One year after last year’s municipal election, tenants still bilked by $1,000/year in unfair taxes
By Mike Chopowick, October 15, 2015
Exactly a year ago, we heard many municipal candidates campaign for “lower rent”, “affordable housing” and “protecting tenants”.
This is what you didn’t hear: Cities actually cause higher rents for tenants. Many city councils impose the highest, most regressive tax rates in Canada on the lowest income residents. For years they’ve gotten away with it.
Ontario is the only place in North America where tenants pay property taxes that are 2.5 times higher than homeowners. And, for even stranger reasons, everyone has just accepted this as a fact of life in Ontario. They shouldn’t. The single biggest thing that can improve housing affordability is setting fair and equal tax rates for tenants. It can and should be done.
In most Canadian cities, property tax rates are the same for all residential properties…a house, townhome, condo or high-rise apartment. In Ontario, cities and town have gotten away with taxing tenants as a separate class. The average Ontario tenant faces a property tax rate of 1.9% (of the assessed property value). In contrast, the average homeowner in the province pays a tax rate of 0.7%. That means that the average tenant faces a tax rate that is over 2.5 times higher than that faced by homeowners.
Most tenants don’t know this, but on average they are paying an incredible $190 per month in property tax. It’s included (and hidden) in their rent. But they are paying it. If these same tenants were living in an owned condominium, the same size and right across the street, they would be paying $111 per month in tax. Tenants are paying almost $1,000 more every year.
According to Statistics Canada, the average income for tenants is about half of what homeowners earn. So, city councillors and mayors that complain about the high cost of housing are not only causing the problem with unfair tax rates, they are being unfair to the lowest income households.
Message to Tenants
Tenants need to speak up about this issue. Provincial legislation strictly requires landlords to reduce rents if property taxes are reduced. The benefit to tenants from fair tax rates would be swift and immediate. If you are a tenant, think about this when you hand over your next rent cheque…that $200 of that is going to your city hall. And, that it should be about $80 less…if tax rates were fair. You don’t use more services than house or condo owners…so why should you pay more tax? Why can’t cities in Ontario be fair like other Canadian cities?
Right now, both the Ontario Ministry of Municipal Affairs and Housing and the City of Toronto are consulting on ways to make housing more affordable. The easiest way would be to reduce multi-residential tax rates that are unfair to tenants. It’s been a year since the last municipal election. Now’s the time for cities to stop ripping off renters.