Mayor Olivia Chow to soften tax blow for renters in 2024 budget

At a speech Monday, Mayor Olivia Chow said she would lower a proposed property tax hike applied to multi-residential dwellings.

Thestar.com
Jan. 30, 2024
Ben Spurr, Mahdis Habibinia

Mayor Olivia Chow says she will rein in a proposed tax hike in the 2024 city budget in order to protect tenants from higher rents.

In a lunchtime speech to the Canadian Club at the Fairmont Royal York Hotel on Monday, Chow promised to reduce the property tax increase applied to multi-residential dwellings when she releases her version of the budget this week.

Chow said she was taking the step, which was recommended by council's budget committee, to ensure "no renters will face huge increases."

The mayor noted that tenants make up almost half of Toronto's population.

"They're facing huge challenges. They're facing evictions. It's very difficult for them, especially if they have kids," she said. "They can't afford to pay more."

In accordance with provincial "strong-mayor" legislation, Chow is scheduled to release her version of the budget on Thursday. It will go to council Feb. 14.

The preliminary version staff released Jan. 10 proposed a multi-residential rate increase of 4.5 per cent. That's half the 9 per cent proposed for the general residential rate, which taken together with a 1.5 per cent increase for the city building fund would bring the total residential increase to 10.5 per cent.

That double-digit increase would be the largest at least since amalgamation, and while it has been the focus of intense debate at city hall because of its potential impact on homeowners, the boost to multi-residential rates could also hit renters hard.

That's because landlords are allowed to exceed rent control guidelines if their taxes go up by an "extraordinary" amount.

This year the province has capped rent increases for regulated properties at a maximum of 2.5 per cent. But a multi-residential tax increase above 3.75 per cent would be considered extraordinary, and allow landlords to apply to raise rents above the 2.5-per-cent guideline.

Chow told reporters after her speech that she would bring the multi-residential increase down to at least the 3.75 per cent threshold, but didn't offer a precise figure.

Because a smaller tax increase means the city will collect less revenue this year, the mayor will have to make up the loss by cutting spending or finding funding elsewhere. Ontario law prohibits municipalities from running deficits.

"You will find that answer in three days," Chow said when asked how she intends to pay for the lower tax rate. The mayor's office couldn't immediately say how much it's expected to cost.

Geordie Dent, executive director of the Federation of Metro Tenants' Associations, called Chow's announcement "heartening." He maintained that landlords already benefit from big profit margins, and there's no reason they should be allowed to pass on higher tax bills to tenants.

Dent has worked for the housing non-profit since 2008 and said it was "refreshing to see a Toronto mayor cognizant of tenant issues."

In her speech, Chow, a veteran progressive, gave the strongest indication yet that she could also lower the proposed 10.5 per cent residential increase. That's been a key demand of critics who charge it would unfairly add to homeowners' financial burdens at time when they're already grappling with an affordability crunch.

"I'm still listening. What tax rate makes sense? And I will have more to say on that in the coming days," she said.

Jennifer van der Valk, senior vice president of communications and marketing at the Toronto Region Board of Trade, said Chow should seriously consider scaling back the residential property tax hike. The business group has warned higher bills could make Toronto less economically competitive.

"We need to attract people to live here, and we need to attract business to invest, and (higher taxes) will certainly have an impact," van der Valk said.

Chow and her budget chief have warned the residential increase could grow by 6 percentage points if the federal government doesn't provide $250 million to house refugees using Toronto's shelter system.

The mayor said Monday she's still waiting for a funding commitment from Prime Minister Justin Trudeau's Liberal government and hasn't lost hope it will come in time for her budget launch.