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Got questions about Toronto's big proposed property tax hike? Here's what we know

Toronto will kick off its 2024 budget process this week, with the city's budget chief warning that a 'substantial' property tax increase is coming. (Alex Lupul/CBC - image credit)
Toronto will kick off its 2024 budget process this week, with the city's budget chief warning that a 'substantial' property tax increase is coming. (Alex Lupul/CBC - image credit)

Toronto's proposed property tax rate for this year is on the table and you've got questions.

CBC Toronto's city hall reporter Shawn Jeffords breaks down below what we know and what we don't at this point.

First, some background:

Staff proposed a 10.5 per cent property tax increase this week — amounting to more than $300 per year added to the bill of the average home — and warned without funding from the federal government, that could climb as high as 16.5 per cent.

The money is needed to combat a massive budget shortfall, city officials say. Mayor Olivia Chow called it "the first step in the process of getting our city back on track."

Key word: process. This property tax debate is far from over and the final rate won't be decided until mid-February.

Here's what we know right now:

How does this affect the key city services people are used to? 

Chow argues one reason the city needs to increase property taxes is to shore up services that have been in decline for some time. That ranges from increasing service on the TTC to maintaining park washrooms to cleaning up dirty trash cans.

The city also needs the funding to deal with the significant financial strain caused by the pandemic and a $1.8-billion dollar budget deficit.

What's the reaction from city council so far?

We're already starting to see some opposition to the budget. Councillors Brad Bradford, Stephen Holyday and Anthony Perruzza have all said they can't support the spending package as it stands.

Wednesday's budget launch was the first time the majority of councillors saw the proposed plan. They'll spend the next few weeks digging into the document, talking with their constituents and deciding what they can, or cannot, live with.

Sometimes it isn't the property tax increase that pushes a councillor to oppose a budget, it's a smaller service cut that affects their ward adversely. A proposed cut of windrow snow plowing in this year's budget could be an example of that, with suburban councillors already raising concerns.

Is it true Torontonians have been paying artificially low property taxes? 

A consultant's report received by the city last fall makes the case that Toronto property tax rates have not kept pace with neighbouring GTHA communities.

From 2013 to 2021, the report notes Toronto raised its property taxes by a rate 1.15 per cent lower than the average of Brampton, Mississauga, Hamilton, Markham and Burlington.

It also suggests the city could increase property taxes to levels comparable to those other cities to help raise revenue. That would require a one-time hike of 10 to 12 per cent over the rate of inflation.

So, possibly a 13 to 16 per cent hike depending on where the rate of inflation stands.

The consultants project that would raise between $490 to $580 million annually.

"If necessary, an increase of this magnitude could be phased in over two or three years to mitigate its immediate impact on all residents, including those of lower income," the report notes.

Mayor Olivia Chow says a tax increase is needed to help shore up city services. She will present her draft of  Toronto's budget on Feb. 1.
Mayor Olivia Chow says a tax increase is needed to help shore up city services. She will present her draft of Toronto's budget on Feb. 1.

Mayor Olivia Chow says a tax increase is needed to help shore up city services. She will present her draft of Toronto's budget on Feb. 1. (Evan Mitsui/CBC)

Olivia Chow says this isn't her budget, but that of city staff. How does that make sense?

Technically, this is true.

Under the "strong mayor" legislation introduced last year by Premier Doug Ford, the budget process changed. It lays out very prescriptive steps and a rigid timeline to adopt a budget. Part of that means that the budget's first draft is presented by city staff. Then it's turned over to the mayor to amend and present a new draft to council.

But the reality is city staff have been working with the mayor's office and her hand-picked budget chief to create this document.

While the mayor has been hesitant to comment on this spending package and its large tax increase, she, her staff and council allies have had an influence on the current proposal.

What happens next?

The proposed hike is still very much for debate. A series of consultations and meetings will happen before the final vote in February. The next few weeks will see:

  • Telephone town halls and budget committee meetings at city hall next week.

  • In-person consultations across the city the week of Jan. 22.

  • Budget committee wrap-up on Jan. 26.

  • Mayor Olivia Chow presents her budget draft on Feb. 1.

  • City council meets to approve the final budget on Feb. 14.

Could the 10.5 per cent figure come down before the final vote?

That's always a possibility.

Chow may be testing the waters by not directly endorsing the 10.5 per cent hike. And she's certainly urging people to tell her what they think of the budget.

Politics come into play too. Her political capital is at its highest point right now as the honeymoon with voters continues. If she believes an increase of this size is important, it could be easier for her to take the reputational hit with city residents this year.

It becomes a more difficult proposition in two years when we're closer to the next municipal vote and she may be seeking re-election.

Ontario bailed the city out by taking over capital costs for the Gardiner Expressway and Don Valley Parkway. Now, the city says it needs the federal government to do more. What are you hearing on that front?

There is a long-standing call for federal aid on a number of files, but this specific ask is tied to shelter supports for refugees and asylum seekers. That's something the city says is the direct responsibility of Ottawa.

Budget Chief Shelley Carroll says she'll be forced to ask staff to levy a six percent tax hike distinct from the 10.5 percent property tax increase if the feds don't come up with $250 million by Jan. 26.

It's another attempt by the city to ratchet up the political pressure on the federal government.

What difference will this make in the years ahead? Is the budget shortfall coming down, or, put another way, should we expect property taxes to keep rising?

City staff say that, yes, this will help them close the yearly budget gap and no, don't expect the property tax rate to be increased at the same level in the years ahead. But don't count on a property tax freeze in the years to come either.

Carroll is quick to point out that Toronto still needs revenues that "grow with the economy." That means something like a municipal sales tax or a cut of personal income taxes generated in the city.