Delaying Waterfront LRT would cost billions in lost tax revenue, productivity: BIA report

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Call it Toronto’s forgotten transit line.

While council has officially endorsed the Waterfront LRT as one of its priority transit projects, talk of the proposed light-rail line along the city’s lakefront has consistently been drowned out by debates about more high-profile schemes such as the relief line or Scarborough subway extension.

Tim Kocur, head of the Waterfront BIA, is trying to rally support for an LRT on Queens Quay E.
Tim Kocur, head of the Waterfront BIA, is trying to rally support for an LRT on Queens Quay E.  (Steve Russell / Toronto Star)

The Waterfront Business Improvement Area is hoping to change that. On Wednesday, the group is releasing an economic analysis it says shows the urgent need to move ahead with the line in the next few years.

“This is a huge opportunity to build transit first for a neighbourhood that is already growing but has even more growth potential. It’s truly staggering,” said Tim Kocur, executive director of the Waterfront BIA, which covers the lakeshore area bounded by Stadium Rd. and Yonge St.

The report was prepared for the BIA by Hatch, an engineering consultancy firm. It contemplates a seven-kilometre version of the Waterfront East LRT that would run between Union Station and Coxwell Ave., connecting downtown to the Port Lands and the Beach. Designs drafted by the city have the line running in a dedicated right-of-way along Queens Quay East from Bay St. to Parliament St.

The Waterfront East line would cost upwards of $1 billion, and is part of a larger $2-billion light-rail network that would stretch as far as Long Branch in the west. Some parts of the network are still in early design phases and, according to timelines presented to council, wouldn’t be complete until sometime after 2028. City staff are expected to provide an update on the project in the second quarter of this year.

The BIA report contends the Waterfront East LRT could be built as early as 2025, and compares that accelerated timeline to a worst-case scenario in which the project would be delayed until 2045.

It concludes that not building the route until then would cost $1.8 billion in lost productivity between 2025 and 2045. The delay would also cost more than $20 billion in foregone tax revenue to the city, provincial and federal governments.

The figures are based on projected waterfront development the report says would take place sooner if the line were built over the next six years.

Queens Quay East is already seeing significant construction, and the long-planned redevelopment of the Port Lands is expected to create a new commercial and residential hub almost equivalent in size of the existing downtown.

Sidewalk Labs, which is planning to build a high-tech test community on Quayside, has described the LRT as “critical to the future and success” of the project.

The BIA report claims moving forward the in-service date for the Waterfront East LRT would accelerate the creation of 19 million square feet of office space, 25,000 new housing units, and 1.3 million square feet of retail along the waterfront, which could support more than 135,000 new jobs and 67,000 residents.

Kocur conceded that much of the development would likely happen regardless of whether the LRT is built, but said without the transit line it wouldn’t happen as fast. He argued that by pairing new builds with new transit, the city has the opportunity to avoid repeating mistakes made in areas such as Liberty Village, where rampant development hasn’t been matched with new lines.

“This is a chance to build transit first as opposed to trying to catch up after the development has already happened,” he said.

Council voted in 2016 to designate the Waterfront LRT as one of the city’s priority projects eligible for federal funding, along with the relief line, Eglinton East LRT, and Mayor John Tory’s SmartTrack plan.

Although the provincial and federal governments last year announced $9 billion in combined funding for Toronto transit projects, there is not yet a formal agreement to fund the Waterfront LRT.

City and provincial leaders have expended much more energy championing other projects council has endorsed, raising the possibility the waterfront project will be pushed to the back of the line.

Councillor Joe Cressy, who represents the ward that would cover much of the Waterfront East LRT route, said nothing should dislodge the relief line’s position as Toronto’s top transit priority.

But the councillor, who sits on the Waterfront BIA’s board, said that with the Port Lands development expected to start coming online over the next decade, the city can’t afford to wait to build transit to that area as well, and the clock is already ticking.

“We are building new commercial and residential neighbourhoods all along the waterfront east,” he said, and “the longer we wait to invest in transit the more productivity we’re losing.”

In the run-up to the June 2018 provincial election, the now-governing Progressive Conservatives were the only party not to make a specific pledge to fund the line.

Mike Winterburn, a spokesperson for Transportation Minister Jeff Yurek, said Tuesday the province is aware the city is working on a final design for waterfront transit, but has not yet “formally requested provincial funding.”

“Should the province receive a funding request, the business case would be considered in the context of other provincial infrastructure and budget priorities.”

Ben Spurr is a Toronto-based reporter covering transportation. Reach him by email at bspurr@thestar.ca or follow him on Twitter: @BenSpurr

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Canada Revenue Agency is tough on regular taxpayers but goes easy on those with offshore accounts, audit finds

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The tax man goes easy on wealthy Canadians with offshore bank accounts while being harsh on regular taxpayers, according to a damning report made public by the federal auditor general Tuesday.

Wealthy tax cheats are given more time to find receipts and they get their interest and penalties waived, even if they didn’t ask for it.

Meanwhile, if a salaried employee can’t find a receipt, it’s automatically disallowed and they’re reassessed, the report said.

“Most taxpayers are individuals with Canadian employment income. We found that the (Canada Revenue Agency) requested information from these taxpayers more quickly, and gave less time to respond, than it did with other taxpayers, such as international and large businesses, and taxpayers with offshore transactions,” said the report.

Auditor General Michael Ferguson highlighted a double standard that many Canadians have personally experienced, where the CRA aggressively pursues regular people for small amounts of tax owing, while offering amnesty and anonymity for those involved in sophisticated offshore tax schemes.

