Olivia Chow defends vacant home tax as it undergoes major changes

Mayor Olivia Chow is defending Toronto's controversial vacant home tax, as city staff try to simplify the levy after a botched rollout earlier this year.

The mayor's executive committee is set to review staff plans to rebuild the way the charge is communicated to city residents. That comes after a process earlier this year that saw over 150,000 people wrongly assessed the fee. 

Chow said Monday the changes should ease the anxiety people felt about the tax, while allowing the city to use it as a tool to address the housing crisis.

"Last year, it was a huge, huge fiasco," she said. "The staff is changing, fundamentally, the design of it. So, no arbitrary deadlines, no automatic notice that scares the daylights out of people."

WATCH | City hall reporter Shawn Jeffords breaks down what went wrong with the controversial tax program and what its overhaul looks like:

In 2021, Toronto created the vacant home tax to motivate owners not using empty houses to rent or sell them. A vacant home owner was charged one per cent of the property's assessed value, which could mean a bill for thousands of dollars each year.

But in March, over 169,000 people's homes were deemed vacant — a number that dwarfed the 11,000 homeowners who were found to have a vacant home the year before. At the time, Chow said the entire process was "fundamentally flawed" and needed a redesign from the ground up.

The city ended up reversing most of the charges.

On Monday, Chow said the city still needs the levy to help address the housing crisis.

"There are 10,000 units out there that are vacant right now," she said. "Let's take that number down and house people in them."

This year, city staff are planning a communications blitz to make homeowners aware of the vacant home tax. They're simplifying the declaration process both online and over the phone. A dedicated team will also be created to help people complete the forms.

Stephen Conforti, chief financial officer for the city, said mistakes were made last year.

"We really didn't do a good enough job communicating the need for an annual declaration," Conforti said when the changes were announced last week.

The levy generated about $55 million last year when it was applied at a rate of one per cent. This year, the tax rate will increase to three per cent.