The Centre for Urban Research and Land Development released a new report recently about how much room Toronto residential property taxes have to grow...and you’re not going to like it (if you live in Toronto).
Here’s the issue the City of Toronto is encountering: There is such a strong demand to live in the city and the population is growing by thousands every year. Toronto needs money to build new infrastructure and repair existing infrastructure to accommodate everyone. In an ideal world, the municipality would benefit from the country’s income tax or HST, but CUR says that’s highly unlikely. The obvious solution is to increase property taxes, but by how much? That’s what the report aimed to discover.
CUR compared Toronto’s property tax data to the other 28 municipalities in the Greater Toronto and Hamilton Area. They discovered that there’s room to increase Toronto’s average property tax rate by approximately 20% and still be close to the median range compared to the other municipalities.
The average effective tax rate (percentage of market value) of 0.51% was 21% lower than the average for the median-ranked municipality (Halton Hills), according to 2016 Census findings. Only Richmond Hill and Markham had lower average effective tax rates.
Despite Toronto home values being 9% higher on average than the GTHA as a whole, Toronto homeowners paid on average 10% less in property taxes. The average property tax paid in Toronto was $4,027. Only five municipalities paid less (Milton, New Tecumseth, Georgina, Hamilton, and Burlington).
King paid the highest average property taxes with $6,978. The median was Newmarket with $4,484. It’s important to keep in mind that Toronto has more high-density condo apartments than any other municipality in the GTHA, which lowers the average property tax paid.
The average property tax burden (percent of household income) of 2.74% in Toronto was 22% less than the median-ranked municipality (Clarington with a burden of 3.5%). Only Milton with a property tax burden of 2.63% was below Toronto.
What CUR is pointing out is that Toronto homeowners should be able to financially handle a 20% increase to property taxes because it would still place the municipality in the middle of the pack. If this property tax hike helps build the infrastructure we need to keep growing healthily, then maybe it should be considered.