Comment 28494

By A Smith (anonymous) | Posted February 06, 2009 at 21:40:39

Jon C, does having a lower tax rate on vacant land promote vacancy? I'm not sure, I never really thought of it that way before. However, seeing that most property owners want to make money on their investment and have fixed costs related to ownership (mortgage payments), I doubt that letting buildings remain vacant is their first choice. I tend to think most would like to have paying tenants. However, if you think that it acts like an incentive in letting buildings remain vacant, I can see where you may have a point, albeit very small. Therefore, if you think the city should drop commercial rates down to the same rate as vacant commercial properties, that would be very helpful.

>> While the tax rate in Hamilton is marginally more expensive (all other factors are comparable or cheaper)

Tax rates on residential properties aren't just marginally more expensive in Hamilton as compared to Toronto, they are almost twice as much. In effect, the city of Hamilton charges people/investors twice as much for the same level of services as does Toronto. Why would anyone fork over an extra .82% x their property value if they didn't have to? This extra cost explains why there are more vacant buildings in Hamilton than Toronto, why less people want to live here and why property values are about half as much.

If the city wants to foster demand for it's product, they should start by matching residential rates with Toronto. This would not have to happen overnight, but could be phased in over a few years. It would require cutting a certain amount of spending, but not as much as most people would think, as the increased demand for homes would push up property values and thus assessments. The recent cut in commercial tax rates up until 2006 has shown what lowering costs for businesses can do, as many new developments have taken place since their reduction.

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