Vacant unit tax survives challenge at council

Ottawa city council is keeping a vacant unit tax critics called an onerous bureaucratic burden, looking instead to streamline the reporting process as the city awaits more data.

Orléans West-Innes Coun. Laura Dudas had put forward a motion to axe the tax, which applies at a rate of one per cent of assessed value on homes unoccupied for six months or more in a year. The tax included an exception for principal residences, but required homeowners to submit an annual declaration stating whether each of their properties are occupied.

Dudas argued that the tax puts a reverse onus on residents, threatening them with fines and penalties if they fail to declare. She said preliminary data suggests it's being applied too broadly.

"The administrative system has failed," said Dudas. "It's broken."

Supporters of her motion gave examples of people with dilapidated, uninhabitable properties stuck with thousands of dollars in bills, and elderly residents improperly hit by taxes and fines. River Ward Coun. Riley Brockington added another argument against the tax, calling it "overreach."

"I have an issue with the state dictating how people use their homes," he said.

Axing tax 'premature'

But Stittsville Coun. Glen Gower put forward a competing motion to retain but amend the tax regime, which was introduced in 2022 to encourage homeowners to return vacant properties to the market amid a housing crunch. Proceeds go to fund affordable housing.

Gower's motion asked staff to find new ways to streamline the declaration process, including by opening an in-person option, and asked staff to consider reducing how often homeowners have to declare.

That earned a wave of support from councillors who said the burden of checking a box can't compare with the burden of homelessness.

"I think it's clear, in Ottawa we have people without houses and we have houses without people, and it's time we do the math and put two and two together," said Coun. Shawn Menard.

"My priority is to try to end that form of human suffering with the limited tools we have."

Staff said they will be able to bring more data to councillors next year that will clarify whether the tax is being applied to the right people. Several councillors said they'd prefer to give the tax a chance and see whether it makes a difference in increasing the housing supply.

"I think giving up on this tax after one year would be a huge mistake," said Somerset Coun. Ariel Troster. "I find it incredibly troubling, the idea that we would abandon this so quickly."

"I don't think we should be making decisions based on anecdotes," said Alta Vista Coun. Marty Carr.

"It's premature," said Kitchissippi Coun. Jeff Leiper. "We don't know what effect this is having in the marketplace."

Gower's replacement motion passed by 15 votes to eight, meaning the tax will remain in effect.