Glen
Senior Member
That was the plan. It has been suspended.
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- Thread starter Glen
- Start date
taal
Senior Member
Ah seriously, indefinitely or was the target just pushed ?
That's unfortunate.
Anyway from what I recall, as I stated earlier, its not very significant when compared to the city charged tax rate.
That's unfortunate.
Anyway from what I recall, as I stated earlier, its not very significant when compared to the city charged tax rate.
nfitz
Superstar
Not significant?
For industrial zoned property, the 2012 education tax rate is 83% of the city tax rate. It's 82% for commercial!
taal
Senior Member
Wow you're right.
Just look at this:
Markham:
(Town) (Region) (Province [education]) (total)
.26% 0.51% 1.13% 1.90%
Toronto:
(town) (Province [education]) (total)
1.74% 1.44% 3.18%
Mississauga is 2.2% (total, don't have the break down).
Just for people who don't think this is significant; Total Toronto tax rates are ~ 70% higher then Markham !
Just look at this:
Markham:
(Town) (Region) (Province [education]) (total)
.26% 0.51% 1.13% 1.90%
Toronto:
(town) (Province [education]) (total)
1.74% 1.44% 3.18%
Mississauga is 2.2% (total, don't have the break down).
Just for people who don't think this is significant; Total Toronto tax rates are ~ 70% higher then Markham !
Glen
Senior Member
The business tax freeze is not the only pain that will be inflicted on many businesses in Ontario. The province will also temporarily freeze its plans to cut the business education tax, a property tax levy that businesses pay at varying rates across the province Suspending those reductions will possibly save the province about $300-million a year by 2014-2015
http://m.theglobeandmail.com/report...ze-on-business/article4102361/?service=mobile
http://m.theglobeandmail.com/report...ze-on-business/article4102361/?service=mobile
nfitz
Superstar
It would be interesting to see what percentage of the education tax on different classes of real estate is collected in the City of Toronto, compared to what percentage of total funding the Toronto school boards receive.
Glen
Senior Member
taal,
the article you quoted from Andrew Spicer's blog shows just how ignorant city officials are regarding the capitalization of taxes. They should be well versed in this area (the Finance Dept), but they appear clueless. Toronto's high tax rates on commercial and apartment buildings do not provide much in the way of extra revenue because the high taxes themselves make the properties less valuable. Values determine rates and rates determine values. As John Barber noted ........
This is really economics 101.
This being said, history has shown that there is no political will to address this issue. While many people point to David Miller's Enhancing Toronto's Business Climate program as evidence of dealing with this issue, that does not bear up to scrutiny. ETBC, is far to little over far to long a period. Every time a new assessment cycle increases residential values more than non-residential, necessitating a tax increase for residential to keep the rations the same, the city runs to the province which allows them to increase the ratios as to insulate residential property owners from any increase. Between 2003-2004 the ratio increased from 3.52 to 3.81 because for the 2004 taxation year, municipalities were allowed to increase the business tax ratios to a level that would be sufficient to neutralize assessment-related tax shifts to all classes. Conversely the 2009 assessment cycle saw commercial properties increase more than the residential class. This allowed the city to reduce the ratio between classes while at the same time allowed the city to impose the second largest commercial tax hike since 1998. For all the talk of being 'progressive' Toronto city council has proven to be nothing more than opportunistic.
the article you quoted from Andrew Spicer's blog shows just how ignorant city officials are regarding the capitalization of taxes. They should be well versed in this area (the Finance Dept), but they appear clueless. Toronto's high tax rates on commercial and apartment buildings do not provide much in the way of extra revenue because the high taxes themselves make the properties less valuable. Values determine rates and rates determine values. As John Barber noted ........
This is really economics 101.
This being said, history has shown that there is no political will to address this issue. While many people point to David Miller's Enhancing Toronto's Business Climate program as evidence of dealing with this issue, that does not bear up to scrutiny. ETBC, is far to little over far to long a period. Every time a new assessment cycle increases residential values more than non-residential, necessitating a tax increase for residential to keep the rations the same, the city runs to the province which allows them to increase the ratios as to insulate residential property owners from any increase. Between 2003-2004 the ratio increased from 3.52 to 3.81 because for the 2004 taxation year, municipalities were allowed to increase the business tax ratios to a level that would be sufficient to neutralize assessment-related tax shifts to all classes. Conversely the 2009 assessment cycle saw commercial properties increase more than the residential class. This allowed the city to reduce the ratio between classes while at the same time allowed the city to impose the second largest commercial tax hike since 1998. For all the talk of being 'progressive' Toronto city council has proven to be nothing more than opportunistic.
js97
Senior Member
I also think TDSB salaries are a little out of wack with the private sector.
i.e. In house council is making 183k, where as in big banks or OSC, their making closer to 90k/110. Most of the stuff is farmed out anyways, so I'm not sure why 183k is necessary
Lots of 6 figured TDSB workers:
http://www.fin.gov.on.ca/en/publications/salarydisclosure/2012/schbd12f.html
i.e. In house council is making 183k, where as in big banks or OSC, their making closer to 90k/110. Most of the stuff is farmed out anyways, so I'm not sure why 183k is necessary
Lots of 6 figured TDSB workers:
http://www.fin.gov.on.ca/en/publications/salarydisclosure/2012/schbd12f.html
fedplanner
Active Member
I find this comment sad because it reaffirms my suspicions that the majority of Toronto residents and businesses are not aware how much they're getting screwed by this rate differential.
