10/01/2012 06:01 EDT | Updated 12/01/2012 05:12 EST

1% sales tax could net $1.3B for transit, says city

More than a billion dollars for transit funding in the Greater Toronto Area could be had through a one per cent sales tax, which is widely regarded as one of the "least objectionable" options to fund transit expansion, according to a city report.

City of Toronto staff are recommending public consultations on a variety of revenue tools such as the sales tax, as well as road tolls and parking levies to fund transit expansion.

In a series of reports released Monday, city staff say new revenue is needed to help fund The Big Move, provincial agency Metrolinx's $50-billion plan for transit expansion throughout the Greater Toronto and Hamilton Area.

One report on a funding strategy calls for the public consultations on new funding sources to be wrapped up by spring of 2013 so that council can decide on funding options before Metrolinx presents its strategy for funding the expansion that summer.

The provincial strategy, the report notes, could be in jeopardy of being cancelled, deferred or partially implemented as the Ontario government looks to erase a $13-billion deficit "unless new dedicated taxes and fees are implemented to pay for them."

It goes on to say that none of the potential benefits of transportation investment will have broad support unless the public understands the benefits.

"A concerted effort from business, community and government leaders is required to put the arguments [for transit funding] on the table," said the report, authored by the city's deputy manager and chief financial officer Cam Weldon.

"Without public support the Province will be unlikely to implement the new taxes that are required to fund the plan."

Ten different funding options

The report lays out 10 different possibilities to fund transit across the GTHA. Top City of Toronto officials spoke to their counterparts across the region and it was agreed that any new taxes would have to applied for all municipalities in the area.

The report notes that "taxes with broad rather than narrow incidence – such as sales tax or gas tax – were least objectionable."

A one per cent sales tax would generate $1.3 billion annually for transit across the GTHA, while a gas tax could net $500 million annually.

Staff recommend in the report that the executive committee, which meets next Tuesday, allow public consultations on transit funding to get underway.

"Experience in Toronto and elsewhere shows that the public is willing to accept tax increases when they are associated with a specific outcome – such as a particular project or series of projects," says the report.

Listed below are some of the revenue options discussed in the report: