Item - 2018.EX30.5

The Executive Committee recommends that:

1.  City Council adopt the following property tax capping polices, for the 2018 taxation year, to:

a.  limit tax increases for the commercial, industrial, and multi-residential property classes by capping taxes at 10 percent of the preceding year's annualized taxes, through the adoption of subsection 292(1), paragraph 1, of the City of Toronto Act, 2006, for the 2018 taxation year; and

b.  discontinue the policy of removing properties from the capping and claw-back system once they have reached their full Current Value Assessment-level of taxation, by not adopting section 7.1 of Ontario Regulation 121/07 for the 2018 taxation year, such that the above capping limit applies to the 2018 tax year to any property that has experienced a property tax increase of greater than 10 percent over 2017 annualized taxes, regardless of whether the property had reached its full Current Value Assessment-level of taxation in a prior year;

2.  City Council direct the Interim Chief Financial Officer to review any additional tax options during 2018, including any potential requests for legislative change, for consideration for 2019 and future years.

3.  City Council direct the Interim Chief Financial Officer be directed to report to City Council following Council's approval of the 2018 Operating Budget to approve and enact by by-law the applicable 2018 clawback rates.

This report provides an evaluation of various tax policy options that may be adopted by Council to support small businesses affected by large assessment-related property tax increases, in response to M35.16: Saving Toronto's Small Businesses and Character Streets with Intelligent Tax Reform.

The 2017 province-wide reassessment saw many business properties face significant tax increases. These impacts can be expected to continue in each year from 2018 to 2020 as assessment increases continue to be phased-in over the 4-year reassessment cycle.  Many properties, having reached their full Current Value Assessment-level of taxation in a prior year, were no longer eligible for capping protection against assessment-related tax increases.

It is recommended that, for 2018, Council adopt measures to provide a level of protection against such unmitigated increases, as an interim strategy, while continuing to evaluate other tax policy options over the course of 2018 that will accelerate progress towards full Current Value Assessment taxation, provide targeted tax relief measures for identified or vulnerable groups, and move towards equity in taxation levels. 

Specifically, this report recommends that a tax increase capping limit of 10 percent of a property's prior year's taxes apply in 2018 to any property in the commercial, industrial and multi-residential tax classes that would otherwise experience a property tax increase of greater than 10 percent, regardless of whether the property had reached its full Current Value Assessment-level of taxation in a prior year.  This is a change from prior years, where, pursuant to Council's decisions, capping protection did not apply to properties that had reached their full Current Value Assessment-level of taxation. This measure will ensure that no taxpayer within those tax classes will face an assessment-related tax increase that is greater than 10 percent of last year's property tax liability.