Ottawa councillor wants to end vacant unit tax, suggesting it's too broad

An Ottawa city councillor wants to rescind the city's vacant unit tax (VUT), suggesting it is overly broad and too onerous for residents.

A notice of motion filed Wednesday by Coun. Laura Dudas, seconded by Coun. George Darouze, asks the city to rescind the tax in 2024 and not charge anyone the 1 per cent tax on their 2023 tax assessment.

The motion contends that the results of the first year's declarations were much higher than what staff expected.

City staff said in June that 3,268 homes were declared vacant by homeowners and 2,836 were deemed vacant by the city because no declaration was received. The bylaw administering the tax requires homeowners to declare their vacancy status to the city yearly. There are 336,865 units in the city of Ottawa, according to a memo from Deputy City Treasurer Joseph Muhuni.

Dudas' motion suggests the city found an unusually high number of vacant units, more than three times what staff had predicted would be found.

"Either Ottawa is Canada’s most vacant city by orders of magnitude, or more realistically, the VUT is being improperly applied to Ottawa residents," the motion states.

More than 1,900 notices of complaint have been filed about the tax, according to the city.

"Even if all 1,909 Notices of Complaint currently filed were successful, that still leaves Ottawa with a vacancy rate somehow 250 per cent higher than staff’s predications; contrasted against Vancouver and Toronto, where staff overestimated vacancy rates," the motion says.

Speaking on Newstalk 580 CFRA's Ottawa Now with Kristy Cameron, Dudas said the intention of the tax is laudable, but the administration is onerous.

"This tax and the way it's been administered has cast too broad of a net," she said. "It is targeting 330,000 Ottawa property owners when, in fact, we're looking at a very small number of people who are sitting on properties and not turning them over to the housing market.

"The numbers don't add up and when we look at what this means in terms of an onus placed on residents, it's just not worth it."

Speaking to reporters after Wednesday's council meeting, Mayor Mark Sutcliffe said he will look at the data from staff about the tax, but questioned some of the figures in Dudas' motion.

"I think if we look at the numbers and make a fact-based decision, we'll be able to decide whether we want to continue with the program or not, but I don't think many of the numbers in the notice of motion, they don't seem to line up with what I've heard about what's been happening with the program," he said.

Dudas' motion compared Ottawa's VUT to similar taxes in Toronto and Vancouver, which found lower rates of vacancy, 0.27 per cent and 1 per cent, respectively, versus 1.8 per cent in Ottawa. Homeowners in Toronto and Vancouver are also required to submit declarations of occupancy status annually, just like in Ottawa.

Dudas is an avowed opponent of the VUT and voted against it when the previous term of council approved it.

Dudas' motion won't be brought to the council table until Aug. 23, when councillors return from a traditional summer recess, but she says she wanted to get the conversation going.

"This will give our community members the chance to reach out and share how they feel about this tax. This will give my colleagues, especially those new to this term of council, to chat with people to get a sense of it," she said.

Her ultimate desire is to have the tax rescinded, she said, but she anticipates there could be amendments or changes.

"I don't believe it in it and I don't agree with it, but if I can't get that majority vote, at the very least, we're going to have a fulsome conversation and I think that's what residents deserve."