The City of Montreal will cap property tax increases at 1.8% in 2025.

The limit will apply to homeowners and businesses, city officials announced recently.

“We want to assure the population because people are stressed,” the head of the city’s executive committee, Luc Rabouin, told reporters during a news conference.

“There’s been an increase in the cost of living over the past few years, an increase in rental costs, an increase in the cost of groceries … so we want to tell them right away, ‘don’t worry.'” 

The cap will also provide some relief for commercial property owners and tenants who have grappled with high interest rates and inflation, including higher mortgage expenses and construction-materials expenses, in the past two years. (Although property taxes are charged to real estate owners, their effects trickle down to tenants in the form or higher leasing expenses.)

But some property owners in certain parts or the city could still face larger increases.

Montreal’s local governance model operates under a borough system. The overall city administration’s share accounts for 87% of the total property tax, CBC reported. Meanwhile, individual boroughs set their own property tax rates while relying mostly on transfers from the overarching municipal government.

Boroughs are headed local mayors who are, essentially, city councillors. Rabouin, who doubles as the mayor of Plateau-Mont-Royal borough, told reporters that the city will be transferring 1.8 per cent of tax revenue to the boroughs, and that move should “facilitate their decisions” to also hold the line on inflation. 

“Of course, we all have a challenge to offer quality services to the population but [also] to respect their capacity to pay,” he said.

“So we made the effort at the city level and all the boroughs [also have to] make the effort,” he said during the news conference.

But the central government’s cap falls under the Villeray–Saint-Michel–Parc-Extension borough’s previously announced 3% hike, CBC reported. Rabouin called for boroughs such as Montréal-Nord, Anjou and Saint-Léonard boroughs to keep their hikes in check.

Those boroughs already have some of the highest property taxes in Montreal, according to CBC. But at the same news conference,

 But the proposed 1.8% cap received a rebuke from Alan DeSousa, Saint-Laurent borough mayor and Official Opposition finance critic.

“We all know that there’s an election in a year, and clearly they’re trying to put lipstick on a pig,” he told reporters.

He accused the central administration of pandering to voters as an election year approaches.

“If the boroughs are increasing [taxes], it’s because they are clearly wanting to not cut into essential services,” he told reporters.