Item - 2021.EX20.5
Tracking Status
- City Council adopted this item on February 2, 2021 with amendments.
- This item was considered by Executive Committee on January 27, 2021 and was adopted with amendments. It will be considered by City Council on February 2, 2021.
EX20.5 - Property Tax Policies for 2021
- Decision Type:
- ACTION
- Status:
- Amended
- Wards:
- All
City Council Decision
City Council on February 2, 3 and 5, 2021, adopted the following:
1. City Council adopt the following property tax capping polices, for the 2021 taxation year:
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, by opting to have subsection 292(1), paragraph 1, of the City of Toronto Act, 2006, apply for the 2021 taxation year;
b. continue to provide that the 10 percent cap on tax increases apply to any property within the commercial, industrial and multi-residential classes, regardless of whether the property had reached full Current Value Assessment taxation levels in a prior year, subject to the threshold adopted in Part 1.c. below; and
c. for the purposes of subsection 292(1), paragraphs 3 and 4 of the City of Toronto Act, 2006, adopt a threshold limit of $500 to determine the taxes for municipal and school purposes, such that properties that are within $500 (plus or minus) of their full Current Value Assessment level of taxation in the current year are taxed at full Current Value Assessment taxation levels for the year, and are therefore excluded from capping/claw-back provisions for that year.
2. City Council direct the Chief Financial Officer and Treasurer to review and report back to the Executive Committee and City Council during 2021 on additional tax policy options, including the potential to define a small business tax class to provide a lower tax rate for qualifying properties, and other potential measures to address impacts on properties that may be subject to large increases in assessed value based on speculative or hypothetical uses, rather than the current use of the property, all for consideration for 2022 and future years.
3. City Council direct the Chief Financial Officer and Treasurer to conduct the analysis, program design and stakeholder consultations for a prospective small business property tax subclass, as outlined in the supplementary report (February 1, 2021) from the Chief Financial Officer and Treasurer and report back to City Council through the Executive Committee as soon as possible for implementation of the subclass and with a mechanism to ensure that any benefits accrue to tenants and not landlords.
4. City Council direct the Chief Financial Officer and Treasurer to immediately begin the consultation required for the intention of implementing a new small business property subclass in order to support small businesses through the pandemic and to stimulate economic growth and job creation post-pandemic.
5. City Council direct the Chief Financial Officer and Treasurer to develop a small business property subclass definition that addresses the following issues:
a. highest and best use assessments - the small business property subclass definition should address the need to reduce property taxes for small businesses that have endured increases in property assessments beyond the average for the Commercial Tax Class;
b. preserving and rebuilding Toronto’s Main Streets - the small business property subclass definition should support small businesses located on Toronto’s main streets, helping them to survive through the pandemic, while also encouraging the rebuilding of main streets post-pandemic; and
c. broad tax relief for small businesses - the small business property subclass definition should recognize that small businesses are located throughout the City and provide a process to provide broad tax relief to these businesses.
6. City Council direct the Chief Financial Officer and Treasurer to set the small business property subclass tax rate to be a percentage reduction from the Commercial General rate, as approved by City Council, as soon as possible and no later than 2022.
7. City Council direct the Chief Financial Officer and Treasurer, the Chief Planner and Executive Director, City Planning, and the General Manager, Economic Development and Culture, once the Provincial Regulations are released, to report on the financial analysis, program design, additional criteria and enhancements, and implementation for the small business property subclass and to report their recommendations as soon as possible.
Background Information (Committee)
https://www.toronto.ca/legdocs/mmis/2021/ex/bgrd/backgroundfile-159873.pdf
Background Information (City Council)
https://www.toronto.ca/legdocs/mmis/2021/cc/bgrd/backgroundfile-163226.pdf
Communications (City Council)
Motions (City Council)
That City Council direct the Chief Financial Officer and Treasurer to conduct the analysis, program design and stakeholder consultations for a prospective small business property tax subclass, as outlined in the supplementary report (February 1, 2021) from the Chief Financial Officer and Treasurer and report back to City Council through the Executive Committee as soon as possible for implementation of the subclass and with a mechanism to ensure that any benefits accrue to tenants and not landlords.
Vote (Amend Item (Additional)) Feb-05-2021 11:00 AM
| Result: Carried | Majority Required - EX20.5 - Tory - motion 1 |
|---|---|
| Total members that voted Yes: 24 | Members that voted Yes are Paul Ainslie, Ana Bailão, Brad Bradford, Shelley Carroll, Mike Colle, Gary Crawford, Joe Cressy, John Filion, Paula Fletcher, Michael Ford, Stephen Holyday, Cynthia Lai, Mike Layton, Nick Mantas, Josh Matlow, Jennifer McKelvie, Denzil Minnan-Wong, Frances Nunziata (Chair), Gord Perks, Anthony Perruzza, Jaye Robinson, Michael Thompson, John Tory, Kristyn Wong-Tam |
| Total members that voted No: 0 | Members that voted No are |
| Total members that were Absent: 2 | Members that were absent are Mark Grimes, James Pasternak |
That:
1. City Council direct the Chief Financial Officer and Treasurer to immediately begin the consultation required for the intention of implementing a new small business property subclass in order to support small businesses through the pandemic and to stimulate economic growth and job creation post-pandemic.
