The detailed property tax report issued by the City of Edmonton reveals that some Ontario cities rank the highest in Canada when it comes to property taxes. The cities of Toronto, Ottawa, Brampton, Hamilton and London take five of the top six spots on the list for the highest average property taxes paid. This is something most homeowners in these cities know intuitively every time they pay their tax bill. Now they have it confirmed by an objective report which compared over 30 municipalities across Canada.
Toronto ranked first with the highest taxes paid at $3,912, followed by Brampton at $3,826. Ottawa was third at $3,532; Hamilton and London were fifth and sixth at $3,305 and $3,078 respectively. St. John’s Newfoundland deserves credit for taking last place with the lowest average tax at $1,540, and Surrey, BC was second last at $1,814.
This sad but helpful property tax news is timely as city councils across Ontario are in the early stages of preparing their budgets. As well, Premier McGuinty’s freeze on assessments for homes expired at the beginning of 2008. Not only will tax rates be going up, but for the first time in a few years homeowners will take a second hit if their home value reassessment shows an increase above the average increase. Assessment changes will take effect for 2009 property tax rates.
What is especially helpful about the Edmonton report is that it compares property taxes in a dollar value instead of as a percentage. Some mayors, like Toronto’s Mayor Miller, try to defend high property taxes by hiding behind what
appears to be a lower rate than other cities. This is hiding because the average value of a home is high in Toronto so the total taxes paid for a Toronto homeowner are higher. When paying taxes one cares less about the rate paid or the details of the complicated formula used. Instead, one cares about how much money is being taken year over year. That is the only comparison relevant to a taxpayer, not whether the rate is 0.82 in one city versus 1.15 in another city.
The main reason for high and growing property taxes in Ontario is that municipal spending is out of control. Municipalities have a spending problem not a revenue problem. While mayors continue to clamour for more and more money from many sources, their appetites for spending grow unchecked. Data from Statistics Canada shows that municipal revenue across Ontario has been running at three times the rate of inflation. In 2006 municipal revenue was up 6.3% while inflation was only at 2.0%; in 2005 revenue was up 7.2% and inflation was only 2.2%. Despite Ontario municipal revenues ballooning from higher taxes, more transfers from other levels of government, higher user fees and new taxes in Toronto; mayors continue to complain that they don’t have enough.
It is interesting how mayors can work together cooperatively when it comes to demanding transfers from other levels of government or getting new taxing authority from the province. If that same energy were transferred to creating efficiencies and reducing costs, the report out of Edmonton might show a different - and welcome - conclusion.