I know how property taxes work…am I an adult yet?

Okay fine, at first glance, I know what you are thinking — property taxes, why would I want to know about that. Learning and doing taxes always seemed like a mundane task but this week’s lecture on property taxes was quite interesting. One characteristic about property taxes is that they depend on the value of not just one house, but the property value of all houses in the city. They change depending on the relative average of city property values, and reassessment of properties maintain a neutral revenue for the city. The challenge remains that cities begin with a set amount of money they need to raise but financial demands often change, therefore the foundational structure of property taxes are not set up to accommodate these demands. This is the major reason that property taxes are ineffective to help cities meet the increased expenditure with inflation and contracted wage expenses.

It is also interesting to explore how property taxes affect different people in different ways. Since it reflects the average increase in property values, individuals making lower wages can end up paying more incrementally due to their property value increasing compared to their neighbours. This disproportionate effect directly feeds into the unaffordable housing crisis in Ontario. Another concern is citizens who live in multi residential units, who are not even aware of their property tax payments, since these rates are not reflected in their monthly rent. Additionally, they fall into a different tax classification, so they end up getting taxed at a higher rate. But building more properties or diversifying city revenue resources seem to be an effective method to keeping property taxes low.

I still think that property taxes lack a certain type of agility or adaptability needed to ensure city services remain sufficiently funded, especially in times of growing demands of COVID-19. Love them or hate, doesn’t seem like property taxes are going away anytime soon. It might be time to look at density increments for new properties or other sources of city revenue.