2. City Council direct the Chief Financial Officer and Treasurer to develop a small business property subclass definition that addresses the following issues:
a. highest and best use assessments - the small business property subclass definition should address the need to reduce property taxes for small businesses that have endured increases in property assessments beyond the average for the Commercial Tax Class;
b. preserving and rebuilding Toronto’s Main Streets - the small business property subclass definition should support small businesses located on Toronto’s main streets, helping them to survive through the pandemic, while also encouraging the rebuilding of main streets post-pandemic; and
c. broad tax relief for small businesses - the small business property subclass definition should recognize that small businesses are located throughout the City and provide a process to provide broad tax relief to these businesses.
3. City Council direct the Chief Financial Officer and Treasurer to set the small business property subclass tax rate to be a percentage reduction from the Commercial General rate, as approved by City Council, as soon as possible and no later than 2022.
4. City Council direct the Chief Financial Officer and Treasurer, the Chief Planner and Executive Director, City Planning, and the General Manager, Economic Development and Culture, once the Provincial Regulations are released, to report on the financial analysis, program design, additional criteria and enhancements, and implementation for the small business property subclass and to report their recommendations as soon as possible.
Vote (Amend Item (Additional)) Feb-05-2021 11:02 AM
| Result: Carried | Majority Required - EX20.5 - Wong-Tam - motion 2 |
|---|---|
| Total members that voted Yes: 24 | Members that voted Yes are Paul Ainslie, Ana Bailão, Brad Bradford, Shelley Carroll, Mike Colle, Gary Crawford, Joe Cressy, John Filion, Paula Fletcher, Michael Ford, Stephen Holyday, Cynthia Lai, Mike Layton, Josh Matlow, Jennifer McKelvie, Denzil Minnan-Wong, Frances Nunziata (Chair), James Pasternak, Gord Perks, Anthony Perruzza, Jaye Robinson, Michael Thompson, John Tory, Kristyn Wong-Tam |
| Total members that voted No: 0 | Members that voted No are |
| Total members that were Absent: 2 | Members that were absent are Mark Grimes, Nick Mantas |
EX20.5 - Property Tax Policies for 2021
- Decision Type:
- ACTION
- Status:
- Amended
- Wards:
- All
Committee Recommendations
The Executive Committee recommends that:
1. City Council adopt the following property tax capping polices, for the 2021 taxation year:
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, by opting to have subsection 292(1), paragraph 1, of the City of Toronto Act, 2006, apply for the 2021 taxation year;
b. continue to provide that the 10 percent cap on tax increases apply to any property within the commercial, industrial and multi-residential classes, regardless of whether the property had reached full Current Value Assessment taxation levels in a prior year, subject to the threshold adopted in Part 1.c. below; and
c. for the purposes of subsection 292(1), paragraphs 3 and 4 of the City of Toronto Act, 2006, adopt a threshold limit of $500 to determine the taxes for municipal and school purposes, such that properties that are within $500 (plus or minus) of their full Current Value Assessment level of taxation in the current year are taxed at full Current Value Assessment taxation levels for the year, and are therefore excluded from capping/claw-back provisions for that year.
2. City Council direct the Chief Financial Officer and Treasurer to review and report back to the Executive Committee and City Council during 2021 on additional tax policy options, including the potential to define a small business tax class to provide a lower tax rate for qualifying properties, and other potential measures to address impacts on properties that may be subject to large increases in assessed value based on speculative or hypothetical uses, rather than the current use of the property, all for consideration for 2022 and future years.
Decision Advice and Other Information
The Executive Committee:
1. Directed the Chief Financial Officer and Treasurer to report directly to the February 2 and 3, 2021 meeting of City Council, detailing the necessary considerations required in order to implement a small business property tax subclass, including the possibility for implementation in 2021.
Origin
Summary
This report provides recommendations for property tax policies for the 2021 taxation year. The recommendations are consistent with and further Council's longstanding objectives for tax policy, designed to ensure the continued competitiveness of Toronto's business tax classes, while affording a level of protection to property owners affected by assessment-related property tax increases.
Specifically, this report recommends continuing the policy of limiting (capping) allowable tax increases in 2021 to a maximum of 10% of a property's prior year's taxes, for any property in the commercial, industrial and multi-residential tax classes that would otherwise experience a property tax increase of greater than 10% and where the tax increase is greater than $500. The costs of capping protection will be funded by withholding (clawing-back) a portion of the tax decreases that would otherwise be experienced by other properties within each class, as has been the City's practice since 1998. These measures will ensure that no taxpayers within those tax classes will face an assessment-related tax increase that is greater than 10% of last year's property tax liability, provided the tax increase is greater than $500.
In order to ensure that progress continues to be made in moving properties to their full Current Value Assessment (CVA) level of taxation, it is also recommended that Council adopt a policy that properties that are within $500 (plus or minus) of their full CVA level of taxation in the current year be taxed at full CVA taxation levels for the year, and therefore excluded from capping/claw-back provisions for that year.
This report also responds to previous Council requests to evaluate the feasibility and financial implications of additional tax policy approaches, including adopting a small business tax class, adopting measures to address assessment volatility, re-evaluating targeted tax ratio reductions within the commercial, industrial and multi-residential classes, and revisiting the current strategies and CVA thresholds for graduated tax rates within the commercial residual tax class. Given that key provincial regulations that would allow for the adoption of a small business tax subclass and/or approaches that deal with assessment volatility have not yet been enacted, making it impossible to determine financial impacts, it is recommended that these measures be considered for implementation in the 2022 taxation year.
Background Information
https://www.toronto.ca/legdocs/mmis/2021/ex/bgrd/backgroundfile-159873.pdf
Motions
That the Executive Committee direct the Chief Financial Officer and Treasurer to report directly to the February 2 and 3, 2021 meeting of City Council, detailing the necessary considerations required in order to implement a small business property tax subclass, including the possibility for implementation in 2021.