The city of Toronto could stand to raise its property taxes by as much as 20 per cent, a new report suggests, pegging its rates as currently among the lowest across the Greater Toronto Area.
The report, which was compiled by Frank Clayton, a senior research fellow with Ryerson University’s Centre for Urban Research and Land Development, looked at 29 municipalities in the area. It ranked Toronto sixth-last based on its average property tax bill of $4,027 in 2016. (King, with an average bill of $6,798, ranked first.)
Taxes in Toronto are 'on the higher end' compared with other large cities in Canada, such as Vancouver, said Peter Muto of Morris Kepes Winters, also based in Toronto.Tax rates outside the city. How Property Taxes Work in Toronto. One factor: property values in Toronto are higher than many of the surrounding municipalities, which tends to make the tax rate lower. (Plowing a kilometre of road costs roughly the same amount, no matter the value of the properties on that road. If property values are higher.
Next week, city council debates Mayor John Tory’s proposed budget, which holds the base-rate increase for residential property taxes at or below inflation, as Mr. Tory repeatedly promised in last year’s election campaign. If approved, the residential rate would rise by 2.55 per cent, but with a 0.5-per-cent levy dedicated to building infrastructure tacked on top of that.
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But Dr. Clayton says his numbers, which echo those produced by city staff in similar studies, show ample room for a much larger property-tax increase. For example, Toronto’s property tax rate of 0.51 per cent is 21 per cent behind the median rate for municipalities in the Greater Toronto and Hamilton Area, Dr. Clayton says.
And measured as a percentage of household income, the amount the average Toronto property taxpayer forks over comes to just 2.74 per cent, compared with more than 4 per cent in places such as Orangeville, Oshawa and Brampton. By this measure, Torontonians could pay 22 per cent more in property tax on average, Dr. Clayton says, and still rank in the middle of the pack.
“The city, the councillors, they can’t cry poor,” Dr. Clayton said in an interview. “I know they are all scared of raising property taxes.”
His numbers leave out some factors that make Toronto’s tax burden look even lighter than it is, although even with these factors included it would remain among the lowest in the GTA. For example, Dr. Clayton’s numbers do not discern which municipalities, like Toronto, charge separately for garbage collection – a rate Toronto is set to increase this year.
Dr. Clayton acknowledges that Toronto’s higher proportion of condominiums also skews his numbers, as they tend to have lower assessed values than single-family homes. He also adds that the city’s much larger business tax base has historically been a cash cow that allowed residential taxes to remain low.
Several on council’s left argue that Toronto needs to hike property taxes beyond inflation to improve things like transit and build affordable housing. While the mayor’s majority on council is expected to hold the line on tax hikes, Councillor Mike Layton says he will support small increases beyond inflation: “The reality is, do we think we are getting the right level of service in the city? Because if we don’t, and we think we should be getting better service in our city ... then we have to raise them.'
Mr. Tory’s budget chief, Councillor Gary Crawford of Scarborough, points to the fact that Toronto is the only city in the report that has the power to charge a land-transfer tax on property transactions. He acknowledges this tax – brought in a decade ago – has allowed the city to keep property-tax rates lower than those of its neighbours. (It has now been declared a risky source of income for city hall as the real estate market softens.)
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Mr. Crawford argues that even with low property taxes, the city has still invested in key services such as transit. “We feel … that we can keep property taxes low, or as low as possible, and at the same time provide the kind of services that the city needs,” he said. “From my side, we have shown that.”
Don Peat, a spokesman for the mayor, defended his lower property-tax-increase plan in an e-mailed statement: “Mayor Tory campaigned on keeping property tax increases at or below the rate of inflation – voters across Toronto in every ward voted overwhelmingly in favour of that promise and gave the Mayor a mandate to continue his responsible approach to the City’s finances.”
As usual in Toronto, property taxes have been front-and-centre in the debate over this year's city budget.
On one side, Mayor John Tory and his allies back inflation-based increases — like the 2.55 per cent residential property tax hike recommended by city staff for 2019 that's tied to Tory's municipal election campaign promise.
On the other side, critics say Toronto has plenty of room to raise property taxes to support city services — and should.
During Thursday's budget debate, Tory's side easily won out, with council approving his plan 21-4 in favour.
BREAKING: Council just backed Mayor John Tory’s inflation-based property tax increase in 21-4 vote. <br><br>That means a 2.55 per cent hike for residential homeowners, which amounts to around $100 extra on the average bill. <a href='https://t.co/XNP1WyqUNs'>pic.twitter.com/XNP1WyqUNs</a>
—@LaurenPelleyUniversity report suggests homeowners could shoulder higher costs
One recent Ryerson University report noted more than 20 municipalities across the Greater Toronto and Hamilton Area 'recorded higher average property taxes than Toronto,' and suggested the city could easily hike taxes by up to 20 per cent.
'Property taxes raised on those of us that can afford it would go a really long way,' noted Devika Shah, executive director of social justice non-profit Social Planning Toronto.
'I think there are a lot of Torontonians in that category who would be willing to give up $10, $20 or $30 a year if it's going to be directed to critical issues like transit, housing, and child care.'
So what, exactly, do property tax hikes really add to your bill — and where does that cash go?
What a property tax increase adds to your bill
Homeowners can now expect a 2.55 per cent increase in their property taxes this year.
That means an increase of $74 for an average household with a home value assessed at $665,605 for 2019.
But there's a catch.
Factored into the final total are a few other numbers, including Current Value Assessment increases which reflect property value assessments conducted on a four-year cycle. Then there's an added special tax levy approved by council in 2017, which contributes to a city fund for capital transit and housing projects.
All that combined means a total property tax rate hike of 3.58 per cent, which would mean the average household would pay an extra $104 — bringing the grand total on an annual property tax bill to $3,020.
Of course, that number can go up or down depending on your property value.
Detached homeowners, for instance, would typically face a much larger increase, while many condo owners can expect just a double-digit rise.
Renters, take note as well — if you live in a place without rent control, your landlord might want to pass along the extra expenses to you, too.
Where property tax revenue goes
Amid all the chatter about tax hikes, have you ever wondered where your cash is going?
According to the city, on an average expected property tax bill of $3,020 this year, the largest chunk — roughly $700 — would be funnelled to the Toronto Police Service.
![Toronto Property Tax Toronto Property Tax](/uploads/1/2/5/6/125695202/976923657.jpg)
The next-biggest portion of around $520 would go to the TTC, followed by debt charges, Toronto Fire, and Parks, Forestry and Recreation.
At the low end, nearly $50 of your payment would go to economic development and culture, just under $60 to Toronto Paramedic Services, and around the same for children's services and employment and social services.
There's also around $30 slated for unspecified areas.
In total, the TTC and emergency services for the city — including police, fire, and paramedics — account for more than half the average taxes paid by Toronto households.
Who pays higher taxes (and who doesn't)
If you're a homeowner, be it a detached house or a bachelor condo, you'll notice a change this year.
What's equally important to know is that many residents on a tight budget are often immune to these kinds of hikes.
That's because of a property tax relief program offered by the city, which allows low-income seniors or low-income people living with a disability to apply for a cancellation of property tax increases.
There's also an option to defer the payments — which means you'd only have to pay the city back if you no longer own your property.