THUNDER BAY – Thunder Bay’s city council has approved a 2021 tax policy that reduces tax ratios for large industrial and multi-residential properties, in line with the city’s long-term tax strategy.
The move will reduce the rate at which those property classes are taxed relative to the residential class. However, it also means they will no longer be sheltered from municipal tax levy increases.
A report from administration presented councillors with two choices Monday: Option 1, which reduces the tax ratios, and Option 2, which would have maintained the status quo.
Council’s unanimous vote to move ahead with Option 1 will have little impact on the average tax payer, reducing the 2021 tax increase by just $0.57 for the median residential single-family home.
The tax ratios represent the degree to which a property class is taxed in relation to the residential property class.
Council voted to reduce ratios to 2.0 for multi-residential (from 2.08) and roughly 2.88 for large industrial (from 2.93).
Tax ratios for other property classes will remain the same in 2021, set at 1.0 for new multi-residential, roughly 2.08 for commercial, and roughly 2.37 for industrial.
By reducing the ratios for the multi-residential class, the city now meets the provincial threshold for tax ratios, meaning municipal tax levy increases will now be applied to multi-residential properties.
That will effectively cancel out the effect of lost revenue from the ratio reduction, said Kathleen Cannon, the city's director of revenue.
Under provincial policy, tax levy increases don’t apply to multi-residential properties in municipalities where their tax ratio exceeds 2.0.
Similarly, levy increases apply at only half the rate for commercial and industrial properties in municipalities where their ratios exceed 1.98 and 2.63, respectively.
The commercial class is now the only class in Thunder Bay remaining above the provincial thresholds, reported city staff.
Coun. Andrew Foulds argued Monday those thresholds were essentially arbitrary, and said he didn’t necessarily agree with the strategy of lowering non-residential ratios to meet them.
The city also applies graduated taxation to the large industrial property class, in which there are only six local properties. Properties in a lower band, valued below $18.5 million, will now be taxed at 96 per cent of the upper band (up from 90 per cent in 2020).
That means properties in the low band will see an overall tax increase of 1.75 per cent, while the lone property in the higher band, with a value in excess of $18.5 million, will see a tax decrease of 1.88 per cent.
Cannon noted Thunder Bay businesses would collectively save $1.67 million in 2021, thanks to the province reducing education tax rates for commercial and industrial class properties from 0.98 per cent to 0.88 per cent. The residential education tax rate remained unchanged at 0.153 per cent.
Council voted unanimously to adopt administration recommendations to proceed with Option 1 tax policy changes Monday.
The final 2021 tax levy is due in two installments, on Aug. 4 and Oct. 6.
