Peel is one step closer to having a vacant home tax for properties in Mississauga and Brampton, as well as Caledon

Consultants form framework for tax, region asks province for approval

Thestar.com
May 5, 2023
Alexandra Heck

The Region of Peel has a vacant home tax policy drawn up and is asking the province for the authority to execute it.

Staff from Ernst and Young presented a framework for the policy to Peel regional council on April 27, outlining how the vacant homes would be identified and how taxes would be collected.

Mohamed Bhamani, national lead for municipal government consulting practice with Ernst and Young, told council the best method of identifying vacant homes is through disclosure from homeowners.

The goal of the tax would not be to generate revenue, but to encourage homeowners with empty properties to either rent out their spots or sell them to increase housing supply in the region’s tight market.

“This is about how we can occupy the homes that are already here,” said chief administrative officer Gary Kent.

Staff were able to estimate that there are approximately 13,000 empty homes in the region based on water bills, but using that method for billing has raised concerns about privacy.

“Legally, it would be difficult,” he said, when asked by Mississauga councillor Joe Horneck about how cumbersome the self-disclosure method would be.

“I want people to change their behaviour and utilize housing properly,” Horneck said. “My challenges are with the implementation.”

Messages would be sent out to all homeowners in Peel, asking them to identify if their home is vacant for more than 184 days a year.

There would be several exceptions for the tax, some being if the owner is in care, if the owner has died, if the property is undergoing a major redevelopment or if it is for sale.

It would be the municipalities that collect the tax, which is suggested to be set at one per cent of the value of the home.

The region estimates that this tax could generate up to $17 million in 10 years at a one per cent rate.

Ernst and Young estimates the project would require $12 million to $14 million in startup costs.

“Why not go for five per cent?” asked Mississauga councillor Carolyn Parrish, reasoning that the startup costs for the project could be paid off more easily.

“It is meant to be a tool for influencing behaviour,” Bhamani said, explaining that a higher tax rate would lead to more homeowners trying to mislead staff.

Councillor Brad Butt voiced concerns about the amount of effort that would be required to administer the tax, which at 13,000 homes equates to three per cent of the population.

He asked how effective the tax could be in increasing available housing.

Bhamani told him that in Vancouver, the number of vacant houses has dropped by 50 per cent since implementing a similar tax.

If approved by Ontario’s finance minister, the tax could come into effect in 2025.