Toronto

Growing push to tax both vacant, luxury homes during city's budget process

As the city continues 2020 budget discussions, there's a growing push to gain much-needed revenue by taxing both vacant homes and some of the city's priciest properties.

Hiking tax on pricey properties is 'housing paying for housing,' councillor says

As the city continues 2020 budget discussions, there's a growing push to gain much-needed revenue by taxing both vacant homes and some of the city's priciest properties. (Michael Wilson/CBC)

As 2020 budget discussions continue at city hall, there's a growing push to gain revenue by taxing both vacant homes and some of Toronto's priciest properties.

On Friday, Coun. Brad Bradford secured the budget committee's backing for his call for more information on potential revenue the city could gain by adding a new Municipal Land Transfer Tax (MLTT) rate tier for high-valued homes.

Back in 2019, a coalition of councillors — Bradford, Ana Bailao, and Joe Cressy — first pitched the concept as a way to offer more housing allowances to vulnerable residents.

The councillors called for a new top tier of three per cent for homes valued at more than $3 million, going beyond the current top tier of a 2.5 per cent tax for homes valued at more than $2 million, with buyers footing the bill.

For every $1 million generated in revenue, the plan could add 200 households to the allowance program, the trio said at the time.

'Housing paying for housing'

"MLTT, and the idea of pairing that with supportive housing, is the notion of housing paying for housing," Bradford said on Friday.

He also expects calls for a vacancy tax on properties sitting empty — a move Bailao and Cressy also support, and which Mayor John Tory has talked about exploring since 2017 — will be "introduced in subsequent budget meetings."

The increased pressure to explore the options also comes amid debate over which could be a better fit for Toronto.

Bradford said while the city should consider both revenue tools, MLTT is an "imperfect mechanism" to fund Toronto's operating budget since there's variability year over year, given the swings in the housing market.

Some real estate watchers also warn it could have unintended consequences. "It starts making it harder for people to upsize from one home to another, which tightens up the supply a little bit in the more affordable segment," said Realosophy president John Pasalis.

It would, however, be "very easy for the city to implement" since the system for it already exists, noted Michal Hay, executive director of advocacy group Progress Toronto.

As for a vacant home tax, Hay is among those stepping up external pressure on city hall, with her organization launching a campaign and petition backing the move on Friday. 

"If you can afford a home that's more than $3 million, you can afford to invest more into making the city more livable," she said.

(CBC News Graphics)

The City of Vancouver raised an estimated $38 million in the first year of its Empty Homes Tax that was first imposed in 2016, Bailao previously told CBC Toronto.

"You have the added benefit from a policy perspective of reducing vacant homes in the city," Bradford said. "You reintroduce those properties back into the supply."

So where does Toronto's mayor stand?

City 'starved for revenue'

"I do not believe it is appropriate to rush into any new or modified taxes without proper information on the implications from our professional City staff," Tory said in a statement to CBC Toronto on Friday.

Staff were already studying the possibility of changes to the MLTT, he noted, while Tory himself worked to secure changes from the province to open the door for the introduction of a vacant home tax.

"From the beginning there have been a number of concerns and then complexities involved with the implementation of this initiative," he said, "and again I will await the advice of our staff on how this could be done."

Hay said, given the financial pressures on Toronto and the need for more housing options for residents, the city doesn't really have a choice beyond exploring diverse sources of cash.

"The city is starved for revenue right now, especially with cuts coming down from the province," she said. "It needs any revenue it can get."

Budget discussions and public consultations are set to continue in the weeks ahead, with a final vote from council in February.

About the Author

Lauren Pelley

City Hall reporter

Lauren Pelley is a CBC reporter in Toronto covering city hall and municipal affairs. Contact her at: lauren.pelley@cbc.ca

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