A row of townhouses are pictured in Toronto on Feb. 13, 2024.Laura Proctor/The Globe and Mail
Toronto voted to keep its vacant home tax after a botched year that caused panic among some property owners mistakenly hit with huge penalties.
The tax is in its second year and requires a proactive annual declaration by the owner that a home is occupied. But many people who did so in 2023 evidently did not understand it was needed again this year, leading to a spike in skipped declarations.
This led to a surge in the number of people being hit with late fees and over 167,000 properties were deemed vacant – far in excess of the roughly 10,000 staff estimate to be empty. Many owners were assessed thousands of dollars in penalties. Councillors’ offices were flooded with phone calls and emails.
“It caused grief and anxiety and it should not have happened,” said Mayor Olivia Chow. “Let’s redesign this program and let’s move forward. Because it’s a good policy, it was just originally the design was flawed, the communication was flawed.”
The city is now sorting out which of the fines were valid and which should be forgiven. Charges levied on about 108,000 properties have already been reversed, according to a staff report. Late fees have been forgiven as well, and credited to residents’ property tax bills.
Staff will also review the program to assess how it can be run better next year. But Chief Financial Officer Stephen Conforti said that staff believed the tax should continue.
“This program, coupled with some of the other really incredible initiatives that we’re undertaking to be able to increase the supply of housing in the city, is essential,” he told councillors Thursday morning.
Hours later, Councillor Vince Cristanti introduced a motion that would eliminate the tax, calling it “unfixable.” This was voted down 18-5.
The tax, which is intended to discourage people from maintaining empty homes during a housing crisis, was introduced under former mayor John Tory. It was set initially at 1 per cent of the home’s assessed value, and was raised last year to 3 per cent. It is expected to raise about $200-million over the next two years, money that will be earmarked for housing.