As the federal government considers a new tax on undeveloped residential land, meant to encourage prompt housing construction, city officials are calling for local control.
They want to be the ones to determine what qualifies as vacant land, if there should be exemptions and what they should be, as well as the tax rate.
“Caution must be taken to ensure that this tax does not financially penalize homebuilders who are unable to proceed with development for legitimate reasons,” states Shanna O’Dwyer, the city’s general manager of finance, in comments to the government publicly released on Friday.
“There are many economic, administrative, and infrastructure challenges which may inhibit residential development, and a vacant land tax must be carefully designed to avoid creating additional barriers to development.”
Federal officials announced they’re considering a new tax on vacant, residentially zoned land during the 2024 national budget process. Dated Dec. 24, O’Dwyer’s comments were submitted ahead of the Dec. 31 deadline for the initial round of consultations.
“Solving the housing crisis requires a Team Canada approach. No single order of government, home builder, not-for-profit, or community can do it alone,” reads the federal government’s consultation page. “We need every partner using every possible lever to build the homes Canadians need.”
As shown in the 2023 Growth Management and Affordable Housing Monitoring Report, there were nearly 6,000 approved but unbuilt housing units in the city, though developers dispute those numbers.
“Overall, a vacant land tax could be a viable tool to incent housing development, while providing increased revenue that can be used by municipalities to directly accelerate housing through infrastructure investments, and other initiatives aimed at increasing the housing supply,” O’Dwyer wrote. “However, we want to stress that due to the highly variable local context influencing development in various municipalities, this tax program will need to have significant flexibility to allow for local decision making and administration.”
Of particular concern, the general manager notes, is the possibility of more developers using their land for agriculture, which comes with a lower property tax rate, as they hold off on construction.
Further rounds of consultation with provinces, territories and municipalities are expected to be held.