Having the same rate as everyone else in the province is fair. Toronto would still be contributing more than enough since property values in Toronto are much higher than anywhere else in Ontario.
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taal
Senior Member
The plan imposed by Miller only works assuming other municipalities in the region eventually outpace Toronto's commercial tax increases (btw this has happened a year or two as of late compared to some of the other cities in the GTA). But as you mentioned this amounts to miniscule changes unless you look very long term (i.e. decades).
But lets be honest, what are the options at this point, the difference between the rates in Toronto are so astronomic there is no good solution (nothing that won't take decades to implement).
I proposed this a while back; The key is for new developments to get a break on commercial tax (to some more reasonable figure), but this must be done without devaluing current properties. There is no good way to do this. Note that new developments do indeed get a tax break, but there are many restrictions to this.
fedplanner
Active Member
The tax rate on commercial properties when compared to other municipalities and the higher education property tax rate imposed by the province are separate issues. For one, the City of Toronto has no authority over setting the education property tax rate. It's a provincial matter. A legacy of Premier Mike Harris.
In your example, the only thing missing is the assessed value of the property. I have no idea what the average assessed value of a 10,000 sqft office building is in Toronto or Markham. If anyone has it handy, people will begin to see the big picture.
In your example, the only thing missing is the assessed value of the property. I have no idea what the average assessed value of a 10,000 sqft office building is in Toronto or Markham. If anyone has it handy, people will begin to see the big picture.
Glen
Senior Member
taal the only option is to do as Machiavelli suggested for a new Prince; Inflict pain at the begining.
taal
Senior Member
Comparable when talking about similar areas .... this doesn't help Toronto at all. Actually I'm fairly sure office space is worth LESS in Toronto (the outlying areas).
Keep this in mind, landlords are competitive, the net rental rates (i.e. all in) in the outer parts of Toronto are actually similar to places like Markham ! Why ? Because landlords charge less gross rental rates to make them competitive (tenants pay the taxes and operational expenses). But there is so little new quality inventory in the outer 416 (most built 20+ years ago). This is because landlords don't find it as profitable.
I've said this before as well to, this has gone on for so long, in many ways Hi-way 7 in Markham (just as an example) is much more attractive then say the 401 / Sheppard area after years of this.
taal
Senior Member
Be realistic, will never happen ...
The only way to get this extra income is to severely increase residential property tax rates or add new taxes / charges. Political suicide (keep in mind I'm sure 90% of residents believe they pay too much residential tax as is); You argue Miller and like don't understand the big picture. I doubt this is true; Having met him and heard him talk (not on this subject matter) he's an extremely intelligent (and this goes for others city staff as well), it's a little much to think we understand what seems like an obvious problem (many studies have been done to indicate as much ... yes some show taxes aren't the be all and end all factor, which I agree, but when talking about properties within 10km of each other in very similar settings its a huge factor). Simply put, that's the best they can do when politics are factored in, the residents of Toronto couldn't stomach any more ...
There is no solution here ... sort term at the very least ...
Glen
Senior Member
The problem is that the current climate and its glacial change is not sustainable. Your point about Miller et. al does not ring true. You have to appreciate the the actual tax burden (non res) is to high right now. The only way for any real adjustment to take place is for tax increases to be less than the rate of inflation. With inflation being so low itself, that limits the pace pace of change. If non res tax increases at 1% per year and inflation is 2%, then a burden that 50% to high will take 50 years to properly adjust. That of course, only if the ratio of built residential and commercial stays the same. Which it has not and will not. So long as the incentives for favouring the development of residential over commercial remain. As former Mayor John Sewell pointed out, both on the hard and soft costs, residential development consumes far more than it produces. Considering that the existing residential base also consumes more than it pays for, it is implicit that the costs for new development are carried by the non residential tax base. So long as the difference in growth remains between classes, attaining a suitable, as in sustainable, level of taxation for the non-residential class will be impossible. Those in charge should know this. Their plans, being inconsequential, are either designed for appearance's sake or based on ignorance. Not an appealing choice. Recall Shelly Carrol complaining that a tax freeze (all classes) would stall Miller's program of re balancing the ratios. Does she really believe it would be better that to increase taxes on already over taxed commercial properties, so long as residents pay more?
Professor Michael Pettis once explained to me the dynamics of economic bubbles as such. "At a party, nobody takes the cocaine off the table until someone dies of of a heart attack". I am afraid that is the fate that awaits Toronto.