Toronto city council and the mayor have announced that property taxes will have to go up 4% to cover budget shortfalls. Recently Toronto has been hit with a city land transfer tax, a vehicle registration tax and continuous 4% property tax increases to offset inflation. Just to keep people up to date, inflation has been below 2% for a few years now.
Although different municipalities through North America have suggested the idea in the past, I believe Toronto must introduce a new tax, one that would greatly even out the balance of who pays for services in this city. It is time for a “Renters Tax”.
A typical homeowner in Toronto pays about $4,000 in property taxes, $120 in vehicle registration for a two car family, usually a parking permit for one if not both cars as nobody in Toronto has two car parking, and all the other hidden taxes that are spread about. The major costs of the city’s budget are the TTC at 16% and police/fire/ambulance at 16%. A large remaining percentage goes towards staff at city hall, and various other services such as libraries or parks and recreation.
The average renter pays their rent to the landlord and their costs end there. Renters use the TTC, they call the police for service, the fire department when something is burning, the ambulance when they fall, read books at the library and use other city services. Tenant advocates often claim that 20% of their rent goes in some back end formula towards property tax for the landlord but in reality, the renter is paying their landlord an agreed upon charge to live in their property, renters escape paying for city services.
As of 2006, when the last true census was done, there was an estimated 460,000 rental households in Toronto. By now that number has risen to well over 500,000. If you estimate that of those 500,000 households, there are multiple tenants in 20% of those apartments, we can speculate that there are 600,000 adult renters in Toronto.
If the city was to charge a $200/year “renter tax” on tenants in Toronto, the city could generate additional $120 million revenue dollars annually.
Advocates will argue that housing in Toronto is already unaffordable for renters, but there is nothing that I’ve read in the Charter of Rights and Freedoms that guarantees people a cheap place to live. Toronto is an expensive city; homeowners pay extreme amounts to purchase here and those that can’t, purchase in more affordable communities. Maybe it’s time for renters to share the costs of an expensive city, or move elsewhere and quit whining about unaffordable housing in Toronto.
If you go to http://www.ontariotenants.ca/taxes/toronto-property-taxes.phtml you will see Tenants already pay many times the rate of property taxes as homeowners.
To ask Toronto’s poorest residents (that’s why we are tenants and not homeowners) to pay an extra tax when we already pay higher rates that homeowners is either ignorance of this fact or selfishness.
Tenants in a small two bedroom apartment typically pay as much property tax as a local small home!
In your year-end look back, you mentioned that this post “got people riled up”. I can see why. It really is a remarkably ill-considered and frankly insulting proposal.
Let’s be clear. Renters are taxpayers. It’s not “some back end formula”, it’s a simple fact: the city taxes residential landlords (at a rate more than triple that of individual homeowners, incidentally) and the landlords pass 100% of that cost directly on to their tenants. For you to dismiss that and suggest that renters — who already shoulder more than their share of the tax burden — are somehow freeloading adds insult to injury.
I think what’s missing here is a little bookkeeping. So here’s a counter proposal for you: landlords should provide their tenants with an annual statement showing the tenant’s share of the property taxes. This would give renters the same tangible sense of connection to tax rates that homeowners already have. It would also hopefully take the wind out of the sails of poorly thought out, punitive proposals such as yours.