Wednesday, August 29, 2007

Ontario NDP Gets the Property Tax Problem

Congratulation to Howard Hampton and the Ontario provincial NDP for calling for property tax reform!
Their "Freeze Till Sale" proposal would see property values frozen at time of sale (unless rented out and/or $40,000 or modifications are made).

The impact of this is that speculators definitely will face the impact of valuation increases not average home owners.

Unfortunately this well-intentioned idea still allows municipalities to increase mill rates at whatever level they wish. So the problem of property taxes going up faster than many can afford won't go away.

The NDP idea, though, will make it politically more difficult for rates to go up as such increase will be large and visible. Instead, we would like to see rate increases capped to the rate of inflation.

Good for the NDP for seeing the problem and trying to address it.

1 comment:

shapper said...

More than a decade ago the Ontario provincial government embarked on property tax reform – The Ontario Fair Assessment System – that claimed to be “fair, consistent, and clear”.

At that time, the government’s promotional materials made the point that it is “unfair” that similar homes “getting the same services” are paying vastly different taxes. During the ensuing decade property tax disparities have demonstrably worsened.

A system of property taxation that is based on alleged, estimated “market value” is arbitrary, subjective, capricious, unpredictable, and not rationally or objectively linked to the services attributable to a property.

The following unfair aspects of the current system need to be eliminated:

1: Assessments based on the alleged desirability (market value) of a property, which in an often-volatile real estate market can be irrationally, emotionally and/or otherwise artificially inflated.

2: Assessments artificially high based on scarcity or limited availability – demand exceeding supply, thus leading to long-time owners of properties being forced to sell because of excessive and punitive tax increases unrelated to provision of services – e.g. cottages.

3: Assessments that, in effect, result in a recurring, annual ‘Capital Gains Tax’ – property owners repeatedly taxed on an alleged but unrealized capital gain.

4: Assessments that are artificially low because they are obtained by differing processes and/or inconsistently subject to many exceptions, special categories, and adjustments - such as ‘capping’ for groups that are able to mount an effective lobby. Influential people are also able to take advantage of special treatment afforded to agricultural or conservation lands – such as horse-racing hobbyists qualifying as farmers.

5: Assessments that discourage home improvements and upkeep, since such work will potentially make the property more desirable to others and thus incur higher taxes.

6: Assessments resulting from the false assumption that owners of more desirable properties are wealthier and better able to pay high taxes than owners of less desirable properties.

7: Assessments resulting in a significant shift of the tax burden from owners of properties deemed less desirable, to owners of those that are purportedly more desirable, either because of location or limited supply.

8: Assessments artificially affected by real estate speculators and by decisions of regulators who through unpredictable regulations, like the GTA ‘Greenbelt’, create an artificial shortage or otherwise influence the market value of particular types of properties.

9: Assessments bearing no logical/rational relationship to the costs incurred by municipalities and the province to supply those services that are funded by property taxes, nor to the quantity of those services available to or consumed by a particular property. In an age where we need to become more conscious of what we consume there should be economic advantages accruing to those who make fewer demands on governments, not tax punishments that have no linkage to actual service consumption. For example, someone who invests in green energy on their property would incur higher taxes as a result of making their property more desirable.

I am writing to urge you, your colleagues, your clients, and all Ontario citizens and property owners to ask the provincial government to introduce legislation that will make the assessment system truly fair and predictable by eliminating the capricious and unpredictable nature of current assessment methods, to be replaced by objectively determined criteria that would be linked to the actual costs of the government services funded by property taxes.

Please review and sign the online petition at:

which will be forwarded to the government and the Ontario Ombudsman.

Robert Shapton

CTF You Tube Channel

Canadian Taxpayers Federation's Fan Box