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Property tax hikes spark outcry across Canada: Are homeowners being bled dry?

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We’ve reached that dreaded time of year when homeowners are slapped with property tax hikes. It’s hitting particularly hard in this economy when many Canadians are struggling to make ends meet.

Post-pandemic, with communities across the country battling high interest rates and disintegrating infrastructure while seeking to improve services and offset the financial deficits of recent years, soaring property tax increases way beyond the inflation rate are being seen Canada-wide.

Is this necessary? Or are homeowners being bled dry?

 

Changing Canadian city centre landscapes thanks to eroding affordability and shifting migration

 

According to a recent analysis by Re/Max Canada, although land transfer taxes and higher property tax assessments in key markets “appear to have little effect on the surface,” the reality is that they’re eroding affordability levels and slowly shifting migration patterns, changing the landscape in Canadian city centres. 

Examining six of the country’s leading housing markets — Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax — Re/Max’s Taxes & Canadian Real Estate report notes that “governments at all levels are collecting billions” through levies and development fees on new construction and land transfer and property taxes on residential properties.

Tax rate increases, along with record-high housing values and mortgage rates, are sparking “a post-pandemic exodus from the country’s most expensive markets,” the report maintains.

“For many, the dream of home ownership is fading,” says Re/Max Canada president Christopher Alexander. 

Affordability and opportunity are keys to a healthy market and economy, Alexander asserts. “The goal should be to make homeownership more affordable, not less … Clearly, public policy is contributing to a myriad of issues, with affordability front and centre. And there’s no relief in sight.”

 

“You can’t tax your way to affordability”

 

Alexander says that government over-reliance on the housing sector as a means of funding is making access to housing increasingly problematic. “New and proposed property tax assessments are creating confusion in markets across the country.” 

As Tim Hudak, CEO of the Ontario Real Estate Association bluntly puts it: “You can’t tax your way to affordability.”

 

Nearly 40% property tax increase proposed in Osoyoos, B.C.

 

Count yourself lucky you don’t live in Osoyoos, on the southernmost fringe of British Columbia’s Okanagan Valley. Residents of this scenic little town — nearly half of whom are seniors — were shocked to learn that an astronomical property tax leap of almost 40 per cent was slated to be adopted this year, largely due to the need for upgrading aging and foul-smelling sewer and water infrastructure, to the tune of over $60 million over the next five years. 

There was a huge outcry from the town, with many people questioning why the hike couldn’t at least be spread out over several years. Mayor Sue McKortoff warned that that would just delay increases down the road. But as she explained to REM, council rescinded the unpopular budget and “agreed to conduct a review” in a special meeting. The revised final increase hasn’t yet been officially announced.

Come of that what may, there’s no getting around the fact that the community’s trust in its governance has eroded.    

 

Significant hikes throughout the country

 

To varying degrees, this is a widespread issue.

In Halifax, property tax assessments this year have jumped by more than 20 per cent, prompting a hike to tax bills of almost 6 per cent. This “adds to the already significant number of hurdles for first-time buyers,” leaving residents wondering when something will be done, reports local Re/Max broker Ryan Hartlen. He believes a good place to start would be incentivizing first-time buyers through property tax subsidies.

In Montreal, reassessments are higher than recent sales prices in some cases. The almost 5 per cent property tax increase (the biggest chunk of which is for public security, mainly police) is the city’s highest jump in 13 years. Montreal’s mayor has stated that Canadian cities are facing “unprecedented challenges” around inflation, housing and climate change. 

Meanwhile, both Vancouver (up by 7.5 per cent) and Calgary (up 7.8 per cent) are seeing significant property tax markups this year as well. And although Winnipeg’s 3.5 per cent rise is more modest, the city has raised and added fees for other services. 

 

Toronto sees historic 9.5% jump in property taxes — “one of the worst types” of levies

 

Torontonians are facing a whopping 9.5 per cent property tax jump, reportedly needed to shore up services, combat a $1.8 billion budget deficit and help get the city “back on track,” according to Toronto mayor Olivia Chow. 

City councillor Brad Bradford is among those opposed. 

Yes, there will now be “hundreds of millions in new spending,” Bradford acknowledges, but it comes at a time when homeowners can least afford it. 

“I’ve heard loud and clear from many in my community that they think this historic tax hike is too much … Deciding to spend money is the easy part of budgeting. It’s finding savings that requires hard work.” 

Bradford recommends that those looking to buy or sell property make sure they’re factoring in the cost of the tax hike. 

On the plus side, the Ontario provincial government has agreed to bail the city out of some significant capital costs, including those for two major Toronto highways (the Gardiner Expressway and Don Valley Parkway). 

The city and other levels of government will need to continue to explore new, efficient measures to raise revenue besides property tax, states Toronto-based Re/Max Realtron general manager Cameron Forbes. He notes that examples could include road tolls and taxes on gasoline and parking. 

“Property tax is one of the worst types” of levy in his opinion, as it’s a regressive tax applied uniformly regardless of income.

 

Not easy: Fort St. John, B.C. worked hard to raise taxes by less than 5%

 

British Columbia realtor Trevor Bolin, former leader of B.C.’s Conservative Party, is well versed in budgets, having sat on the local city council of his hometown of Fort St. John for the past 16 years.

“If you can imagine what your home and personal costs have looked like the past year — forced up due to skyrocketing costs — now imagine providing those same services to swimming pools, hockey rinks, city-wide fleets of vehicles, staffing wage increases, etc.,” Bolin says. “That’s what’s happening with your property taxes right now.”

He explains that the Fort St. John council worked hard to ensure a less than 5 per cent increase this year, which wasn’t easy. He adds, “Sadly, as municipalities continue to cover expenses for provincial and federal governments, you’ll have a tax increase next year as well.” 

Lastly, “I can tell you that politicians really don’t like being sworn at while grocery shopping,” he advises, laughing.

 


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