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Toronto Toronto property tax rates among the lowest across GTA, report says

Fred Lum/The Globe and Mail

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.)

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.”

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