How does the City determine how much property tax I have to pay?

Your property taxes are calculated using the Current Value Assessment of your property (as determined by MPAC - the Municipal Property Assessment Corporation) and multiplying it by the combined municipal and education rates for the applicable class of property.


 Simple property tax calculation formula (click to expand)

The following is a simplified explanation of the complicated process of calculating property tax rates:


Step 1) Calculate the Total Municipal Tax Levy Requirement

Base Budget
+ One Time Items
+/- User Fee Changes
- Reductions
+ Expansions
+/- Change in Provincial Funding and Other Revenues
+ Capital Financed by the Tax Levy
= Total Municipal Tax Levy Requirement


Step 2) Calculate the Amount to be Raised by Taxation

Total Municipal Tax Levy Requirement
- Taxation Revenue not based on Assessment (Example: Railway or Airport Levy)
= Amount to be Raised by Taxation


Step 3) Update Tax Ratios

All property classes have a defined ratio, relative to the Residential Class which is set at 1.000. By comparison, the ratio for the Commercial class in 2023 was 1.98.

Tax policy refers to changing a non-residential ratio, which transfers the tax burden to other property classes.


Step 4) Tax Rate Calculation

Total Amount to be Raised by Taxation Total Assessment
x Tax Ratios


 What is City Council's role in the budget process?

 City Council has tough decisions to make:
  • Which services are essential and need more funding?
  • Should any services be reduced or not offered anymore?
  • How much should we charge for certain services to keep them running without burdening you too much?

What role as a Resident do you play?

You also play an important role in shaping our budget. By learning about the budget process, providing feedback, attending City meetings, and talking to your Councillor, you can make sure your voice is heard. Your input helps ensure that the City Budget meets the practical needs of residents and also reflects our community’s values and priorities. Get involved—it’s your city, your home, and your future.

Budget Glossary

You may see or hear the following terms when reading or engaging with the City Budget. Click each one to expand for a definition.

 Infrastructure such as roads, vehicles/equipment, parks, sidewalks, trails, streetlights, playgrounds and buildings
 Base budget
 A budget with the same staffing, service levels, and user fees as previous years including increases/decreases in costs for existing staff and services as well as revenue trends.
 Capital budget
 The City’s plan to purchase, build, maintain, repair and replace assets including infrastructure such as roads, vehicles/equipment, parks, sidewalks, trails, streetlights, playgrounds and buildings. Capital budget can also include budgets for projects that span multiple years.
 Capital financed by the tax levy
 The portion of the Capital Budget that is paid for by property taxes as opposed to grants, transfers from reserves or other funding sources.
 A type of long term loan used as partial financing for major capital projects. The debt, including interest, is repayable over 10 to 25 years. Debenture debt spreads the project costs and related tax or user fee increase over a number of years and ensures that future taxpayers/ratepayers pay their fair share of capital projects being completed today.
 Education Tax
 A tax, collected as a part of the property tax, that is used to fund the cost of elementary and secondary school education. The Ministry of Finance sets the education rates for all property classes annually. The municipality forwards the education taxes levied to applicable school boards using a formula established by the province.
 Enhanced Infrastructure Renewal Program (EIRP)
 A special component of the Capital Budget that is paid for by property taxes as opposed to grants, transfers from reserves or other funding sources. EIRP was introduced in 2011 as an incremental strategy to address the infrastructure deficit through increased capital out of revenue funding. EIRP is restricted only for capital renewal and replacement of existing assets in the following categories: Pavement rehabilitation, road network improvements, bridges and culverts, streetlights, sidewalks, storm sewers, parks and facilities.

 An increase in budgeted staffing levels or service not related to a one-time item. 

