Ranking Property Tax Burdens in Ontario Cities

A recent set of statistics published on the real estate site Zoocasa has attracted a fair amount of attention in the media and ultimately even in Thunder Bay.  The data for these Ontario municipalities includes the property tax rate, the average value of homes and tax calculations for some standardized home values ranging from $250,000 to $1,000,000 dollars.  The highlight of the data is of a course a ranking of property tax rates across 35 Ontario municipalities and the illustration that property tax rates in Windsor are the highest in the province and those in Toronto are the lowest with Thunder Bay coming in at second highest.

Of course, how you rank these tax burdens – especially when we are discussing property taxes in say Thunder Bay or Sudbury compared to southern Ontario cities – can lead to different answers.  In the end, much depends if you want to rank tax rates, the average taxes paid based on average property values, taxes paid per standardized house values or property taxes as a share of resources available – for example household income.  There are two components to calculating a simple estimate of property taxes paid – the value of the home and the tax rate applied. Using the tax and property value data from Zoocasa and household income data from the BMA 2019 report, here are some of the rankings in visual form.

First, Figure 1 plots average house values ranked from highest to lowest for the 35 Ontario municipalities.  The prices range from a high of $1.08 million dollars in Richmond Hill to a low of just under $189,000 for Sault Ste. Marie.  Not surprisingly, houses in the GTA area have the higher values while the four northern Ontario cities in the data are all at the bottom.  Sharing the bottom with northern Ontario cities are other places that have been relatively economically depressed in recent years – Windsor, London, St. Catharines.   

Ontario Employment Growth Showing Regional Weakness

The July 2019 Labour Force Survey was released by Statistics Canada yesterday and showed total national employment in July was down slightly (by -0.1%) while the unemployment rate moved upwards to 5.7 percent.  What was also interesting was the year over year change in employment as it showed the last twelve months have seen substantial employment growth even if recent growth has slowed a bit.  Seasonally unadjusted employment growth results showed an increase between July 2018 and July 2019 of 2.2% for Canada and 2.3 percent for Ontario.  However, as the accompanying figure shows, when the rates are examined by economic region and ranked there is quite a difference in performance across the province.



The highest growth was for Kingston-Pembroke at 8.9% followed by the Ottawa at 4.2%.  It would appear that eastern Ontario as a whole is doing quite well.  The Kingston area is apparently seeing substantial residential and non-residential construction activity - including hospital and bridge construction - as well as an increase in food manufacturing.  Next was Toronto at 3.4% and then nearby Kitcher-Waterloo-Barrie also at 3.4%.  Lagging behind but still positive are Stratford-Bruce at 0.8% and Hamilton-Niagara at 0.6%.  Thus, eastern and central Ontario edging into the Niagara peninsula have seen employment growth.  The remainder - mainly Southwestern and Northern Ontario have not done well - seeing employment declines.  The largest decline was London at -4.5% followed by Northeast Ontario at -2.6% , Muskoka-Kawarthas at -1.8%, the Northwest at -1.7% and then Windsor-Sarnia at -0.2%. 

With respect to Northern Ontario, employment in the Northeast declined from 257,400 to 250,800 between July 2018 and 2019 while the unemployment rate rose from 6% to 6.8%.  In the Northwest, employment fell from 107,800 to 106,000 while the unemployment rate rose from 4.9% to 5.6%.  If there is an economic slowdown or recession in the offing, it would appear that it may already be underway in parts of Ontario.

Crime and the Economy: Are Low Interest Rates a Factor?

The most recent set of crime statistics for Canada revealed that police-reported crime in Canada, as measured by both the crime rate and the Crime Severity Index (CSI), increased for the fourth consecutive year in 2018, rising 2%.  The accompanying figure below further reinforces the fact that after years of decline – a decline that stretches back to the 1990s – crime rates are rising.  Of course, all of this begs the question as to why crime rates are rising again after years of decline.

Explaining the drop in crime rates has been a source of some debate.  The fall in crime rates since the 1990s in Canada as well as the United States has been attributed to a number of factors including new policing strategies, changes in the market for illegal drugs, an aging population, a stronger economy, tougher gun control laws and increases in police numbers. As for the impact of the economy on crime, well that is also a source of debate. 

On the one hand, the intuitive feeling is that a weak economy should cause people to turn to crime.  Yet, many studies of the relationship between the economy and crime have found statistically small relationships between unemployment and property crime and often no relationship between violent crime and unemployment.  It has also been argued that economic downturns may actually reduce criminal opportunities as when unemployment is high more people are at home "protecting" their property and when out and about they carry less cash and possessions.

If the latter is the case, one could make the argument that the strengthening economy of the last couple of years has been a key factor in fueling the recent surge in crime.  Unemployment rates in Canada are at historic lows and to add fuel to the fire – so are interest rates.  Low interest rates mean that even if more employment today is part-time or uncertain, people are still able to consume more and go out more simply by borrowing more.  Indeed, Statistics Canada also noted recently that the seasonally adjusted household credit market debt to disposable income ratio increased to 178.5 percent in the 4^th quarter of 2018. 

More debt to fuel spending on homes and basic consumption frees up resources to spend on more illicit things like illegal drugs and much of the recent crime increase is drug related. 

With unemployment low and cheap money sloshing around both fueling spending and consumption, the opportunities for crime may have mounted. It is certainly a point worth considering.

Winston Churchill on Boris Johnson and Brexit

Boris Johnson is now the United Kingdom’s Prime Minister and he has promised to lead the UK out of the European Union by October 31^st.  He insists that he can get the European Union to renegotiate the deal even though the Europeans are adamant that the deal negotiated with Teresa May is a take it or leave it proposition.  And if they do not renegotiate, then Johnson is also quite strident that Britain will leave no matter what. As a result, all of this will likely lead to a quite disruptive and erratic next few months as Britain and the EU try to sort out the remainder of Brexit.

