Ontario municipalities are again asking for an upward adjustment to the payments that health care, post-secondary and correctional facilities make in lieu of property tax. Toronto finance officials calculate that a nearly 144 per cent increase is needed to account for inflation since 1987. That’s the last time the $75 per capita rate for accommodated individuals — known as the heads-and-beds levy — was increased.
Toronto Council passed the enabling by-law to collect the annual levy at its July meeting last week, and also agreed to ask the Ontario government to boost the fee to $182.79. Pleas for increases have similarly been forwarded to Queen’s Park since the 1990s.
“If the rates had been increased to reflect increases in the Consumer Price Index in each year from 1987 to 2025, an additional $29.9 million in tax revenue would be received in 2025,” a staff report to City Council observes. “This is an issue faced by all Ontario municipalities.”
Instead, the City will collect roughly $20.8 million, based on the number of beds for students, patients and detainees in formal student residences, in-patient health care units and detention centres. This has already been accounted for in the 2025 Toronto budget, but, under Provincial rules, the subject public institutions are not required to pay it until after July 1 each year.
Several other municipalities and their umbrella organization, the Association of Municipalities of Ontario (AMO), have also been lobbying for a boost to the institutional levy.
“Municipal governments have long felt this payment to be insufficient to account for the fact that provincial facilities, while providing economic benefit, also place a burden of added wear and tear on local infrastructure, increased demand for public transit, policing, and EMS services and so on,” AMO reported in a 2021 submission to the provincial government’s pre-budget consultations.
Although a review of Ontario’s property tax and assessment system has been in progress for nearly two years, this issue does not appear to be on the agenda.
“To date, the Province has not committed to any review of the legislative or regulatory provisions that govern the levy on provincial institutions,” the Toronto staff report notes.
