Do We Pay Too Much or Too Little? DRAFT

Mayor Miller has bragged that Toronto's residential property taxpayers have the lowest taxes in the GTA. (He could also say more correctly that the city charges by far the lowest "development charges" too_ there is supporting evidence for this. Also, the city taxpayers contribute more to the province's educational kitty than others too.) Does this imply that we pay "too little" and the city should charge more (if politically and economically able/expedient)?

A while back we found a report from the city of Edmonton that might assist finding some answers. (We need to find it again.)

City property taxes (excluding province's education tax on property) are simply the assessment property value (by a provincial agency, MPAC) multiplied by city established tax rate (that varies somewhat by nature of property).

From this simple equation, we can look if the "value" component that will answer the "too much / too little" question. The tax rate is controlled by the city to help budget balancing and making tax increases palatable to residents..

As most who own a residential property in Toronto know they can get more building space if not land for less outside the city boundaries in the GTA than within. A similar and likely newer 2-story, 2000 sq.ft. plus structure north of Steeles can be a $100 to more than $200 thousand less (even with the much larger development charges.)

The average houseprice residence in Toronto, is quite uncommon outside the city boundaries but not its pricing.

So how can you look at this "objectively". Do you weigh/factor in the city services, proximity to a wider range of schools and culture, better shopping opportunities, shorter trips, better public transit, ... when equating value in the city to the rest of the GTA? But if so, you must also weigh in the increasing traffic congestion, city road and service deterioration, increasing intensification of city living (higher densities of homes and people) by provincial mandate.

Should you work out a standard measure of what Toronto residents get for their money? How about working out a city tax on a household square foot basis to start a meaningful comparison?

The only reasonable and quick conclusion (from the real estate market) is that you pay a purchase price premium (in addition to the city's land transfer tax and vehicle tax) in Toronto compared to the rest of the GTA. The real estate value maxim seems true "location, location, location."

But for a variety of reasons, some people like to stay and live in the big city and some want to stay outside in their bigger and newer homes. A choice of lifestyle compromised by income or just trading off the utililty of different things for different folks?

Bottom line: We doubt there is any answer. We pay what we pay. Some of us could afford to pay more. Many cannot without sacrificing lifestyle and many more basic needs. The city population seems to have adjusted to covering a Toronto price index inflation experience via property tax increases. That seems to be a fair tradeoff. But to suggest we have the lowest taxes is not fair by any measure.