 Full-Time Equivalent (FTE)
 An employee works 1820 hours a year if they work on a full-time basis. This is used to convert the hours worked by several part-time employees into the hours worked by full-time employees. When a business employs a significant number of part-time staff, it can be useful to convert their hours worked into full time equivalents, to see how many full-time staff they equate to.
 Gross Operating Budget
 Expenditures (e.g. wages/benefits, supplies, contracted services, utilities, payments of legislative levies, debt payments etc.) required to deliver day to day City services.
 Infrastructure Gap / Annual Infrastructure Deficit
 The gap between capital funding required to maintain the assets in accordance with asset management plans and the current Capital Budget.
 Municipal Tax
 The tax amount and payment-in-lieu of taxes that is calculated using the applicable general and special area tax rates. The general tax rate is applied to all properties to fund the services required to operate the municipality as determined in the budget process. Special area tax rates are applied to properties within areas that benefit from additional services. Municipalities are responsible for setting both the general and special area tax rates to fund all provided services. Municipal taxes do not include education taxes.
 Municipal Tax Levy
 The total of all municipal expenditures funded by property taxes.
 Net Operating Budget
 Expenditures required to deliver day to day City services less certain revenues received by the City (e.g. user fees, specific grants, building permit fees etc.) and transfers to/from reserve funds.
 Net Taxable Assessment Growth
 The additional taxation revenue the City receives from new assessment generated by construction activity (expansions and new buildings) less lost assessment from demolitions and successful assessment appeals.
 One-Time Items
 Budgeted expenses and revenues that are temporary in nature (e.g. pilot program, one time grant).
 Property Class
 A category assigned to each type of use that occurs on a property. Descriptions are set out in provincial legislation to identify the criteria for residential, new multi-residential, multi-residential, commercial, industrial, pipeline, farm, and managed forests property classes. A municipality may adopt optional classes (office building, shopping centre, parking lots and vacant land, residual commercial, large industrial, professional sports facility and resort condominiums) by by-law. Thunder Bay currently has adopted the New Multi-Residential and Large Industrial property classes.
 Rate Supported Budget
 The portion of the City’s budget that is fully funded by fees that are only applied to the users of the service. These rates are separate from the property tax bills. The rate supported budget includes Waterworks, Wastewater, Solid Waste (Landfill), and Prince Arthur’s Landing – Boater Services.
 A decrease in budgeted staffing levels or service not related to a previous one-time item.
 Reserves/Reserve Funds
 Monies set aside for specific purposes, including both operating and capital budget items. There are two types of reserve/reserve funds:
  • Statutory/Obligatory – municipalities are required by legislation to establish certain reserve funds (e.g. Canada-Community Building Fund)
  • Discretionary – can be established by City Council for a specific purpose (e.g. Tax Assessment Appeals, Recreation Trails).
 Special Service Area Tax Rates (or Urban Service Area Tax Rates)
 A tax rate associated with a service or activity of the municipality that is not being provided or undertaken generally throughout the municipality, or is being provided or undertaken at different levels or in a different manner in different parts of the municipality. The City has a special area rate for garbage, public transportation (transit), sewage and drainage (storm water), and street lighting.
 Tax Ratios
 The relationship between the municipal tax rate for the residential class and the tax rates for other property classes. The residential class is the basis for comparison for other classes, so its tax ratio is always 1.0. If the tax ratio for another class has a value of 2.0, the tax rate for that class when measured against the residential rate is two times more. Municipal Councils can to change tax ratios to some extent within parameters established by the province.
 Tax Supported Budget
 The portion of the City’s budget which is funded through property taxes and funds a variety of services that contribute to the health, safety and quality of life in the City of Thunder Bay such as:
  • Roads
  • Parks and Open Spaces
  • Emergency Services (Thunder Bay Police, Thunder Bay Fire Rescue, Superior North Emergency Medical Service)
  • Recreation and Culture
  • Planning Services
  • Pioneer Ridge, Long Term Care and Senior Services
 Threshold Ratios
 In 2001, the Province introduced “threshold ratios” for Multi-Residential, Commercial, and Industrial property classes. If the commercial or industrial tax ratio is above the threshold ratio, only 50% of the property classes’ share of the general municipal levy increase can be passed on to that class. The other property classes must assume the remaining 50% of the tax increase that is not permitted to flow through. If the multiresidential tax ratio is above the threshold ratio, a full 100% levy increase restriction applies. This restriction does not apply to urban/special service levy increases.
 User Fee
 Money paid for a service, like admission to the pool or green fees at the golf course.
 User Fee Changes
 Portion of budgeted revenues that relate to a change to the rate of a user fee (not related to change in consumption/up-take of user fee).



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