A showdown over the future of the Toronto’s vacant home tax appears set for city council next week, with Mayor Olivia Chow saying the levy needs a complete overhaul, while some city councillors are moving to kill it altogether.
Chow said the administration of the tax this year has been fraught with confusion and has caused anxiety for tens of thousands of homeowners. She’s vowing to make fundamental changes, while still defending the levy designed to help address the city’s housing crisis.
“We’re cleaning up this mess,” she said. “It’s scary getting a bill that says, all of a sudden, I have to find $5,000 in a couple of weeks. It’s unfair. It caused hardship.”
The tax targets homeowners who choose to keep their residential properties vacant. The city has said the measure is meant to increase the supply of housing by discouraging homeowners from leaving residential properties unoccupied.
A new report from city staff released Friday says about 167,000 homes in Toronto were deemed vacant after the extended period to make a declaration ended on March 15. That meant just over 20 per cent of all residential properties in the city — approximately 813,000 — were deemed vacant.
That was a dramatic year-over-year increase. In 2023, just 11,000 — or just over one per cent of those same homes — were deemed to be vacant following the process.
Failing to file before the deadline meant a fine of $21, which has now been waived.
Some homeowners say they forgot to file before the deadline, while others say they filled out the declaration in time and were billed by the city anyway.
108,000 charges reversed, 1 staffer fired
By mid-day Friday, the city says it had reversed approximately 108,000 charges. It will now cross reference last year’s list of vacant homes with this year’s list to automatically opt-out an estimated 48,000 additional properties it believes are occupied.
Anyone subject to the tax currently pays one per cent a year of a home’s current assessed market value, a potential bill for thousands of dollars. That fee applies if a home has been unoccupied for six months in a year or is not used as the owner’s principal residence or by “permitted occupants.”
Chow said city hall is to blame for the billing mess and is moving to fix it. She confirmed the situation has led the city to fire at least one civil servant.
“The program was designed in a way that is deeply flawed,” she said. “That person is no longer working for the city. The communication has failed … And it doesn’t matter at this point whose fault it is. It’s the city’s fault. “
Yearly mandatory opt-out could change: Chow
Last week, Chow and budget chief Shelley Carroll said the city will waive the late fee for not declaring a status on time.
They’re now asking city staff to conduct a full review of the problems this year, with an eye to improving the system next year, when the tax increases from one to three per cent. That could include using utility data, like water and hydro usage, to determine if a home is vacant instead of the owner opt-out.
Council had previously been warned by city staff that using utility data to determine which homes in the city were vacant could be a problem because of privacy concerns. Instead, council adopted a system that requires every homeowner in the city to make an annual declaration about the status of their home or risk being fined or taxed.
Some councillors push to scrap tax
Coun. Stephen Holyday has long been an opponent of the tax, criticizing the complexity of the system and what he says is its overreach into the private affairs of city residents.
He has seconded a motion from Coun. Vince Crisanti that will try to kill the tax at a council meeting set to begin Wednesday. That motion, which will require a two-thirds majority vote of council to even be debated, calls the tax “disruptive and inconvenient beyond repair.”
“I am very confident that it has eroded people’s confidence in government,” he said. “And I’d be happy to do away with this tax.”
Coun. Brad Bradford has filed an administrative inquiry with city staff in a bid to understand how the rollout went so wrong. The tax was administered for the first time last year, but was not marred by the same problems, he said.
“There’s no doubt that the rollout of the vacant home tax this year has been an absolute disaster,” he said. “I want to understand what the extent of the damage has been in 2024.”
Carroll said council needs staff to take a “forensic” look at the process and what went wrong. She’s not in favour of scrapping the tax completely, however.
“We had one good year of implementation, which went really relatively well,” she said. “And we had an error this year. That’s not a long enough track record for me to just say throw it out.”
Despite the challenges, the vacant home tax is still expected to generate $55 million in revenue for the city this year. In their report on Friday, city staff say part of that funding will be used to address problems with this year’s rollout.