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Taxes hit you where you live

How much tax on a $380,000 house in the GTA? Location plays big part in your tax bill, Star analysis shows

2008 tax increase:  $252.97 or 4.61%

2008 tax increase:  $136.77 or 4.21%

2008 tax increase:  $83.91 or 3.75%

* Figures based on a $380,000 home, excluding education tax. York Region rates not finalized.

Toronto Star
Phinjo Gombu
March 31, 2008

Homeowners who live in the aging industrial city of Oshawa pay the highest property taxes in the GTA, while those who live in Toronto and Milton – the country's fastest-growing community – pay among the lowest municipal taxes, a Star survey has found.

As Toronto City Council begins final debate today on a budget that includes a proposed 3.75 per cent tax hike, we're taking a comparative look at tax rates and what drives them in the 25 municipalities that make up Greater Toronto.

The large disparity in property tax rates across the GTA is an indication of the very different challenges faced by the 25 municipalities that make up the most densely populated region of Canada.

The survey showed, among other things:

  • Oshawa's high taxes are a testament to the unique difficulties faced by a city best known for General Motors as it grapples with a confluence of aging infrastructure, low property values and increased capital costs.
  • Homeowners in Durham Region municipalities such as Ajax, Pickering, Whitby, Oshawa and Clarington continue to pay significantly higher taxes than those in Peel, York and Halton – regions that also seem better positioned to draw business and commercial taxes.
  • Toronto manages to have it both ways, charging both the GTA's highest industrial-commercial taxes and the region's lowest residential property taxes.
  • Many rural municipalities, such as Uxbridge, Scugog and Georgina, struggle with high taxes while facing the problem of a small assessment base (both residential and industrial-commercial) and little prospect for growth as a result of the Oak Ridges Moraine Conservation Plan and the newly protected Greenbelt.

The survey also found that Toronto and Oshawa, which represent extremes on the tax spectrum, are grappling with the underlying issues in their own unique ways.

In Toronto, where the financial burden is borne more heavily by the commercial-industrial sector, a 15-year plan that began in 2005 is gradually shifting more of the tax responsibility onto homeowners.

Meanwhile, Oshawa has embarked on an ambitious infrastructure investment plan, especially in its downtown core, hoping to capitalize on growth from new business and families seeking modestly priced homes.

One reason city-by-city comparisons are difficult is that the same amount of money buys "less house" in Toronto than in a place like Oshawa. On the other hand, a home with equivalent assessed value draws a far bigger tax bill in Oshawa than Toronto.

So the Star compared property taxes in two ways: First, by comparing what's considered an "average" home within each of the region's 25 municipalities; second, on a single property value ($380,000) applied across all the municipalities.

Torontonians pay taxes to a single entity: the city. In other places, residents pay both a city and a regional tax. For the sake of comparison, we blended those taxes proportionately. (The education tax, which is uniform and set by the province, appears on the municipal tax bill but isn't included in this comparison.)

Oshawa regards an "average" home there to be valued at $275,000. At that assessed value, the homeowner will pay $4,157.56 in taxes in 2008, the Star found. That is:

$1,350 more per year than for an average Mississauga home ($365,000)

$939.90 more than for an average home in Vaughan ($412,070), and

$1,901.31 more than for an average Toronto home ($369,300).

We also compared taxes based on an across-the-board home value of $380,000, a figure chosen randomly by the Star.

On a home of that value in Oshawa, the owner's municipal/regional taxes would be $5,744.86. That's $2,822.01 more than on a similarly priced Mississauga home and $3,423.34 more than on a similarly priced Toronto home.

Chris Brown, Oshawa's director of finance, acknowledges that residents in his city face significantly higher taxes than others, but says it's caused by a confluence of events, including low property values and the fact that the city has made a long-term decision to invest heavily in infrastructure projects.

"We are in a major investment time frame right now," says Brown. "There's a cost to that, but we hope there's a payoff down the road."

The investments include a plan to revitalize the downtown core with the $45 million GM Centre, the $39 million Legend Centre, a provincial courthouse and a new fire hall.

Oshawa has even implemented special incentives to encourage companies to build residential and commercial buildings downtown – waiving lucrative development charges in hopes that benefits will come later.

"This type of investment attracts assessment," says Brown. "If assessment increases, individual taxes could go down in the future."

The situation is vastly different in other suburban municipalities, such as Milton, where booming development is helping to pay for new infrastructure. Its location along Highway 401 between Toronto and the U.S. border makes Milton attractive to business.

Milton's population grew by 71.4 per cent in the previous five years, according to Statistics Canada figures released last year, making it the fastest-growing community in Canada, while Oshawa grew by a paltry 1.8 per cent, only slightly higher than built-out Toronto's 0.9 per cent increase.

Companies like Magna, which established a stamping plant in Milton, and Whirlpool, which recently picked the area as its new distribution facility for the eastern seaboard, boost the community's bottom line.

"We feel blessed," says Milton Mayor Gordon Krantz. "We are well positioned geographically. We are three hours from the Windsor border."

Ajax Mayor Steve Parish says one reason Durham Region's suburban municipalities have higher taxes is that the region has not been as successful in attracting a healthy industrial-commercial tax base.

"In the case of places like Mississauga and Vaughan, one real driver that attracts industry is the proximity to the airport," Parish adds. "It's a big driver."

Milton's commercial business tax rate is just 2.32 per cent, the lowest in the GTA, while Vaughan's is 2.39 per cent.

Oshawa's commercial business tax rate stands at 3.58 per cent, much closer to Toronto's 4.09 per cent.

Posted on Thursday, April 3, 2008 at 04:50PM by Registered CommenterElaine in | Comments2 Comments | References1 Reference

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Reader Comments (2)

Toronto may have have the lowest property tax but they also have the property transfer tax. factor that in and you got..:)
April 4, 2008 | Unregistered CommenterAbbotsford Real Estate
I live in Oshawa. I was shocked when I received my 2008 final tax bill. It is a double-whammy! My home is nowhere near the $263,000 assessment but my property taxes are $4,770! With the closure of the GM plant looming, it looks like us homeowners will have to carry the property tax revenue void it will create. I hope the infrastructure investment in the City of Oshawa pays off in the future.
December 17, 2008 | Unregistered CommenterMichael B.

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