With Aging Infrastructure and Rising Costs, Cities Mull Property Tax Hikes

A person walks by a row of houses in Toronto on July 12, 2022. The Canadian Press/Cole Burston)

As Canadian cities begin budget discussions, some are considering property tax increases as a potential means to address budget deficits, rising operational costs, and aging infrastructure needs.

Toronto implemented its largest property tax increase in 25 years last February, raising rates by 9.5 percent, while Vancouver property taxes jumped 7.5 percent this year, which was still less than the 10.7 percent hike the previous year.

As for next year’s budgets, Ottawa is mulling a 2.9 percent increase, Edmonton is considering an 8.1 percent hike, and Calgary will debate a proposed 3.6 tax increase. Metro Vancouver’s regional government, meanwhile, recently approved a 9.9 percent tax increase, on top of potential municipal hikes. 

Proposed property tax hikes come as many Canadians report financial strain from rising living costs. Taxes remain the largest expense for Canadian households, as the average family spends more on taxes than on basic necessities, according to data from think tank Fraser Institute.

Ottawa: 2.9 Percent Increase and 8 Percent Transit Levy Hike

In a draft budget released Nov. 13, Ottawa proposed a 2.9 percent increase in property taxes, citing issues such as rising infrastructure and construction costs, and insufficient funding from provincial and federal governments. Officials said the proposed budget will “keep Ottawa running, while balancing our current realities.”

In addition, the city has proposed an 8 percent increase to the transit levy, saying the system is facing challenges, including low ridership levels and a “significant funding gap” for next year. The city said it plans to expand rail lines, replace more than 100 “aging” buses with zero-emission buses, and implement a new bus network.

The proposed increase in property tax and transit levy amounts to an overall tax increase of 3.9 percent.

The 2025 draft budget identified $54.2 million in savings “through service reviews and continuous improvement initiatives,” the city said, bringing total savings to $207.7 million since 2023.

Council will consider the draft budget on Dec. 11.

Edmonton: 8.1 Percent Tax Increase

The City of Edmonton has proposed an 8.1 percent property tax increase for next year’s budget, 1.1 percent more than the hike approved by city council in April.

The adjustment would help ease inflationary pressures and rapid population growth, officials said on Oct. 31, as these issues have made it “much more expensive” to deliver services to Edmontonians.

The 7 percent increase approved earlier this year will help manage budget challenges and maintain services, the city said. The additional 1 percent increase will go to the city’s financial stabilization reserve—containing savings for the city in case of budget shortfalls—which was depleted during the pandemic. The other 0.1 percent will help fund the 2025 municipal election.

City council is set to receive budget adjustment reports on Nov. 13 and make final decisions in December.

Calgary: 3.6 Percent Tax Increase

The city of Calgary unveiled its 2025 draft budget on Nov. 5, proposing a 3.6 percent increase in property taxes.

The city had considered an additional 0.9 percent increase in September, citing issues such as aging infrastructure—evidenced in the critical water main break earlier this year—rapid population growth, and inflation, but the idea was discarded after the city reviewed its investment strategy and identified additional investment revenue, officials said.

The proposed 3.6 tax increase comprises a 5.5 percent increase for residential properties, and a 1.4 percent increase for commercial land.

The city is also proposing higher user fees for water, waste, and recycling services to fund system infrastructure and meet the demand for more landfill capacity. “This change will help the city keep pace with inflation and population growth, ensuring that existing infrastructure is reliable and resilient,” according to officials.

Under the proposed budget, an average Calgary home with an assessed value of $700,000 would pay $8.37 more per month in property tax and $5.09 more in utility fees, according to city estimates.

Council will begin budget discussions on Nov. 18.

Metro Vancouver: 9.9 Percent Tax Increase

Metro Vancouver, British Columbia’s most populated region, approved a 9.9 percent property tax increase for 2025, effective Nov. 1. The increase is in addition to any potential hikes in municipal property taxes, which have yet to be announced in some cities including Vancouver.

The Metro Vancouver board of directors initially planned an 11 percent increase to cover ongoing construction of the North Shore Wastewater Treatment Plant, a project first announced in 2011 that has suffered delays. After reviewing “multi-year capital programs,” directors decided to reduce the rate hike to the current 9.9 percent.

With the proposed budget, residents would pay an average of $875 annually per household for all regional services, officials said.

They said Metro Vancouver has kept rates “artificially low” since 2021 to mitigate the financial effects of the pandemic. In 2023, for example, the increase was kept to 4.5 percent, down from the 10.7 percent originally planned, by pausing some projects.

“The reality is the rate increase we’re seeing this year must be done to ensure that we have the resources to keep our infrastructure in good condition,” said Metro Vancouver board chair Mike Hurley in a Sept. 26 press release.