considered by council today.

Speaking with reporters prior to Tuesday’s meeting, Tory said that while the city has been successful in finding $891 million in savings in its budget over the last five years it needs “billions” to properly invest in transit and housing.

He said that the money realized through the increase to the city building levy will allow him to seek matching funds from the provincial and federal governments, something that he said he will be “relentless” in pushing for.

“I am conscious of the fact that there is affordability issues that a lot of people face in the city but I think if we don’t build the transit and we don’t build the housing those issues will only get worse,” he said. “We can’t afford not to make these investments.”

‘Five or 10 years too late’

Tory told reporters earlier in the day that he believed members of council were generally supportive of the tax hike because they recognize “the crucial nature” of the investment that is needed in transit and housing.

In fact, in recent years several councillors have pushed for above-inflationary tax increases to fund infrastructure, only to be rebuffed by a mayor who has fought to keep annual property tax increases to around the rate of inflation.

Ryerson University also released a study earlier this year that suggested that Toronto’s property taxes could go up by 20 per cent and the city would still be in the bottom half of GTHA municipalities when it comes to its residential tax rate.

“Frankly we are five or 10 years too late,” Coun. Gord Perks told CP24 during a break in Tuesday’s meeting. “Part of the reason that we are in the crisis that we are in right now is over the last 10 years the city has been asking you to pay less in taxes than you used to so this mostly just catches us up with where we used to be and brings us closer to where other municipalities are in terms of their property taxes. We are still going to be among the lowest.”

Per capita spending has actually declined

According to a recent audit of the city’s books by Ernst and Young, the amount of money spent on services per resident has actually declined over the last four years from $3,166 in 2015 to $2,976 in 2018.

The report said that the decrease suggests that the city is funding increased demand in services driven by population growth through a “continued focus on generating efficiencies in its budget,” a practice that it suggested is not sustainable.

“As our population grows we spend less and the result is cracks,” Coun. Joe Cressy said during Tuesday’s meeting. “I wait longer to get on the 505 bus every day, it should be a streetcar but we don’t have enough of them. It is taking longer to find a space on a waiting list for affordable housing and childcare and when you look at our service standards we are not maintaining our parks the way we used to. Those are visible cracks.”

In voicing his support for the increase to the city building levy, Cressy said that council has before it a chance to “turn a corner” after years of being “told that the solution is more so-called efficiencies.”

He said that Tory should be commended for pushing the idea forward, as should other members of council who have pushed for above-inflationary tax increases for the last number of years.

“I grew up playing football and in football you congratulate the person who scores a touchdown but you never forget your blockers,” he said. “And so for five years I have been at city council and each and every year at every budget debate members of this council have made the case we are about to vote on today, so I think our blockers deserve some recognition too.”