Financial Foundations Framework

Property Tax Disrupted

Property Tax Disrupted

Technological change has “disrupted” many traditional industries. Some of the most notable include print media, telecom, retail, and music. Some cities have firsthand experience with rideshare technologies like Uber and Lyft disrupting the traditional taxi industry. Many more local governments, though, have experience with technology disrupting traditional revenues.

The effect of online retail on sales taxes is perhaps the most obvious example of local government revenue disruption. More recently, short-term rental platforms, like Airbnb, disrupted local hotel taxes. Technology has also begun to disrupt the biggest local government revenue of them all: property taxes. Property tax is the largest revenue generated by local government in North America. In the U.S., for example, it accounts for about 30% of all revenues generated by local governments.

It might seem that because the property tax is rooted in physical land use, it would be insulated from technology-led disruption. There is no single, big, obvious technological force we can point to as a disruptor like we can for hotel taxes and Airbnb or sales taxes and online retailing. However, many less obvious 21st century technological forces are conspiring to reduce the relevance of property taxes, which have been in use in North America since at least the mid to late 1600s.

The Region of Peel, in Ontario, recognized this disruption and decided to do something about it.