Chow calls for an overhaul of Toronto's vacant home tax

Next week, a debate on the future of Toronto's vacant house tax will take place at city council, with Mayor Olivia Chow saying the levy needs a complete overhaul and some city councilors moving to eliminate it altogether.

According to Chou, tax administration this year has been full of confusion and tens of thousands of homeowners have been worried. He promised sweeping changes while defending a levy that would help solve the city's housing crisis.

“We're cleaning up this mess,” he said. “It's scary to suddenly have a bill that says I have to make $5,000 in a couple of weeks. It's unfair. It's a hassle.”

The tax is aimed at homeowners who choose to keep their homes vacant. The city says the measure aims to increase housing supply by preventing homeowners from leaving their homes vacant.

About 167,000 homes in Toronto were declared vacant after the March 15 filing deadline, according to a new report by city staff released Friday. This was considered to be just over 20 percent of all housing units in the city – about 813,000. empty

This was a dramatic year-on-year increase. In 2023, just 11,000, or just over one percent of those homes, were considered vacant after the process.

Failure to submit by the deadline would result in a $21 fine, which has now been waived.

Some homeowners say they forgot to file by the deadline, while others say they filled out the declaration on time and tried to bill the city anyway.

108,000 fines were returned, 1 employee was dismissed

As of mid-day Friday, the city says it has canceled about 108,000 payments. It will now compare last year's list of vacant homes with this year's list and automatically reject 48,000 additional properties it deems occupied.

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Budget Chief Shelley Carroll says the city needs to review the conditions surrounding this year's problematic distribution of the vacant home tax. (Greg Bruce/CBC)

Anyone who is taxable currently pays one percent per year of the home's current assessed market value, a potential bill for thousands of dollars. This charge applies if the house is vacant for six months in a year or is not used as the owner's main residence or “authorized occupants”.

Chow said the city is to blame for the billing mess and is moving to fix it. He confirmed that the situation has led to the dismissal of at least one civil servant in the city.

“The program is deeply flawed,” he said. “That person no longer works in the city. Communication is down… It doesn't matter who's fault it is. It's the city's fault.”

Annual mandatory waiver subject to change: Chow

Last week, Chow and Budget Chief Shelley Carroll said they would waive the late fee for not declaring the city's status on time.

Now they're asking city staff to do a full review of the problems this year, with an eye toward improving the system next year, when taxes will increase from one percent to three percent. This could include using utility data, such as water and water usage, to determine if a home is vacant rather than denying the homeowner.

The council was previously warned by city staff that using utility data to determine which homes in the city are vacant could be a privacy concern. Instead, the council adopted a system requiring every homeowner in the city to make an annual declaration of their home's status or risk fines or taxation.

Some advisers insist on tax deductions

Number. Stephen Holliday has long been an opponent of the tax, criticizing the complexity of the system and its intrusion into the private affairs of city dwellers.

He seconded the motion by Coun. Vince Crisanti will try to repeal the tax at a council meeting starting Wednesday. The proposal, which requires a two-thirds majority of the council to even debate, calls the tax “disruptive and irreparably inconvenient.”

“I am very sure that this has weakened the public's confidence in the government,” he said. “I'm happy to get rid of that tax.”

Number. Stephen Holliday has been highly critical of the vacant house tax and wants it to be scrapped. (Mike Smee/CBC)

Number. Brad Bradford made an administrative inquiry to city staff to understand how the distribution went wrong. The tax was introduced for the first time last year, but there were no problems like before, he said.

“There is no doubt that the introduction of the vacant house tax this year was an absolute disaster,” he said. “I want to understand the extent of the damage in 2024.”

Carroll said the council needs staff to take a “forensic” look at the process and what went wrong. However, he is not in favor of abolishing the tax altogether.

“We've had a good year of implementation, which has gone relatively well,” he said. “This year we had a mistake. It's not a long enough record for me to say leave it.”

Despite the challenges, the vacant home tax is expected to bring in $55 million to the city this year. In a report Friday, city staff say some of that funding will be used to address issues related to evictions this year.