The last decade has been marked by rapid population growth in Ontario with total population rising from 12.852 million to 15.109 million - nearly 18 percent growth. This growth has largely been in urban areas and some municipalities have grown substantially faster than others. Figure 1 presents population growth rates from 2011 to 2022 for Ontario’s thirty largest municipalities. These municipalities range from 2.928 million for Toronto to just under 100,000 for Niagara Falls and their population total in 2022 was 10.645 million people or about 70 percent of Ontario’s total population. Population growth rates ranged from a high of 69 percent for Milton followed by 34 percent for Brampton, and 32 percent for Waterloo. At the bottom of the list were Mississauga, Thunder Bay, and Chatham-Kent. Of these 30 communities, about half grew faster than Ontario as a whole while the remainder grew more slowly.
Now the determinants of municipal population growth are complex but largely revolve around socio-economic incentives of one type or another including general economic opportunities and employment, access to locational amenities and services, the ability to provide housing via both availability and affordability and municipal taxation. Taxation is an intriguing variable at the municipal level because on the one hand one would expect higher property tax levels all other things given to discourage population inflows and reduce population growth. On the other hand, rapid economic growth and population growth expands municipal tax base and allows for lower rates on a broader base and hence lower average property taxes paid – residential, commercial, and industrial. Needless to say, the resolution of the effect of property taxes on population growth is ultimately an empirical question and a fairly complicated estimation process that would need to account for this bi-directional effect.
Nevertheless, it does not hurt to look at some charts. Figure 2 presents the percentage change in average detached residential bungalow taxes (Source: BMA Municipal Reports and several municipal websites) for the period 2011 to 2022 for Ontario’s 30 largest municipalities ranked from highest to lowest. The largest increase appears to be for Richmond Hill which saw average property taxes essentially double. It should be noted that Richmond Hill was in the bottom third of these 30 Ontario municipalities when it came to population growth. There is then a steep drop off going to 53 percent for Markham and then a gentler downward slope ending with Windsor at 19 percent.
In terms of the relationship between residential property taxes and population growth, there are two more figures. Figure 3 looks at population growth from 2011 to 2022 as a function of the average bungalow taxes in place at the start of the period – taxes in 2011. This does not control for anything else but does suggest a slightly negative relationship. That is, places with higher property taxes in 2011 saw slower population growth in the decade afterwards. Figure 4 looks at the relationship somewhat differently plotting population growth against the percentage change in average property taxes paid by a bungalow and here the relationship is slightly negative. However, if you dropped the two obvious outliers in this chart (Richmond Hill and Milton), you get a more negative linear relationship between population growth (vertical axis) and property tax growth (horizontal axis) (see Figure 5).
So, the long and short. Do higher property taxes affect population growth in a negative way? Probably, but the relationship is only one of many factors that affect population growth.
