Brampton has some of the highest property taxes in the Greater Toronto Area, but freezing property taxes isn’t necessarily the right answer. Property taxes are complicated, and reducing the city’s revenue through property tax freezes or cuts can only make it harder to build Brampton up in the future.
How is property tax different from other taxes?
Property taxes are very different from most other taxes we pay. Sales, income, and corporate taxes, if left alone, rise with inflation. This is because in the case of these types of taxes, increases in income, retail sales, and corporate revenue automatically mean more revenue for provincial and federal governments.
But municipalities rely mostly on the property tax, which is set each year. The municipality decides how much property tax revenue it needs for the year, and then decides the tax rates to procure the revenue. Hence, a property tax freeze actually means a reduction of municipal income, as it does not take into account the cost of inflation or property value increases.
How does Brampton’s property tax rate compare?
The 2018 residential tax rate in the City of Brampton was 1.035591% of the property’s assessed value. The average single residential property in Brampton (as assessed each year by the independent Municipal Property Assessment Corporation) is $695,904, meaning the average homeowner paid $7,207 last year. Of that amount, $3,353 went to the city, $2,671 went to the Region of Peel, and $1,183 went towards education.
In Mississauga, the 2018 residential tax rate was 0.82350% of the property’s assessed value. Overall, housing prices are slightly higher than in Brampton; the average house in Mississauga is assessed at $726,211. But on that average property assessment, the homeowner pays $5,980, over $1200 less than the average Brampton homeowner, even though they pay the same Region of Peel and education rates.
Taxes paid to the City of Brampton cover items like municipal roads, Brampton Transit, parks and recreation, fire services, libraries, city planning, and bylaw enforcement and municipal courts. Taxes paid to the Region of Peel cover policing, regional roads, water treatment and management, waste collection, public health, and many social services.
Property tax rates in Toronto, Vaughan, Markham, and Oakville are even cheaper. In Toronto, the property tax rate for a single-family home is just 0.63551%. However, property tax rates are higher in Durham Region, Georgina, and in Orangeville.
So why are property taxes higher in Brampton?
So why are property tax rates higher in Brampton than most other cities in the GTA? And what can Mayor Patrick Brown and City Council do about it?
First of all, housing values are lower in Brampton than in neighbouring municipalities like Mississauga, Vaughan, and Oakville. This makes Brampton a more affordable place to buy a home, but it results in higher property tax rates in order to cover the costs of servicing each property. Expenses such as labour and materials don’t change based on the municipality.
Second of all, Brampton does not have as much diversity of land uses as Mississauga or Vaughan. Tax rates are much higher for commercial and industrial lands than for residential development. In Brampton, commercial properties such as offices and shopping centres pay twice the residential rate – 2.141485% of the assessed value. Industrial properties – factories and warehouses – are charged at a rate of 2.443981%. Other cities, such as Mississauga and Vaughan, charge similar rates.
Despite the amount of industrial land in Brampton, especially warehouses, it pales compared to industrial land in Mississauga or Vaughan, and there are far fewer employees. According to the Region of Peel, in 2016, the total employment in Brampton was just 155,116, while in Mississauga, there were 435,123 jobs. That year, Vaughan’s total employment was 201,008. Compared to its suburban neighbours, Brampton is still a bedroom community, and its residential tax rates reflect that.
Toronto enjoys the cheapest property tax rates (and many argue that they are too low to support city services like transit and housing) because of its diverse land uses, its high property values, and its denser city form, especially in the old City of Toronto. It is cheaper to service higher-density neighbourhoods because there are fewer roads, water mains, and fire stations per resident, and they are more efficient to police.
Would it help to freeze the property tax rate?
Freezing Brampton’s property tax in 2019 may sound like an easy solution to a complex problem, but it will cut into budgets for important things like parks, recreation centres, fire protection, libraries, transit and planning and economic development programs. If Brampton is truly interested in reducing the burden of high property taxes on its residents, it should focus on attracting business investment and urban intensification in places like downtown Brampton, while continuing to build a city that people want to live in. It will take time, but it will be worth it.