Vacant home tax — fix it or scrap it
If nothing else, Toronto council can console itself with the clarity that comes from spectacular failure.
In this case, the fiasco is the shambolic implosion of its vacant home tax. What began with the best of intentions has become an Edsel of public policy. If the tax scheme cannot be reformed to avoid the confusion we’ve seen this year, it should be scrapped.
City council voted in 2021 to impose a vacant home tax to discourage homeowners — particularly investors dwelling elsewhere — from leaving properties unoccupied while the country was enduring a housing crisis. The tax took effect the next year, applied to homes not used as principal residences by owners or their tenants for six months or more in a year.
The tax began at one per cent of a home’s value. In October, council voted to triple it to three per cent this year.
But here’s the rub.
The onus is on homeowners to notify the city by a deadline, later extended, that they were, in fact, living in their residences. Alert denizens of city hall might have realized that there would be problems in essentially presuming a home vacant unless citizens went out of their way to prove otherwise.
Oh, there were reminders and deadlines. But human nature being what it is many were missed or forgotten, while homeowners coped with the endless distracting demands of daily life. Then, the increased bills started to arrive.
And homeowners, living in the residences for which they were now being dinged thousands on the assumption it was vacant, howled like coyotes.
As of last Friday, the city had received 62,000 complaints — enough to account for every citizen (with thousands to spare) in a city the size of North Bay.
In all, it was a “difficult week,” Coun. Shelley Carroll (Ward 17, Don Valley North), the city’s budget chief, said in world-class understatement.
Carroll undertook to reverse incorrect charges, waive fees and improve the program. The city planned to double the staff available to help homeowners cancel improper bills.
What Toronto had here, it seems, was a massive failure to communicate.
Coun. Brad Bradford (Ward 19 Beaches—East York) called it a complete fiasco and said “Torontonians deserve better from local government.”
Chow apologized on behalf of the city, saying she inherited a flawed system from former mayor John Tory and that “we’re cleaning up the mess.”
The fact is, if the city had planned better, there should not have been a mess to clean up.
What does history tell us, after all, about taxes and tax increases? Well, that a tax on tea triggered the revolution against Britain in America. That a tax on salt marked the beginning of the end of the British Empire’s raj in India. That a poll tax in Britain in 1990 caused riots in the streets and prompted the ruling Conservative party to rebel against then-prime minister Margaret Thatcher.
More recently and right here at home, we have seen the hay that federal Conservative Leader Pierre Poilievre has been able to make of the carbon tax.
In short, the city was playing with dynamite.
Taxes of any sort are potentially incendiary. They need be handled with extreme care. The slightest error, the tiniest mistake in implementation can be fatal.
The Star’s Edward Keenan put it rather nicely when he described the current state of play as “a fiasco. A snafu. A debacle. A farce.”
Chow cannot slough this one off on Tory. The increase happened on her watch. The flawed process continued. Warnings about its risks were not heeded.
It’s time to make this right. Late filing penalties should be waived. Staff should explore other ways to determine if homes are vacant. Carroll and Chow, for example, will ask officials to examine whether data around utility usage could be used. Privacy concerns would need to be addressed but most homeowners would likely favour such an approach over the current paperwork headache.
The vacant home tax is a money maker for the city, expected to pull in some $100 million next year. But right now, it’s coming at a steep price for frazzled homeowners.