Whereas unaffordable housing generally reflects high land values that are driven up by speculation, which makes ownership very expensive to buy, but profitable for sellers and developers, and puts rental housing at a disadvantage when competing for buildable sites; And whereas a lower property tax rate on improvements and a higher rate on land value could be made to keep taxes the same or lower for most properties, but would reduce the speculative gain from ownership and make rental housing developments more competitive: Therefore be it resolved that UBCM request that the Province amend the Community Charter to grant municipalities the option of setting different property tax rates for land and improvements.
Ministry of Municipal Affairs The municipal variable tax rate system does not allow for separate tax rates between land and improvements because such a system could be used to levy unfairly high rates on undeveloped or underdeveloped land. Different tax rates for land and improvements may provide an incentive to develop so that property taxes are reduced but will not improve the affordability of land. Land is assessed at its highest and best potential use based on zoning and market conditions. The Province provides municipalities with other tax mechanisms to incentivize property development such as the revitalization tax exemption under S.226 of the Community Charter, which may be used to provide a tax reduction in order to encourage economic, social or environmental revitalization in targeted areas or properties, such as new development on vacant and under-utilized land. A municipality may also reduce the costs of affordable rental housing development by waiving or reducing development cost charges using section 563 of the Local Government Act. In addition, vacant land is often assigned to Class 6 Business and Other until the potential use of the property can be refined through the municipal planning and zoning process. The Class 6 tax rate is much higher than the residential tax rate, meaning there is already a significant tax burden on vacant land.