Levy Restrictions

Levy restrictions only apply where the tax ratio is set above the Provincial threshold. To be levy restricted means that the class will not have to share, in full or in part, any increase as a result of a municipal tax levy increase. The levy restriction was intended to act a deterrent from moving ratios upwards.

Previously, if levy restricted, only 50% of any municipal tax levy increase is passed onto the class. With changes in regulations relating to the multi-residential tax class, the levy restriction for the class is set at 100%. This means that no municipal levy increase can be passed onto this class until the ratio is 2.0 or less.

When a class becomes levy restricted, City Council has the option to either:

a) Leave the ratio as is and accept the restriction in place. In doing so, the affected class will continue to pay the same proportionate share of taxes as paid in prior year however any budget levy increase will be paid by all other non-restricted classes; or

b) Make changes to the tax ratio for the class affected by the levy restriction, either as a one-time adjustment or as an adjustment over time, so as to achieve a ratio that is lower than the threshold. In doing so, the restricted class will then share in any future year budget levy increases.

In some cases, due to the levy restriction, the tax ratio will automatically lower each year. In this situation, City Council may choose to allow the class to fall below the threshold without any additional intervention.

Currently, all business classes are at the provincial threshold and therefore not considered to be levy restricted. No further downward changes are required in the setting of the 2020 tax rates.

Tax Ratio Movement

In previous years, Council has strategically chosen to reduce ratios of the business classes (multi-residential, commercial and industrial) downward towards the provincial thresholds. This decision was based upon preserving the interests of the business sector, who have generally been in favour of lower tax ratios and who argued that reducing ratios would stimulate economic development in the community and facilitate competitiveness and tax parity with other municipal jurisdictions. Historic data would suggest that lowering the tax ratios for business classes during periods of good economic conditions supports long-term financial stability in years where the business tax base is compromised. The ability to move ratios downwards was also facilitated by relatively stable assessment changes.