In the five years from 2013-2018, the CRA accepted voluntary disclosures from 140 people who were already being audited, and waived $17 million they owed in interest and penalties.

The voluntary disclosures program, which encourages tax cheats to come clean by pledging not to prosecute them and offering to waive some or all of their penalties, has since changed its rules to prevent those who are already being audited from taking part.

“Does the CRA have a culture of conveniently ignoring tax-evaders who have the means to hire a lawyer?” asked Green Party Leader Elizabeth May in reaction to the report. “The CRA needs to shift its Sheriff of Nottingham approach to tax-collection and have the rich pay their fair share rather than concentrate audits on hardworking Canadians because it’s easier to have them pay.”

In response to the report, Revenue Minister Diane Lebouthillier pledged to “ensure that our tax system is fair for everyone, throughout Canada.”

Ferguson’s team put together a list of eight recommendations that focused on the lack of consistency in how the CRA applies tax law. Consistency, the auditors pointed out, is enshrined in the Taxpayer Bill of Rights. They nevertheless found wide discrepancies in how people were treated by the CRA depending on their region and activities.

In one example cited, the CRA gave regular taxpayers 90 days to produce a receipt and automatically disallowed the deduction if it wasn’t provided in time.

But those with offshore transactions were given much more time to produce documents, and that timeframe “was sometimes extended for months or even years.”

“Sometimes, the agency did not obtain information at all, and the file was closed without any taxes assessed,” the report stated.

On average, the CRA took more than 18 months to complete audits that included offshore activity.

“The CRA continuously strives to apply the law consistently while taking taxpayers’ individual circumstances into account,” Lebouthillier said in a statement. “The agency will review its internal processes and procedures to ensure its compliance work follows sound and transparent processes.”

Since the Panama Papers were made public in 2016, the Liberal government under Prime Minister Justin Trudeau has added more than $1 billion to the CRA’s budget to crack down on tax cheats, with a focus on those using complex offshore schemes.

In the last two years, the CRA says it has collected $21.5 billion in additional revenues from the stepped-up audits and other compliance activities.

But Ferguson’s report says those numbers are not only imprecise — based on estimates rather than actual revenue — they’re also overstated.

“The additional revenue the agency reported … did not reflect the taxes that it could not collect from taxpayers. This means that the impact on the government’s fiscal results was significantly less than what the agency estimated,” the report stated.

The auditors found the CRA reported at least $1.3 billion in additional revenue that was never collected.

“This previously reported additional revenue will never be collected because the assessments were overturned through the objection process,” the report said.

Lebouthillier agreed that reporting could be improved.

“I agree with the auditor general’s recommendations related to improving reporting and processes,” Lebouthillier said in a statement. “The CRA has already started to produce more strategic performance indicators, such as the tax gap estimates launched in 2016. The CRA will continue to build on this work with additional estimates to better report on our successes to Canadians.”

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Marco Chown Oved is a Toronto-based investigative reporter. Follow him on Twitter: @marcooved

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‘It’s harassment’: 94-year-old Ontario woman in battle with Canada Revenue Agency – Toronto

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A 94-year-old Bradford, Ont. woman says the Canada Revenue Agency is harassing her with written demands for money after she says an agent said she owed nothing.

No, these are not fake CRA demands like you read about, perpetrated by offshore scammers threatening jail if you don’t pay: This is the real deal.

“That’s an appreciable sum when you’re on a limited income,” said Elizabeth LeMoine, referring to roughly $1,200 being sought by the CRA.


READ MORE:
CRA issues? The Taxpayers’ Ombudsman might be able to help — for free

“It’s like a slap in the face,” said LeMoine, referring to the assurances she and her daughter received from a CRA agent on the telephone that the persistent demands would be discontinued.

“I think it’s shameful that you can’t defend yourself,” said LeMoine’s daughter, Christine, who has been working to resolve the issue for more than a year.

She said she called the CRA about a hundred times. However, Christine said she can’t get through due to call volumes.

Last year, she contacted her local member of parliament, Peter van Loan, whose office promised to investigate. However, Van Loan resigned his seat this summer to return to his law practice in Toronto. Christine said the constituency office will not do anything about the situation..


READ MORE:
CRA is experiencing ‘higher than normal volumes of work’ on tax-return reviews

The demands appear to relate to Elizabeth’s relocation to Bradford from Pasadena, Newfoundland, where she lived for more than 60 years. She is originally from Ireland.

From what the LeMoines can glean from conversations with agents, the CRA appears to believe that Elizabeth moved to Ontario in 2016, not 2017, when she sold her house in Newfoundland.

When contacted by Global News, the agency refused to discuss the case due to privacy (even though Elizabeth LeMoine consented to have Global News contact the CRA for the purpose of getting action).


READ MORE:
Peterborough residents lose thousands in Canada Revenue Agency phone scam

“While we can’t comment on a specific case due to the confidentiality provisions of the Income Tax Act, reassessments due to a move can happen,” CRA spokesperson Dany Morin wrote in a statement.

“We are committed to working collaboratively with all taxpayers to resolve their tax situations with respect, fairness and integrity.”

Elizabeth said she doesn’t object to paying her taxes in full, and has done so her whole life. But she said she is unwilling to pay the government under the circumstances.

“It would be like giving in when you know it’s wrong,” Elizabeth said.

Christine said the experience has revealed how difficult it can be do deal with the government bureaucracy.

“Once they’ve got their boot on your neck, they’re not taking it off until they get your money. There’s no one that cares,” she said.

© 2018 Global News, a division of Corus Entertainment Inc.

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