Ashton said he had a "fundamental problem" with the fact the new taxes will see five per cent of city residents paying for 70 per cent of the city's shortfall.

"How do you create a new fiscal relationship based on that flawed principle? Does that mean the next taxes that come will be just as unfair and inequitable? Is the challenge of the city so great that we're prepared to have taxes that are unfair? I couldn't go there."

Ashton was the swing vote in July that led to the debate on the land transfer and vehicle registration tax being deferred until this week. His surprise vote led to his dismissal from Mayor David Miller's powerful executive committee.

He argued at the time the city should be taking the issue of downloading to the provincial election before it considered any new taxes. In the wake of Monday's vote, he said the mayor squandered that opportunity.

"I think the mayor saw this as a battle with his council and not a battle with the provincial and federal levels of government. I think the mayor staked out his political future in partnerships with the labour movement and the community and social groups across the city, and that's not to say I'm against them, and that's how he spent his time," Ashton said.

On Monday, the rift in council healed somewhat, thanks to a compromise crafted by Ward 6 (Etobicoke-Lakeshore) Councillor Mark Grimes and endorsed by the Toronto Board of Trade.

If the vote had been taken at the Scarborough Community Council, the taxes would have lost.

In the 26-19 council vote that approved the land transfer tax, Norm Kelly (Ward 40, Scarborough-Agincourt), Raymond Cho (Ward 42, Scarborough-Rouge River), Glen De Baeremaeker (Ward 38, Scarborough Centre) and Adrian Heaps (Ward 35, Scarborough Southwest) supported it, while Paul Ainslie (Ward 43, Scarborough East), Ashton, Mike Del Grande (Ward 39, Scarborough-Agincourt), Chin Lee (Ward 41, Scarborough-Rouge River), Ron Moeser (Ward 44, Scarborough East) and Michael Thompson (Ward 37, Scarborough Centre) opposed.

The 25-20 vote that resulted in the approval of the vehicle registration tax would have lost on a tie, with Ainslie moving to the 'yes' column

The solution that Grimes crafted made small, but significant changes to the package originally put forward in July, particularly concerning the land transfer tax.

First-time home-buyers of modest homes under $400,000 won't have to pay any land transfer tax and other home buyers in that range will just pay one per cent. As well, any purchase of sale agreements signed before Dec. 31 won't have to pay the taxes.

Those and other amendments passed by council mean the city will collect far less tax dollars - about $175 million as compared to $356 million in the original package. That leaves the city with a $239 million budget hole, which could result in a tax increase as high as 12 per cent.

Ward 33 (Don Valley East) Councillor Shelley Carroll, who chairs Toronto's budget committee, conceded the new taxes are "only part of the solution."

She said that the city has come of age.

"We have a lot of hard work to do, but today we start rolling toward a positive compendium of the kinds of tools that successful cities have," she said. "We came of age today. It's always hard to grow up and so we're going to have to work hard together."

The new package is also tied to work being done by an outside panel to overview Toronto's spending, something that was a key factor in bringing another ally, the Toronto Board of Trade, onside.

Carol Wilding, the board's president, said the board had long been calling for such a panel to make sure tax dollars are being spent wisely.

She said that other amendments to protect large commercial buildings from the new tax, as well as another decision to create a separate, lower tax class for small businesses, helped bring the board onside.

"There were three key concessions," she said. "One is the acceleration of the property tax rebalancing, it puts $300 million back into the business community, and the changes to the realty tax means we have $10 million a year in relief for the business community," she said.

"And a third is a commitment to redirect the new taxes toward infrastructure once we get out of this crisis."

Here's how the new taxes work.

The land transfer tax will be paid by purchasers of residential real estate, at a rate of 0.5 per cent on properties valued at less than $55,000; one per cent on properties valued up to $400,000; and two per cent on properties at more than $400,000.

For commercial properties, the tax rate will be capped at 1.5 per cent up to $40 million.

The vehicle ownership tax will be put on top of the provincial licensee fee, at a rate of $60 extra for cars and trucks; $30 extra for motorcycles and mopeds.

The vehicle registration tax passed by 25-20; the land transfer tax by a vote of 26-19.

~ With files from Susan O'Neill