Raphael asks of me here, Do you have an objection to the concepts of city states?
As in the completely separate political entities of ancient Greece? Yes, yes I do object.
But I suspect there's more to that question.
His full question includes the following justification, Toronto might be a prime example of such a necessity in order to benefit from it's own regional earning power and afford the expenditures of it's own taxation powers.
I suspect Raphael more meant the question as, "do I object to Toronto becoming its own province?"
No, not completely, but I have deep reservations.
(Full disclosure of bias. I believe Canadian Federalism is dysfunctional as currently setup. I earnestly believe that provincial governments have too much power, and hinder the progress of Canadian society through infighting, turf wars, and all-out bickering. So I have an admitted bias against provincial governments. I will try to set that aside.)
If Toronto became its own province, it would definitely enjoy the advantages of full control over its own tax policy. While federal income taxes and the GST would still be collected from the citizenry, all other taxes would stay within Toronto's jurisdiction. On the surface, it looks like a big windfall for Toronto.
What would happen to the rest of Ontario? It would lose a large portion of its tax revenue. Not only are income taxes lost, but also all revenues collected through PST, gas taxes and other taxes. Toronto accounts for almost 50% of Ontario's population. That is a significant loss of income. So would that push Ontario into have-not status? I quite strongly suspect it would.
Now would Toronto be considered a Have province? Probably. Given the concentration of wealth in a large urban area, in balance with the rest of the country, any funding formula would find Toronto a Have province. So Toronto, through federal income taxes, would still be subsidizing Ontario.
Now that it is a separate provincial jurisdiction, Toronto has to setup its own provincial infrastructure. It now has to fund a series of programs like health insurance (THIP?), education, infrastructure, arts and literacy, etc. etc. Government bureaucracies must be created for a legal system, transportation, education, health, and so on. These institutions will eat into a large chuck of the income tax revenue collected.
Also, how are the municipal concerns now addressed by city council, managed when the city is both a province and a city? Does it have to maintain municipal as well as provincial government structures?
Given the duplication in effort between the Province of Ontario and a Province of Toronto, and that the actual tax base stays the same, the additional bureaucracies will suck more money away and leave less for discretionary project spending. I theorize that on balance, if Toronto became its own province, both Toronto and Ontario will become poorer overall. I haven't crunched the numbers; I don't have the skill or the desire. So if anyone has data that conclusively refutes my argument above, so be it.
So where does this leave Toronto? Well it now has new taxing powers beyond property tax. That addresses the main benefit of becoming a province, without the overhead re-creating existing institutions. And according to a recent study Toronto doesn't have the highest property taxes, suggesting room to move there. (Though that calculation is disputed.)
I conclude that a drastic measure such as separating Toronto from Ontario is not actually necessary. We're better off tinkering with the current system rather than radically overhauling it.