Inequity in Ontario Tax Credit for low income tenants needs to be revised | Unpublished
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Unpublished Opinions

Bill Toms's picture
Ottawa, Ontario
About the author

BA (Honours Economics) MA York University
Federal Public Servant for 33 years at National Energy Board, Energy Mines & Resources (NRCAN), Bureau of Competition Policy, Environment Canada and Finance Canada. Retired in 2003 as Senior Chief Resource and Environmental Tax.
Currently Principal at ENTRANS Policy Research. See website for additional information.

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Inequity in Ontario Tax Credit for low income tenants needs to be revised

September 20, 2014

I wrote this letter on August 28th and I am still awaiting a response. I have yet to even receive an acknowledgement of receipt of my letter.

Update: I finally received a response today, Oct. 27, 2014. See below and please comment.

Dear Minister Sousa:
 
I am writing to you to suggest a change to the design of the Ontario Tax Credit for lower income tenants.
 
Let me frame the problem with a simple example:
 
If I were to live in apartment and pay $1000 per month and that monthly rent included all water, electricity and heat then I can include the $12000 annual amount as "occupancy cost" to calculate my Ontario Tax Credit.
 
If instead I were to live in a house and pay $800 per month as rent and pay all my own utilities directly (at say $200 per month on average) then I can only include $9600 as my annual "occupancy" cost although I have actually spent exactly the same amount on housing ...ie $12000.
 
It seems to me that the tenants who pay their own utilities would not get the same benefit from the Ontario tax credit?
 
Is my analysis correct?  If so when will the calculation be modified to provide greater equity? This matter is of even greater importance due to the rising costs of water, gas and electricity bills for so many lower income Ontarians? I have written about this to several people over the years but have never received even one constructive reply save that sent to me in 2011 from Mr. Yasir Naqvi which he can share with you if you wish. He cited the Clean Energy Benefit which I understand will soon disappear.
 
What I propose does not need to actually cost any additional money.  All that needs to be done is to change the parameters of how the credit is calculated so that all tenants are created equally.
 
I should note that there is a hidden environmental benefit as well. It may encourage more landlords to actually modify their rental arrangements so that more tenants actually pay their own utilities and therefore have a direct and immediate incentive to use their services in a more frugal manner.  I am actually a landlord and I would not want to be responsible for paying my tenant’s water, gas or electricity bills because that would leave them with a much reduced incentive to conserve. It would also expose me to an even greater liability if they were to vanish and I try to recoup any lost rents through what is known as the Tenants Protection Act. This Act gives virtually no protection to the landlord in such circumstances but that is an issue for another day.
 
I note also that the annual ceiling for rent increases calculated by the Ontario government also does not distinguish which party actually pays for utilities?

Please let me know if you will be asking your department to at least analyze this suggestion.  I am not your average "wacko"... indeed I have many years of experience working on tax policy issues at the federal level so perhaps that at least makes me a special "wacko" but with experience.
 
I would be pleased to actually get an acknowledgement of receipt of this suggestion and/or a phone call if your departmental staff need any further elaboration.