Vacant Unit Tax Reflects Vacant Civic Administration: BENN
The Vacant Unit Tax is not a loophole.
The federal politicians and the public servants who were tasked with drafting the Federal Negative Billing Option did not want to handcuff governments. The sole purpose of this legislation was to appear to be on the side of consumers, not taxpayers. In short, the limitations of this regulation were explicitly understood at the time it was drafted.
Having said that, this city is struggling to get its budget under control. Council instructed staff to limit the property-tax-rate increase to 2.5 per cent. They instructed staff to cut spending, but not on their pet projects, favourite initiatives or anything that might cause some self-interest group to whine. So staff invented a revenue generating solution to what the numbers staff produced clearly demonstrated to be a small problem.
A new regulation, that if administered properly would result in a revenue stream that would not impact the rounding of the numbers presented to the public. A new regulation, that when administered in a municipal standard manner, would create endless headaches for residents and staff. Municipal standard. Inadequate thought to the possible outcomes. Inadequate attention to detail. But administratively easy. All part of the ongoing culture of incompetence that is endemic at city hall.
All of which brings us to the fundamental problem. One that dovetails with Bulldog commentator Mike Patton’s missive of the day. Council is incapable of understanding that at some point the sources and uses of cash must balance. They are incapable of making tough decisions. They are, however, capable of making poorly reasoned, but administratively easy decisions.
So this council fits right in at city hall. Municipal standard.
Ron Benn, a finance executive, has been a member of the Centrepointe Community Association for the better part of three decades.
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I may not understand, but because of the way the tax is administered, it appears a house with a transaction closing during the first four months of 2024 could be retroactively assessed a vacant unit tax penalty for 2023 which the buyer closing between January 1 and April 30 may be liable for. This is because the declaration of a non-vacant property isn’t due until at least the deadline of March 21, 2024, so the sold house’s tax status possibly isn’t known until at least that time when the vendor is responsible for making the declaration for 2023. I’m assuming it could be declared vacant by the city for 2023 on May 1 2024 when I’m guessing the tax status is assumed known (and due diligence of liens on the house sort of thing may reveal the vacant unit tax assessment). So if a vendor didn’t file a declaration by April 30 2024, the property now in possession of the buyer has the vacant unit tax owing for 2023, and as I read it, the buyer is on the hook for this tax bill, that close to doubles annual taxes. And if it isn’t paid, a lien is placed on the buyer’s new house. So if you close a real estate deal before April 30, 2024, buyer beware.
In the FAQ for the VUT, the city says they cannot use the water bills or hydro usage to confirm someone is living there because of privacy laws, but the Privacy Act just requires 3 things – telling you what it is you are collecting and why, how it will be used, and how long the info will be retained. If they simply changed the hydro and water bills they could easily determine if someone is living in a residential unit and only target those with low to zero usage. The city will counter that there are two electricity providers in Ottawa – Ottawa Hydro and Hydro one and about 1% of the population are using wells. The counter to that is that between the water and electricity bills, they can easily identify 99% of the units with no one living there. The VUT is ok with someone living there so all they have to know is that fact. This seems like yet another expansion of city staff worth $8.2M to support this program. The Finance And Corporate Services 2024 budget site shows they really have no idea how much money will come in for this, but they are committing $4.1M to the housing reserve from it.
The Forecast, Budget and Estimate are quite different and this is evident when you look at the other budget items. They give no actual revenue for 2023 and it is likely they are losing money on this, based on the very expensive additional staff required