City Property Tax and Fee Changes

Summary#

This item sets Toronto’s 2023 property tax rates and many City user fees, and makes related budget decisions. It also increases the Municipal Accommodation Tax (the hotel/short‑stay tax) and creates new reserve funds. The broad goal is to raise the revenue approved in the 2023 budget, support transit and housing projects, and update fees to reflect costs.

Key changes:

• Main property tax increases for 2023: about 5.5% for residential and industrial; 2.75% for commercial and multi‑residential. Plus a City Building Fund levy of 1.5% (residential/industrial) and 0.75% (commercial/multi‑residential) for transit and housing.
• Municipal Accommodation Tax increases from 4% to 6% effective May 1, 2023. Council adopted this change (vote carried 25–1).
• Water/wastewater and solid waste rates: previously approved 3% increases are confirmed as final for 2023.
• New and adjusted user fees across multiple programs; some outdated fees are discontinued.
• New reserve funds created for Vacant Home Tax proceeds (to support affordable housing), debt servicing stability, capital‑from‑current, and the Canada Community‑Building Fund.
• “Construction Hubs” are designated in several busy areas; permit fees in these areas are higher to fund added coordination and safety.

What it means for you#

• Homeowners

  • A typical home (assessed at $695,268) will see about a 7% municipal tax increase ($183 from the budgetary levy and $50 from the City Building Fund), bringing the municipal portion to about $3,569 in 2023.
  • Final tax instalment due dates: July 4, August 1, and September 1, 2023 (different dates apply if you’re on pre‑authorized payment plans).
  • Low‑income seniors and people with disabilities: the tax increase cancellation program now uses a household income threshold of $49,361 and a property assessment cap of up to $975,000 (for 2023). The deferral program still uses a $50,000 household income threshold and has no assessment cap.

• Renters and tenants

  • Multi‑residential properties face a smaller tax increase (about 3.5% including the City Building Fund) than single‑family homes and industrial properties. This could mean smaller indirect tax‑related pressures on rents than for other classes, but rent levels depend on many factors. The bill does not set rents.

• Travelers and accommodation providers

  • Hotels and other accommodations subject to the City’s Municipal Accommodation Tax must charge 6% (up from 4%) on stays beginning May 1, 2023. Visitors will pay the added 2 percentage points.

• Small businesses and commercial property owners

  • Commercial properties have a total increase of about 3.5% (including the City Building Fund). The Small Business subclass continues to receive a 15% reduction off the general commercial rate.
  • Registered charities in commercial/industrial classes continue to receive mandatory property tax rebates; the City funds these within those classes.

• Industrial property owners

  • Industrial properties face about a 7% total increase (including the City Building Fund), aligned with residential.

• Water and solid waste customers

  • Water/wastewater and solid waste rates are up 3% for 2023 (effective January 1, 2023). For low‑income seniors and people with disabilities, existing solid waste rebates continue.

• Developers, utilities, and contractors

  • New “Construction Hub” areas are defined in several zones (e.g., downtown, Lake Shore East/West, Liberty Village, East Harbour, Yonge‑Eglinton). Occupancy/hoarding/related right‑of‑way permit fees are higher in Hubs (generally 25% above non‑Hub rates) to cover enhanced coordination and safety services.

• Charities

  • The City set aside about $9.88 million in 2023 for mandatory tax rebates to registered charities in the commercial and industrial classes. This is funded by small additional class‑wide tax rates within those classes.

Expenses#

This item mainly raises and allocates City revenues rather than creating a single new program cost.

• Property tax levy: about $5.20 billion in 2023, including $58.9 million from the 1.5% City Building Fund increment.
• Municipal Accommodation Tax increase: projected net revenue of about $41.6 million in 2023.
• Water/wastewater: 3% increase is expected to add about $32.5 million in 2023 for Toronto Water operations and capital.
• Solid waste: 3% increase is expected to add about $9.38 million in 2023 for Solid Waste Management operations and capital.
• Charity property tax rebates: about $9.88 million in 2023, funded within the commercial and industrial classes (no net impact on the overall budget).
• Reserves: planned 2023 contributions include about $251.8 million to the City Building Reserve Fund and $40.7 million to the Scarborough Transit Reserve Fund.
• Intergovernmental funding requests: the City requests $932.8 million to offset 2023 COVID‑19 impacts (mainly TTC, shelters, public health), plus $96.5 million (refugee/asylum response) and $48.0 million (supportive housing). If not received, the City states it would need to shift eligible capital funds to balance the budget, which could delay capital projects.

Proponents' View#

• The item appears intended to fund Council‑approved 2023 operating and capital needs and keep long‑term transit and housing projects on track.
• Applying a smaller increase to commercial and multi‑residential classes (half the residential percentage) could be seen as supporting businesses and renters while still raising needed revenue.
• The City Building Fund levy increases provide a dedicated, predictable stream for priority transit and housing investments.
• The Municipal Accommodation Tax increase provides added revenue from visitors to help fund City services.
• Construction Hub fees reflect the extra work the City does to coordinate dense construction zones and could improve road safety and reduce congestion.
• New reserve funds (Vacant Home Tax, Debt Servicing, Capital From Current, and Canada Community‑Building Fund) could improve transparency, debt management, and tracking of dedicated funding (e.g., for affordable housing and transit).

Opponents' View#

• One concern is affordability. A 7% municipal tax increase for the average home, higher utility rates, and various user fee increases may put pressure on households and some businesses.
• The Municipal Accommodation Tax increase will raise the cost of hotel and other short‑stay bookings in Toronto. This may raise questions about impacts on tourism and event hosting costs.
• The item depends on significant provincial and federal funding to address COVID‑19‑related shortfalls. The report states that if this funding is not fully received, the City would redirect eligible capital funds to balance the budget, which could delay infrastructure projects.
• Higher fees in Construction Hubs could increase project costs for builders and utilities. This may indirectly affect development costs, though the bill does not quantify this.
• The report includes many technical tax policies (e.g., capping and clawbacks for certain classes). These can be complex to understand, and the practical impact on individual properties may vary.