Adam: Is Mark Sutcliffe's small tax increase good or bad for Ottawa?

The 2.5 % property-tax hike is well under current inflation levels, and bucks the trend in some other cities. We may end up having to pay more in the long run.

Published Dec 14, 2023 • Last updated 2 hours ago • 3 minute read

Is Mayor Sutcliffe’s 2.5 per cent tax increase a Christmas gift to residents, or will it later be followed by a lump of coal? Photo by Ashley Fraser /Postmedia

Mayor Mark Sutcliffe has cause to celebrate after the 2.5 per cent property tax increase that was approved by Ottawa Council ensured he kept his election promise on taxes. Ottawa’s low tax for 2024 sets it apart from some of the high tax increases proposed or adopted by other cities across Ontario.

But you have to wonder whether 2.5 per cent, far below inflation, was set artificially low to give us a false sense of achievement.

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“We are doing it in a way that respects the affordability crisis that Ottawa residents are facing,” Sutcliffe said. “They are paying more for food. They are paying more for rent. They are paying more for everything. I think we’re respecting the affordability crisis for Ottawa residents by not making them pay for a big tax increase.”

That may be so, but Ottawans are not the only ones having a hard time with the cost of living. The problem is nationwide, and the approach to municipal taxes in other cities is to set increases closer to the inflation rate. For instance, Newmarket is eyeing a 2.99 increase next year, while in London, Ont., taxes are expected to go up three to 3.4 per cent. Mississauga will see a 2.3 per cent tax increase, although Peel Region, of which the city is a part, is looking 4.5 per cent. Burlington has settled for 4.99 per cent, and Kitchener has proposed 3.9 per cent.

Toronto, which increased taxes by 5.5 per cent this year, is still working on 2024.

The outliers include Greater Sudbury, which is contemplating a six per cent hike, while Durham Region proposed more than nine per cent. Guelph has approved an 8.5 per cent hike.

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With inflation currently at 3.8 per cent, several cities seem to have opted for similar ground: tax increases hovering around three to four per cent. They all cite the increasing cost of municipal services, and it raises the question of whether Ottawa’s 2.5 per cent is right for the times.

Don’t get me wrong, I’d rather pay 2.5 per cent than four per cent. Who wouldn’t? But, with the uncertain economic situation, and higher levels of government unwilling to open their wallets, are we merely giving ourselves taxes that make us feel good today, while postponing the pain that is inevitable?

Bob Chiarelli managed a couple of tax freezes as mayor; then people turned on him when taxes increased 2.9, 3.9 and 3.9 per cent respectively in his last three years. Sutcliffe alluded to the tougher times ahead in 2025 and beyond, and you have to wonder if it would have been better to spread the pain gradually, with slightly higher increases now in anticipation of the future.

We can’t escape the fact that city services are paid for largely through property taxes. In Ottawa, property taxes take up 52 per cent of the load, while federal and provincial grants account for 23 per cent. Revenue from fees and service charges cover another 15 per cent, with the remainder from other sources. If you opt for lower taxes, you get less money, and you pay through higher rates, service charges and user fees.

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The 2024 budget is something of a gamble. The city knows that 2.5 per cent hikes are not sustainable over the long term and is hoping that federal and provincial governments will cough up enough money to fill budgetary gaps in 2025 and beyond. It’s a big gamble.

The federal election is slated for 2025, with Ontario following some seven months later. It is not uncommon for governments seeking votes to loosen the purse strings, and that may well be the city’s bet. If somehow, those other governments don’t come through, prepare to pay through the nose.

We don’t know if Sutcliffe’s approach to property taxes is better than that of other cities. Time will tell. In the meantime, we’ll take the 2.5 per cent and hope for the best — next year and beyond.

Mohammed Adam is an Ottawa journalist and commentator.