There’s 200 million reasons to fix this issue
Racking up more than 62,000 complaints and counting, Toronto city hall’s attempt to collect a tax on empty homes has been full of problems this year.
One of the bigger ones is that the reminder of the annual requirement to declare whether your home was vacant for more than six months last year — and thus generally subject to the tax — was mixed in with property tax bills, meaning a lot of people never noticed the notice. Some of those who did and properly declared their status seem to have been billed anyway. It’s a real mess.
Mayor Olivia Chow, who inherited the tax from her predecessor John Tory, has promised she’s going to “clean up this mess.” She’s bringing a motion to council later this month to waive late fees and modify the appeal process to make sure people aren’t paying an unjust bill.
But, really, the biggest problem with Toronto’s vacant home tax doesn’t have anything to do with this year’s declaration process. It dates back further.
It started with reports from years ago that ruled out the idea of using anything but a manual and annual declaration process to determine vacancy. Other measures that would seem like obvious ways to determine vacancy, like whether the home is using much water or electricity, were dismissed.
A 2017 report to city council, for example, declares that city hall “would face significant restrictions due to individuals’ privacy rights on the use of personal information contained in water or hydro meter to track the presence of individuals within a residential unit as a means of identifying potentially vacant units for tax purposes.”
A 2020 report by consulting firm KPMG is even more definitive: “It is likely that any attempt by the city to use personal data like electricity and water consumption would be met with significant public opposition,” the authors wrote.
But, um, would it? I consider myself pretty privacy conscious, but I can’t say that the municipal government — the owner of both the power and water utilities — having access to data about my power and water usage is something that really worries me.
Sure, there were barriers to pursuing a more data-based approach to the vacant home tax, but city hall didn’t seem interested in testing the strength of those barriers. Instead, they jumped right to a bureaucratic, error-prone process that puts the onus on residents — based on the premise that because a similar process has worked with Vancouver’s vacant home tax, it would work well here.
It hasn’t, clearly. And at this point it’s hard to have much faith that Toronto city hall will do better in future years. Instead, it’s worth going back to the idea of a data-based approach, because a lot of the issues with that approach seem to have workable solutions.
If provincial privacy legislation is the real challenge, for instance, then it seems like it should have been worth asking Queen’s Park to consider some narrow changes to that legislation.
If the concern was that the average resident would revolt over the very notion of another bureaucrat knowing how much water or power they use, it seems like maybe residents should have been asked
The city expects $200 million in approximate revenue from the vacant home tax in 2025 and 2026
about it first, via a poll or survey, to see how many actually care.
Other challenges had solutions too. Condo buildings where units aren’t individually metered for utilities, for example, could still offer building-by-building data that could determine which buildings are likely to hold a lot of vacancies, creating the equivalent of a big flashing neon sign saying “investigate here” for bylaw officers.
It’s important that Chow and city hall really get this right.
There are 200 million reasons why a vacant home tax remains a good idea. That’s the approximate total revenue the tax is projected to bring in for the 2025 and 2026 budget years, after the rate increases from one per cent to three per cent of the assessed value of the empty home. Chow has already earmarked a bunch of this money for affordable housing initiatives.
Mercifully, city hall seems to be warming up to the need for a new process. At last month’s city council meeting, city councillors Dianne Saxe and Stephen Holyday both pushed for exploring the option where homeowners could at least opt-in to letting the city consider their utility bills when determining vacancy status, as an alternative to the annual declaration.
And Chow and her budget chief, Coun. Shelley Carroll, will be formally asking city staff to consider “the feasibility of an evaluation process based on city utility usage data” in their motion about the tax later this month.
It’s a necessary push. Another year with vacant home tax problems like we’ve seen this year and Chow and council are likely to face serious pressure to drop the tax — and all the city revenue it brings in — entirely, leaving a big vacant space in the city’s financial plan.