Each year at budget time, the discussion of taxes – property taxes in particular – reaches a fever pitch.
As a new member of the Budget Committee, I heard firsthand the call of some citizens to increase property taxes by up to 25%. The basic premise is that Toronto’s taxes are far too low compared to other GTA municipalities. Knowing that most Leaside residents pay between $5,000 and $15,000 annually, I found this claim to be questionable and decided to dig a little deeper.
While numerous comparative tools are used, it is important to remember that the Municipal Land Transfer Tax (from which the City will collect over $450 million from residential home sales this year) and fees for solid waste collection are exclusive to Toronto. Although the MLTT isn’t borne equally by residents, both these taxes are uniquely paid by Toronto home owners and must be included in any property tax comparison. On average, these two fees add approximately 17% to property taxes.
Proponents for raising taxes assert that Toronto’s tax rate is the lowest in the GTA…but is it?
It makes sense that this would probably be the case as our average property values are the highest in the GTA. The average detached home in Toronto is 40% higher, while the average semi-detached home is almost 50% higher (Leaside averages are higher still). For instance, if the average home in Oshawa were only half that of Toronto, the tax rate would need to be double to provide the same services. (Interestingly, the property tax rate in Vancouver is roughly half that of Toronto.) When one accounts for the higher comparative value of Toronto homes as well as the aforementioned unique fees, Toronto’s actual tax rate would be slightly higher than the GTA average.
Many of us forget that pre-amalgamation Toronto was in fact four cities and two boroughs. Given Leaside’s desirability and consequently higher home values, residents might expect to pay higher than average taxes. However, if Leaside were just considered as part of an average neighbourhood in what was the “old” City of Toronto (there is no analysis on the old boroughs) the taxes are not nearly as low as some would argue.
When looking at an average two-storey home in the “old” City of Toronto (including Leaside), the property taxes levied are actually the highest in the GTA at $6,900 annually (MLTT and solid waste fees are not included). For that same home in the “old” City of Scarborough, the taxes levied are 50% less. The explosive increase in the value of homes in Leaside and “old” Toronto has really left us in a state of a “Tale of Two Cities” whereby residents in one area of the city are paying the highest taxes in the GTA while those in another are paying the lowest.
While we could argue that we need to increase taxes to pay for Toronto’s various unmet needs, using the rationale that it’s because “we” pay the lowest taxes in the GTA is highly dependent on where you reside.