Ottawa taxes
Bob Plamondon takes a close look,
Compared with the evident corruption in Montreal, and the Rob Ford soap opera in Toronto, the City of Ottawa is imbued with tranquility. Even the normally raucous budget debates at Ottawa’s city hall have been reduced to tepid affairs. Perennial warnings of outrageous tax increases, only to be tempered by some last-minute heroic political act, are relics of the past.
So let’s give full credit to Mayor Jim Watson. Not only has he bettered his promise to keep property tax increases below his target of 2.5 per cent per year, but he has conditioned city bureaucrats — even the police force — to not even ask for anything above his welldemarcated line in the sand.
Even though it’s almost double the rate of inflation, the proposed 1.9 per cent property tax increase for 2013 will gain little scrutiny or analysis. But that does not mean council should claim victory or fall asleep at the switch.
Just because the 2013 tax increase will cost most homeowners no more than one cup of coffee per week does not mean the overall tax bill represents good value or is affordable in the first place. Indeed, we often hear that taxes in Ottawa are higher than Toronto and other cities. But is this true?
To help answer this question, I analyzed the 2012 Financial Information Returns for the five largest single-tier cities in Ontario.
Of course each city has its own set of challenges, circumstances and local priorities. All cities have local priorities and spend tax dollars differently when dealing with crime, transportation, housing, childcare or snow clearing.
While cities have different sorts of revenues (property taxes, user fees, government grants) and from different sources (homeowners, businesses, government), at the end of the day, property owners are on the hook to pay what’s required to balance the books.
To give the data a sense of proportion, and enable comparisons among cities of different sizes, I used the shortcut by expressing various revenue totals for each city on the basis of an amount per household.
Starting with the bottom line, City of Ottawa property taxes are 5.8 per cent higher than the five-city average, but we land only slightly below Toronto. This suggests that Ottawa property taxes are not sub- stantially out of whack.
Property taxes represent only 40 per cent of Ottawa’s total revenue, so it’s worth looking at how we stack up for the other sources of revenue.
Every city gets payments in lieu of taxation (PILTS): the equivalent of property taxes paid by government. But these payments have a bonus element because the portion of the tax bill that relates to education — about 18 per cent of what’s paid — is kept by the municipality and not shared with the province, which is the case for property taxes.
It may well be that the special nature of PILTS more than compensates Ottawa property-taxpayers for policing and other costs incurred owing to our status as the national capital.
While government giveth, government can also taketh away.
Indeed, we seem to get the short end of the stick when provincial government grants are handed out. Of course these grants vary with the number and extent of local programs in place, and these grants can vary from year to year.
But it’s clear that the City of Toronto takes substantially more cash out of Queen’s Park than the other four largest Ontario cities. In 2012, that worked out to $898 more per Toronto household than Ottawa. In 2011, Toronto received $865 more in Ontario grants than Ottawa.
It makes sense that user fees are highest in Toronto, largely because of the mass-transit system and that Ottawa would rank in second place.
But Ottawa does lead the pack in a few areas, such as licenses and penalties, where we pay much less than the average. Perhaps this is our bonus for being law-abiding.
When all revenue sources are included, Toronto had $1,938 more revenue on a per-household basis than Ottawa. Almost half of that difference is Queen’s Park showing Toronto its love.
You would think, because Toronto is more expensive to run — for transit, policing, housing, childcare, that its property taxes would be much higher than Ottawa. But that’s not the case.
Perhaps Ottawa council should look at how we might get a better deal from Queen’s Park, or persuade Premier Kathleen Wynne to change the funding formula so municipalities in Ontario are funded on a per-capita basis rather than following a sharedcost approach to programming that favours Toronto.
A municipality that wants more services should ask local taxpayers to pay for it. In the past, Queen’s Park has given Toronto special breaks, which in some years has resulted in its property taxes rising at levels below what we faced in Ottawa.
If Queen’s Park gave to Ottawa what it gives to Toronto on a perhousehold basis, we would be looking at a substantial tax decrease — perhaps as much as 25 per cent. The current system hardly seems fair.
In a coming analysis, I will see how Ottawa spending chalks up compared with its peers.