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Homeowners face 4% tax hike

Ahab

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I think you are missing the bigger picture. Higher property taxes are not good news for renters.

As you know, property taxes are collected on rental buildings. Renters don't pay property taxes directly, but they do pay.
I think this is one of the biggest problems with our municipal tax system. There's simply no transparency which creates a silly schism between tenants and homeowners. I suspect most tenants are completely ignorant of how property taxes affect their rents.

If the city actually imposed a rental tax that would replace the taxes renters are paying indirectly, there would be a riot. Yet, the city has done this to homeowners through a new garbage fee (which is not even revenue neutral) and all the critics are blasted for being nutty.

If Miller was interested in real tax reform and not merely implementing sneaky tax grabs, he would implement a tax on rents and cut taxes for landlords.
 

kEiThZ

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The Post? Whatever. Frankly, it's likely to disappear before the end of the end of the year anyways, because of the prudent private sector running it, a development I welcome.
You may find them unappealing and wish for their demise but that doesn't take away from the facts presented here.

Although, I agree with raising taxes to keep the books balanced (I don't want services cut), it's at least a little deceiving to say that it's only 4% while imposing new fees and raising existing ones. There's charges that one could argue are a fair increase (ie. water - need money to rebuild infrastructure). But there are fees that the 416 has that nobody else does and they are all basically targeted at homeowners - garbage, car registration, pet license, land transfer tax. The worst part is that those taxes are far in excess of what it costs to provide the respective services. That's what makes it feel like gouging. I agree that the user pay principle should apply to those services and that requires fees. But 25 bucks to register my cat? And what does the city provide in return for that? I'd rather have them be honest and raise revenue through taxes instead of abusing the fees that were slapped on to legitimately price services according to consumption.
 

Tuscani01

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I think you are missing the bigger picture. Higher property taxes are not good news for renters.

As you know, property taxes are collected on rental buildings. Renters don't pay property taxes directly, but they do pay. Although a new property tax class has been created for newly constructed purpose-built rental buildings, existing rentals are taxed at a commercial rate, far in excess of Toronto's residential rate. So, even though your rent is guideline protected, you may have (depending on the type of your rental accommodation) started off paying an initial rent that was higher than it needed to be because of the onerous tax burden in this city on rental buildings. Even if you didn't, many tenants do.

Existing tenants might not get hit immediately from property tax increases, but in the era of vacancy-decontrol tenant legislation, higher taxes prompt higher rents for vacant units, so new tenants or moving tenants get hit. Over a period of time, it helps accelerate the march towards higher average rents across the city.

So, while I'm glad that your rent is less than 1.8% increase this year, I don't think renters as a class have much to laugh about. Property tax treatment is a key problem vis-a-vis rental affordability in this city.
I dont think you understand my situation. Every unit in my building is rented out at the same price, regardless of when you moved in. Whoever rents my unit when I am done will be paying exactly what I am paying until the period when rent is increased (June). At that point, the increase is still capped. Thats just my situation, and im assuming its thanks to living in a co-op. Everything here is transparent, and each resident gets to vote on the final budget including rent increases.

For that reason... im still allowed to laugh!:)
 

Tuscani01

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I see. So you want others to pay the tax increase so that you can get the services from the city.
Thanks, I love you!

Actually, im not in a subsidized unit. My rent subsidizes the low income families and community living residents in my building. However, being a member of a co-op means there is no landlord. I volunteer within the building which contributes to lower costs for all. We still pay property tax, but our savings in other areas mean we don't feel the increases as much.
 
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Glen

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If the city actually imposed a rental tax that would replace the taxes renters are paying indirectly, there would be a riot. Yet, the city has done this to homeowners through a new garbage fee (which is not even revenue neutral) and all the critics are blasted for being nutty.
You do know that garbage pickup in rental buildings is not done or paid for by the city? The new garbage fees on residents was already a fact of life for renters .
 

Ahab

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My point was not about the new garbage fee, although I do feel that the fee in this context can only be considered a tax increase.