Based on these positions, it would appear that the outcome by October 31^st is assured – Britain will leave the EU without a deal and sail off on its separate way.  On the other hand, politics is a strange process with a lot of dramatic posturing and one could very well see a new deal emerge.  Or, in what could be a really bizarre turn of events, Britain could very well stay in the EU.  Just as only Nixon could go to China, only Boris could actually keep Britain in the EU.

Much of the discussion of the entire Brexit issue has focused on how chaotic and disruptive it has been and how damaging it is to Britain’s long-term economic and political interests.  However, there may be some reason behind this madness if one is to take the writings of Winston Churchill on foreign policy and extrapolate them to the present.  In his first volume of his epic history of the Second World War, Churchill writes the following:

“For four hundred years the foreign policy of England has been to oppose the strongest, most aggressive, most dominating Power on the Continent, and particularly to prevent the Low countries falling into the hands of such a Power…we always took the harder course, joined with the less strong Powers, made a combination among them, and thus defeated and frustrated the Continental military tyrant…Thus we preserved the liberties of Europe, protected the growth of its vivacious and varied society, emerged after four terrible struggles with an ever-growing fame and widening Empire…Here is the wonderful unconscious tradition of British Foreign Policy…Observe that the policy of England takes no account of which nation it is that seeks the overlordship of Europe…it is concerned solely with whoever is the strongest or the potentially dominating tyrant.”

Well, there you have it.  Britain’s elites and particularly those in the Conservative Party appear to be - borrowing from the words of Keynes - the unwitting slaves of some now defunct foreign policy prescription that guided the rise to empire.  Boris Johnson and the Brexiteers do not view the dominant European power as Germany, France or Spain but the grand project of European union and its bureaucracy in Brussels is now the continental tyrant.  By leaving the EU, they see themselves as safeguarding the freedom of Britain and sowing disruption that might lead to the eventual breakup of the EU. 

Of course, one might ask why they joined?  Well, as the European Project was coming together after 1950, it gradually became apparent that it was not falling apart and would continue.  So, being on the inside would have been the best way to keep an eye on things and steer things according to Britain’s interests.  Indeed, being on the inside and “unconsciously” provocative or disruptive could be seen as a potential policy direction given hundreds of years of British foreign policy geared towards keeping Europe apart.  Indeed, French President Charles De Gaulle’s opposition to British membership can be viewed as a realization of this.

Why leave now? Well, the “unconscious” hope was that given the strains the EU was undergoing in the wake of the 2008-09 financial crisis and the migrant crisis, leaving now might be the final push leading to its break-up.  However, the miscalculation here was that it is no longer 1789 or 1913 or 1939.  It is the early 21^st century and Britain’s actions have interestingly enough galvanized the Europeans at least for the time being into working harder to stay together.  Boris and the Brexiteers and their “unconscious” policy formulation may backfire big-time.
 

Crime Statistics Update 2018: Thunder Bay Crime Rate Down 6 Percent

The Police-reported crime statistics for 2018 from Statistics Canada are out.  The police reported crime statistics provide both the crime rates and the crime severity index as well as more specific data on things like the homicide rate.  According to the report, police-reported crime in Canada, as measured by both the crime rate and the Crime Severity Index (CSI), increased for the fourth consecutive year in 2018, growing by 2%. Despite the increase, the CSI was 17% lower in 2018 than a decade earlier. Indeed, over the period 1998 to 2014, the crime severity index in Canada fell rather dramatically – dropping by about 44 percent - but has now started to rise.

The CSI increased in two-thirds of Canada's largest census metropolitan areas in 2018, with the largest increases in Windsor (+21%), Moncton (+15%) and St. Catharines–Niagara (+15%). Breaking and entering was an important contributor to the increases in Windsor and St. Catharines–Niagara, while fraud was an important contributor to the increases in Moncton and Windsor. The largest decreases in the CSI were in Belleville (-20%), Saguenay (-12%) and Peterborough (-10%). 

 

The value of the CSI was highest in Lethbridge at 137, followed by Regina at 126.6 and then Winnipeg at 119.4.  Thunder Bay ranked 8^th out of 35 on the level of crime as measured by the CSI index (See Figure 1) while Greater Sudbury ranked 14^th.  In terms of changes, Thunder Bay and Sudbury both registered an increase in the CSI in 2018 at 9 and 5 percent respectively (See Figure 2) with Thunder Bay reporting the 9^th largest increase and Sudbury the 17^th.  Driving Thunder Bay’s increase in the CSI were increases in breaking and entering; robbery; fraud; trafficking, production and distribution of cannabis (pre-legalization); attempted murder; and homicide.  As for Sudbury, the increase was driven by Increase in breaking and entering, and sexual assault; and partially offset by decrease in child pornography.

 

However, when the increase in crime is reported using the traditional crime rate (which measures total reported crimes per 100,000 population without any weighting) Thunder Bay actually registered a decrease in reported crime (See Figure 3) while Sudbury registered an increase.  Indeed, Thunder Bay registered the third largest decrease in crime rates of these 35 CMAs at -6 percent while Sudbury was up 5 percent.  However, at 8 homicides in 2018, Thunder Bay still ranked first in the homicide rate amongst Canadian CMAs coming in at 6.38 per 100,000 of population.  Greater Sudbury comes in at 0.59 per 100,000 – one of the lowest homicide rates in the country.  Barrie was the lowest in 2018 coming in at 0 homicdes.  Brantford, came in as the second-highest this year with a rate of 3.36 homicdes per 100,000 followed by Regina at 3.1.  

So the long and short for Thunder Bay this year is that crime rates are down but the severity is high.