Olivia Chow defends vacant home tax as it undergoes major changes

Mayor Olivia Chow is defending Toronto's controversial vacant home tax, as city staff try to simplify the levy after a botched rollout earlier this year.

The mayor's executive committee is set to review staff plans to rebuild the way the charge is communicated to city residents. That comes after a process earlier this year that saw over 150,000 people wrongly assessed the fee.

Chow said Monday the changes should ease the anxiety people felt about the tax, while allowing the city to use it as a tool to address the housing crisis.

"Last year, it was a huge, huge fiasco," she said. "The staff is changing, fundamentally, the design of it. So, no arbitrary deadlines, no automatic notice that scares the daylights out of people."

In 2021, Toronto created the vacant home tax to motivate owners not using empty houses to rent or sell them. A vacant home owner was charged one per cent of the property's assessed value, which could mean a bill for thousands of dollars each year.

But in March, over 169,000 people's homes were deemed vacant — a number that dwarfed the 11,000 homeowners who were found to have a vacant home the year before. At the time, Chow said the entire process was "fundamentally flawed" and needed a redesign from the ground up.

The city ended up reversing most of the charges.

On Monday, Chow said the city still needs the levy to help address the housing crisis.

"There are 10,000 units out there that are vacant right now," she said. "Let's take that number down and house people in them."

This year, city staff are planning a communications blitz to make homeowners aware of the vacant home tax. They're simplifying the declaration process both online and over the phone. A dedicated team will also be created to help people complete the forms.

Mayor Olivia Chow says changes to the vacant home tax process will make it easier to declare a property occupied. (CBC)

Proceeds of tax used to fund rental protection program

Stephen Conforti, chief financial officer for the city, said mistakes were made last year.

"We really didn't do a good enough job communicating the need for an annual declaration," Conforti said when the changes were announced last week.

The levy generated about $55 million last year when it was applied at a rate of one per cent. This year, the tax rate will increase to three per cent.

The proceeds of the tax are used for Toronto's Multi-Unit Residential Acquisition Program (MURA), which enables the city to buy at-risk private market rental housing to make them permanently non-profit housing.

But the changes to the vacant home tax program come at a price. The city will spend an additional $2.5 million to improve the rollout.

In all, it will cost the city nearly $6 million to administer the tax this year.

Despite the proposed changes, there are some councillors who oppose the vacant home tax. Councillor Stephen Holyday said the tax is growing more expensive to administer each year and remains too invasive.

"People are right to question this process, to ask why city council is looking deep into their lives?" he said. "This is a tax I haven't supported from day number one, and I still do not support it."

Coun. Brad Bradford said the "reverse onus" of the tax, requiring people who have lived in their homes for decades to declare them occupied, is an irritant. Until the city can figure out a way to administer the charge without requiring city residents to fill out an annual declaration, the entire idea should be paused, he said.

"You have to ask the question, 'is the juice worth the squeeze on this one?'" he said. "And I think until they come up with a better fundamental program, this should be shelved."

Even if the changes are approved by the committee today, city council will have the ultimate say over the policy at a meeting next week.