Toronto’s Mayor Olivia Chow is standing firm on her proposed 6.9% property tax increase for 2025, aiming to balance the city’s budget amid rising costs and outdated property assessments.
At a press conference on January 30, 2025, she addressed the looming hike and its effects on residents, stating, "I understand it’s still challenging for many across the city." To ease the burden on those most affected, Chow announced the expansion of eligibility for existing financial relief programs targeting homeowners on fixed incomes.
The city's budget, which includes this tax hike, is structured so the average homeowner will pay approximately $268 more next year, as the city grapples with rising operational costs and the need for improved infrastructure. Chow revealed the composition of the tax increase: 5.4% allocated for city operations and 1.5% dedicated to the city building fund aimed at enhancing transit and housing.
Significantly, property valuations have remained frozen since 2016, greatly influencing the current tax strategy. This freeze means the city continues to assess properties using the 2016 average home value of $692,000, even as home prices have soared nearly 50% since then. This situation creates inequities, with the burden of city budgets increasingly falling on residents of affordable homes.
To qualify for the cancellation of property tax increases, homeowners must be at least 65 years old, or aged 60 to 64 and receiving government old age benefits, owning homes assessed at $975,000 or less. The tax relief program has also opened up to individuals receiving disability support. Chow's announcement revealed expectations to increase the income eligibility threshold for these programs to $60,000 from last year’s $57,112, extending their reach to over 2,300 additional households, potentially totaling around 12,300 benefiting from the relief.
Despite these measures, not all council members are pleased. Councillor Stephen Holyday from Ward 2 (Etobicoke Centre) voiced concerns over the sufficiency of the solutions proposed. He remarked, "There are a whole lot (more) people living on the edge... yet the costs of remaining in their home are continuing to increase." Holyday criticized the relief measures as inadequate for the larger population living under financial stress, who may find themselves unable to afford to maintain their homes.
The continuous property valuations' freeze and the resultant higher tax rates can be attributed to systemic issues with the Municipal Property Assessment Corporation (MPAC), which has not updated property assessments since 2016. This longstanding freeze makes the taxation system fundamentally flawed, leading to disproportionate tax burdens on homeowners as market values change without corresponding assessments. Experts highlight how this outdated framework could cause significant inequities; homes appreciating significantly are taxed on legacy values, not reflective of current market conditions, burdening residents financially.
Chow and others have called for reform, emphasizing the necessity of updating how properties are assessed. The mayor's office has sought to urge MPAC and the provincial government to address this outdated evaluation approach, with calls for consistent evaluations reflective of actual housing conditions.
The challenges of the current property tax structure underline the need for systemic reform to create more equitable market conditions for all homeowners. With no clear timeline on when property evaluations will resume, concerns linger among residents about future tax bills, particularly for those potentially facing greater financial strain.
The conversation around property assessments and taxation illustrated glaring gaps within the city’s fiscal policies, likely to remain contentious as the city endeavors to find solutions to its budget pressures alongside the need for fair taxation. The proposed measures aim to assuage immediate financial concerns for some residents, but broader changes are still necessary to reform the underlying issues affecting Toronto’s housing market.