Railway taxation must change

Way back in 1904, H.J. Pettypiece, MPP, addressed the Empire Club at a noon luncheon and his topic of conversation was the taxation of railways.
He complained then that Canadian railways were not paying their fair share of taxes to villages, towns, and cities in Ontario.
Some 112 years later, Fort Frances Coun. Ken Perry is pushing for railways to pay their fair share of taxes to the towns, cities, villages, and First Nations across the province.
Railways are federally-regulated and the Province of Ontario controls the amount of taxation that can be charged by municipalities to railways operating in the province. Railways do not pay taxes; instead, they offer a grant to communities.
For 102.75 acres of actively-used industrial lands and right of ways, the CN pays the town a paltry grant of $3,622.97. A business with one acre of vacant industrial land would pay the Town of Fort Frances $446 in taxes.
The 102.75 acres owned by the CN would produce roughly $45,500 in tax revenue for the town as vacant industrial property.
In addition, there are roughly $16 million in improvements to the land based on the value of installing track (CN has about 20 km of track through Fort Frances).
What the CN pays in lieu of taxes is far less than most homeowners pay.
Fort Frances is not alone. Rainy River, Morley, Chapple, Rainy River First Nation, Emo, La Vallee, Alberton, and Couchiching also are deprived of sizeable funds by the province’s special agreement with Canada’s railways.
Back in 1904, Canada funded the almost 20,000 miles of track across the country while towns and cities received very little in tax revenue back. Back then, Manitoba taxed the earnings of the railway while Quebec received a five percent royalty from the railway.
In 2014, the City of Toronto sought more funding from the railways through provincial legislation. The province agreed and increased Toronto’s tax rate for railways and hydro transmission lines.
Then in May of this year, the federal government agreed in an amendment to the Indian Act that First Nations could levy taxes on railway right-of-ways running through their reserves.
The request for change in the legislation had come in 2014 from the Kanaka Bar Indian Band. The legislation allows the band to set taxes on 100 percent of the assessed value of the railway properties.
The provinces of Manitoba, Saskatchewan, Alberta, and British Columbia in recent decades have allowed municipalities, towns, and cities to tax railways on 100 percent of their assessed value.
Railways in Manitoba, Saskatchewan, and Alberta are assessed on tonnage, length of track, and the land that comprises the property in the communities that lines pass through.
With Fort Frances having the greatest number of trains hauling freight into the heart of the United States, the tonnage factor would be substantial if the province were to follow the pattern of the western provinces and the taxation benefits to Fort Frances and the towns in the western portion of Rainy River District.
For communities across the four western provinces, the taxes are an important source of municipal revenue helping to offset local residential taxes.
Coun. Perry has suggested the 102 acres of railway right-of-way and railway improvements that are found in Fort Frances could result in a tax bill to the Canadian National Railway of more than $1 million compared to today’s $3,622.97 sum.
Town council, through the Northern Ontario Municipal Association, pushed the Association of Municipalities of Ontario to demand action from the Wynne government. A committee has been struck to study the railway taxation issue, with a representative from the Town of Fort Frances appointed to it.
A couple of meetings have been held but no resolution appears in sight.

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