There are many ways of measuring the effect of property taxes on the residents of a municipality. All too often, news media use the budget bottom line, dollars, as their measure and feel impelled to describe anything else as a tax increase, ignoring population change and inflation.
Currently, the City of Ottawa (Ontario Canada) defines a constant municipal tax as one which nominally results in the same number of dollars paid by the same taxpayers. When the value of all properties rises the same amount, taxes do not change. When the number of assessable properties increases, total dollar taxes can go up, in proportion of the assessed value of new properties to existing ones. However, all changes to existing properties that require a building permit are treated as improvements (for example, repairs following a fire), allowing an increase in 'constant' property taxes. This formula is not provincially mandated, but nonetheless is commonly agreed upon by most Ontario municipalities. It allows 'constant' taxes to go up at a slightly greater rate than that of population. But, there is no allowance for inflation in this model.
As usual, things have been made more complicated. As one Ottawa councillor wrote me, "Councillors are not so lucky as to have a 'Councillors' Guide to Property Taxes'. In fact, the property tax system, which was supposed to be simple a few years ago, has turned into a real morass. [We had] to reopen our budget in late May 2003 and invent a tax-rebate scheme, simply to achieve what we had thought we had done in February 2003."
Longer ago than I care to remember, I chaired the Recreation & Parks Board of the Township of Cumberland. When it came to establishing a baseline for the R&P budget for the Township, I made the following proposal : that the best measure of municipal 'constant tax' is the portion of tax of the total income of all residents of the township, after tax by superior levels of government. The reason: even though municipal taxes are based upon the capital value of property, people in fact pay taxes out of income, not capital.
In Canada, Revenue Canada can provide the aggregate taxable income of all residents reporting from a postal address. (In Cumberland's case, these were then half of Orleans, Cumberland (village), Sarsfield, Navan and Vars.) This measure is established by an agency distinct and separate from the municipality. All residents of Canadian municipalities file an income tax return in order to obtain tax credits. So, it takes into account local population changes, local employment changes, and local inflation. Today, the data is assembled and published by the Conference Board of Canada.
Here are the numbers for the amalgamated City of Ottawa:
| year | population | per capita income | final tax billing ($,000) | real tax change | |||
|---|---|---|---|---|---|---|---|
| 2000 | 785907 | 33505 | 745774 | pre-amalgamation | |||
| 2001 | 796800 | +1.8% | 33640 | +0.4% | 777858 | +4.3% | +2.1% |
| 2002 | 814195 | +2.0 | 33806 | +0.5 | 805484 | +3.6 | +1.1 |
| 2003 | 828461 | +1.5 | 34086 | +0.8 | 830484 | +3.1 | +0.7 |
| 2004 | 839566 | +1.6 | 35263 | +3.5 | 864495 | +4.1 | -0.9 |
| 2005 | 854333 | +1.5 | 36761 | +4.2 | 919774 | +6.4 | +0.6 |
| 2006 | 865554 | +1.3 | 38181 | +3.9 | 959654* | +6.6* | +1.4 |
| 2007 | 877300 | +1.3 | 40077 | +5.0 | 984039 | +2.5 | -3.8 |
| 2008 | 888850 | +1.2 | 41738 | +4.1 | 1050733 | +6.8 | +1.5 |
| 2009 | 898150 | +1.1 | 41709 | -0.1 | 1131196 | +7.7 | +6.6 |
| 2010 | 908389 | +1.1 | 42715 | +2.4 | 1191959 | +5.4 | +1.9 |
| 2011 | 917550 | ||||||
| -The final tax billing excludes
education which is not under City control. Levies applied solely to sub-areas of the
City are excluded throughout, notably the fire service charge which is applied solely
to areas with hydrants and which was moved from tax bills to water bills for 2006.
- Populations are estimates by the City planning department as of 31 December the previous year; an official census is held only every 5 years. - The per capita income data from the Conference Board of Canada includes an estimate of the 'underground' economy, the income not declared to Revenue Canada. - Percentages are rounded to the nearest 0.1% * The 20999,000 cost of curbside garbage pickup was moved from the general tax bill to a special levy paid only by those who receive the service for 2006. The effective tax increase was therefore 6.6% for this year. | +11.3% cumulative since amalgamation | ||||||
For example: during the calendar year 2000 the average population of the City was 791354 ((785907+796800)/2); during 2001, 805498. The average population during 2001 was thus 1.8% higher. During 2001 the per capita income was 33640, an increase of 0.4% over the 33505 of 2000. Therefore, the income-neutral property tax for 2001 would have been 2.2% higher than for 2000. In fact the tax levied in 2001 was 4.3% higher, 2.1% more than population plus per capita income changes.
So, since amalgamation the City of Ottawa has increased taxes by over 11% as measured by the incomes of its residents. It's true that the province of Ontario has downloaded additional expenses to municipalities during this period by increasingly underfunding provincially-mandated programs. For example, in 2001 provincial grants funded almost 31% of social housing expenditures. By 2005, this had decreased to 24%. However, the amount of these provincial changes was small compared to the real tax increases. Clearly, municipal expenses here are rising faster than the means of its residents to support them.
In November 2006, voters elected a new mayor. He campaigned on zero tax increase, which he defined as "the same house pays the same dollars". No allowance for inflation, no allowance for decreasing provincial support. In his first budget, he was faced with an arbitrated wage award for police that was in excess of inflation, and had to persuade city council to move 2 million from general taxes to local levies to save face. The net result of his efforts were some of the greatest increases in real taxes since amalgamation. We threw him out in 2010.
The new mayor intends to limit tax increases to our ability to pay, which is what this page is all about. The saga continues.