29 October 2004
Ms. Cindy Ryder, Policy Analyst
Dear Ms. Ryder;
As a representative of the Thunder Bay District
Unincorporated Ratepayers Association, I was disappointed that I was not able to
participate in the discussions on Provincial Land Tax (PLT) held in
There is no question that the PLT is in need of an overhaul. Both the assessment used and the tax itself have outlived their usefulness. This overhaul could reasonably take one of two paths:
Current taxes and assessments:
As I am sure you are aware by now, property taxes in the unincorporated areas take a number of forms. We have the PLT with associated amounts for Local Services Boards where they exist; Local Roads Board taxes where Roads Boards exist; school taxes for properties within school district boundaries; and a surtax on school taxes which varies between school districts and is sent straight into provincial coffers. Some properties pay only PLT; others pay some combination of the above smorgasbord.
Of particular interest to me is the surtax collected by the
school board. This is submitted directly
to the Province and is therefore essentially another PLT. At present, in the
Assessments:
At present, only the taxes collected by the school boards are using a market value assessment. PLT, Local Services Board taxes and roads taxes all use the MNR assessment. I would support a straight market value assessment for all taxes, provided the transfer from one system to the other is strictly revenue-neutral. It would seem to be easy enough to switch, as most properties have a market value assessment attached already. Only those properties outside of school districts would need to have a new market value assessment done.
Inequities:
I would like to address two different types of inequities presently existing in our property tax system.
First, there are two businesses, farming and managed forests, which pay only 25% of the local property taxes which are assessed to everyone else. (This is achieved by assigning these businesses a tax assessment of only 25% of market value.) This is inequitable for two reasons. To begin with, the tax burden is shifted to other local taxpayers, although we have no say in what subsidy level (if any) we want to extend to these businesses. Second, the forest business in particular is costing the local taxpayer a tremendous amount in road repairs alone. In my township I estimate at least 20% of the annual road repair budget goes to repair damages done by logging operations. If the Province wants to extend tax relief to these businesses, let the Province rebate the amount out of provincial coffers.
The second type of inequity is systemic. Municipalities are eligible for provincial and federal subsidies which the unincorporated areas cannot access. For example, the federal gas tax rebate will go only to municipalities. This means that the unincorporated areas, although relatively poorer, will be subsidizing the municipalities through the gas tax. This extends right down to provincial programs as well. For example, the smaller municipalities in our area are eligible for provincial subsidies for roads which amount to more than twice as much per kilometer of road than the local roads boards receive. Overall, these municipalities got approximately 40% of their budget from the provincial coffers. Yet our Local Services Board (our quasi-municipal structure for unincorporated areas) receives no subsidy for its’ services. Again, since we all contribute equally to the provincial budget, this is effectively a subsidy from the unincorporated to the richer municipalities.
What the property taxes will support:
This brings us to the central question of this tax-reform exercise: What will a new PLT fund?
By their very nature, property taxes are a regressive
tax. Further, since the amount of land
is fixed, property taxes are unsuitable for programs whose costs are rising
faster than the rate of inflation. This
is particularly true in
With that in mind, my position as a representative for the unincorporated ratepayers is that any tax which is levied on property must have a clear purpose, must go to local programs, and must have a degree of control given to the local taxpayer.
A clear purpose means that every amount collected through a property tax must be identified. If it is for policing, state the rate and the amount for policing. That amount should then appear in the policing budget for the unincorporated areas. This is clearly seen in the present taxes for Local Services Boards, at the bottom of the PLT form. Each service is listed, along with the tax rate.
Local programs are those directly administered in the District. We do not support our property tax dollars going into the provincial general revenue fund.
Taxpayer control means that the taxpayer must have a say in the tax rates for any replacement PLT. The only way to contain costs – to allow the poor and the folks on fixed incomes to continue to afford their homes – is to allow taxpayers the chance to vote on their taxes. This is also done with Local Services Boards budgets; everyone has a chance to vote on the tax rate every year.
Summary:
With these ideas in mind, I would like to suggest what a reformed PLT might look like.
First of all, it would be based on a market value assessment (which would also be used by Local Roads and Local Services Boards). Then I would limit the services for which we might be taxed to those services which can be offered by an Area Services Board. Finally, I would scrap the PLT and the associated school surtax as they presently exist, and allow Area Services Boards and/or District Social Services Boards to directly tax for the services they offer. This taxation ability would be subject to taxpayer approval if any tax increase for a year exceeded the Consumer Price Index.
Thank you for your time in reviewing these ideas. I hope to have an opportunity to comment on any proposed legislation before it is presented for a first reading in Parliament.
Sincerely,
Fred Mueller
R. R. # 1
e-mail: silvermt@vianet.ca
Cc: Ms. Catherine Shepherd, David Leskowski, Paul Hogan