Density. It’s dazzling. But the array of glass and glitter springing up from in the form of condos in the core may be more a sign of a cash-strapped city desperate for money.
Blame our backward property tax system.
Tear down a few houses and build a tall condo building instead, and the city gets more money. That’s the inherent pro-development bias built into our property tax system.
This insidious built-in bias toward new and bigger buildings could help explain why even Toronto’s generally progressive city council has taken so long to show concern about uncontrolled development.
Budget committee chair Shelley Carroll warns that “cities can get addicted to that growth,” especially those that enjoy the opportunity for rapid development on greenfield sites.
This inflexible system dates back to when cities provided just a limited set of services. Why not modernize it?
A simple solution would be to tax property values at a constant rate every year, so revenues would go up along with property values.
This solution would be impossible, however. Rapid fluctuations in estimated values would make city revenue too unpredictable, while residents of rapidly gentrifying neighbourhoods would see their taxes go up even faster than they already do.
Instead, properties could be assessed at their last sale price, and their taxable value would be adjusted yearly only for inflation.
The NDP proposed something similar in the run-up to the last provincial election. This system would keep revenue stable for government and make property taxes far more predictable for taxpayers.
It’s true that wealthy people who remain in the same home for a long time would end up paying lower taxes, but on the other hand, retired people on fixed incomes living in gentrifying areas would no longer be forced out by rapid tax increases.
Property taxes, since they are not related to income, will inevitably be unfair to someone. Better that they be biased in favour of those property owners with the fewest resources.
Municipalities, especially larger ones, now have a much greater range of responsibilities, including extensive social services and huge city-building capital projects, but the tax system has not kept up.
Dylan Reid is an associate editor of Spacing magazine.