My point is that the taxes renters pay are indirect, which should be a concern to them as they simply do not know how much of their rent is going to taxes. If they did know, as all homeowners now know how much of their money is going into the collection of their garbage, then renters would be more engaged in how much they should contribute to the welfare of the city. As it stands now, homeowners are really the only ones engaged in the debate. If renters knew how much taxes they were paying through their rents, I am sure many of them won't be shrugging off a 4% hike.
 

CDL.TO

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I don't get this. When we hear the yearly story about 4% tax hike, or whatever, does that mean the rate is increasing by 4% or something else? If it is the actual property tax rate that is being modified, then inflation is a non-issue. The entire point of tax rates, as opposed to a poll tax, is so that taxation is a constant function of some underlying metric of society's ability to pay. In municipal terms, I guess that means land values. Tax rates aren't meant to be adjusted for inflation. Tax rates implicitly take inflation into account by being a function of some kind of inflation sensitive wealth.
There's a whole page of posts following yours, but not one actually replied to your inquiry. Strange.

Anyway, to answer your question NO it does not mean that the tax rate is being increased by 4%. That isn't how property taxes work. It's clear that 95% of the population does not understand how municipal taxes work and this is contributing to the annual anger over tax increases.

  • What the tax increase actually means is that the city is increasing their total take from taxes by 2.5%.
  • So if the "income from taxes" section of the city's budget was $1,000,000 last year, with a 2.5% increase it will be $1,025,000 this year.
  • Then the city adds together the value of all taxed properties in the city (based upon MPAC assessments), and uses this to determine the tax rate.
  • So if the total value of all property in the city was $1 billion, and with a city budget from taxes of $1,025,000 as described above, the city would have to collect $0.001025 for every dollar of assessed value in the city.
  • So we would have calculated the tax rate as 0.1025%.
  • And therefore on a $200,000 home you would pay $205 in taxes.

So, property values have NO effect on how much tax revenue the city receives. And every new building that gets built brings NO new revenue to the city (but it does help keep your tax bill lower by raising the total assessed value of the city). And since the tax rate is determined by the budget (and not vice-versa), inflation must be accounted for.

Even though there have been tax increases every year of Miller's administration, with new construction and property value increases the tax rate in Toronto has DECREASED.

There's an additional 1.5% tax increase on top of the 2.5% as part of a plan to shift the tax burden off of businesses and on to homeowners, bringing the total to 4%. This pro-business move was implemented by Miller, not Lastman, and he has to face the flak for it every year. But if he hadn't, people would have given him flak for not helping business... damned if you do, damned if you don't. Heck, people gave him flak for not making the transfer larger!

So, account for inflation (~2%), and the pro-business tax transfer (1.5%) and we see that the ACTUAL property tax increase (that is, increase in city income from property taxes) is ~0.5%. That said, this doesn't take into account all the new service fees introduced over the past year, but we're discussing property taxes here.

Hope this helps clear things up.
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GraphicMatt

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The garbage user fees are a bit of social engineering if anything - there's a lot of merit to the idea that people will find a way to reduce their household waste if only to avoid paying for it.

It's good long-term thinking, really, and something all municipalities should think about doing. Just because there's a recession doesn't mean there's a free pass to forget about the environment.
 

Paleo

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Mississuaga taxes are going up 4.5%.... time to dump that socialist mayor.
I'm looking at the financial report for the City of Mississauga right now and from 2003 to 2007 (if I'm reading it right) expenditures went from $352M to $466M, an almost 33% increase (the city did not grow by 33%, not even close) and in that context, do the Toronto numbers really look all that bad?

In absolute terms the Toronto numbers seem huge because we're dealing with an extra digit but the increases don't look out of line when compared to our neighbours to the west.
 

Archivist

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CDL, thanks so much for that detailed post. I certainly couldn't have written it myself, but it's very helpful to put this discussion in context.
 

CDL.TO

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Mississuaga taxes are going up 4.5%.... time to dump that socialist mayor.
AND Mississauga doesn't have the 1.5% transfer from businesses to homeowners (which brings in NO new revenue to the city). So the comparison is more accurately 2.5% increase for Toronto and 4.5% for Mississauga.
 

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