Unincorporated areas soon to see land tax reform

The Ontario government is finalizing details on tax reform for unincorporated territory across the province.
Under the current system, all properties in unincorporated territories are taxed with a provincial land tax (PLT) rate of 1.5 percent using assessed property values that haven’t been updated since the 1940s.
With the tax reform, property values in unincorporated areas will be reassessed under the Current Value Assessment (CVA) formula that’s already being used across the province for municipal, education, and interim-provincial taxation.
When the province originally moved to this CVA format back in 1998, unincorporated areas were not included.
New PLT rates will be finalized early next year, but the Ministry of Finance has released what the maximum rates will be for each property class:
•Residential and multi-residential properties within school boards will see a maximum tax rate of 0.0023 (0.23 percent);
•Residential and multi-residential properties outside school boards will see a maximum tax rate of 0.0004 (0.04 percent);
•Farmland and managed forests within school boards will see a maximum tax rate of 0.0006 (0.06 percent);
•Farmland and managed forests outside school boards will see a maximum tax rate of 0.0001 (0.01 percent);
•Commercial properties both inside and outside school boards will see a maximum tax rate of 0.0012 (0.12 percent); and
•Industrial properties both inside and outside school boards will see a maximum tax rate of 0.0006 (0.06 percent).
To calculate a property tax bill, the property’s estimated value is multiplied by the maximum rate. There is a minimum $6 tax for each property.
According to the Ministry of Finance, under this system, 50 percent of properties owners will see a decrease in what they’re paying, 45 percent will see an increase by no more than $150, and five percent will see an increase by more than $150.
These figures are based upon 2005 assessed values, said Ministry of Finance media relations officer Scott Blodgett, and could change for 2008, but not by much.
Changing the PLT from 1.5 percent to lower numbers, while having property assessments rise in value, means the government’s revenue from PLT will remain at about $10.5 million, he noted.
“Generally speaking, if your assessment increases more than the average, you will pay more. If it increases less than the average, you will pay less,” Blodgett explained.
The ministry will be mailing all property owners individually with information about the reform, including assessment notices in the fall.
“If a property owner is seeing a tax increase above $150, the property is both relatively high-valued and had its assessment grow relatively fast compared to others in its class and jurisdiction, i.e., inside or outside school boards,” said Blodgett.
But some people are going to have a hard time affording these changes to the taxation system, warned Ontario NDP leader and Kenora-Rainy River MPP Howard Hampton.
“[The government has] been very vague about what the overall tax increase will be,” he said. “But if you sit down with a calculator and figure it out over a four-year period, each year it’s going to go up by probably by about $100. It’s going to be a hefty tax increase for people.”
Hampton also noted most people who have property in unincorporated areas get very little in the way of services, such as fire protection, sewer, water, or even building and maintaining roads.
“So that’s the other side to this picture,” he said. “That for a substantial tax increase, there’s absolutely no guarantee that these people are going to see any government services or any increase or improvement in government services, or at least the services that are ordinarily associated with the property tax.
“Yes, the provincial land tax was low, but people were not getting municipal services at all,” stressed Hampton.
“I think there was a rationale for paying a lower land tax,” he added. “There’s no property tax services or services that are ordinarily being associated with the property tax that were being provided for them.
“So in the context of things, this is going to be a very substantial tax increase for people—and people should know about it.”
Yet according to Hampton, public knowledge of these tax changes isn’t there, and the government has been keeping the tax reform off the public radar screen.
“For a government that says they weren’t going to raise taxes, this is called raising taxes through the back door and they’re hoping that no one will notice,” he charged.
Consultation meetings announced only a week or so before they occur, and being held during weekday mornings, makes them inaccessible, Hampton said.
These meetings should have been held in each community, not just in a few locations, he argued.
The closest information sessions to Rainy River District were held yesterday and this morning in Kenora and Dryden. Blodgett said locations were chosen by the ministry based upon letters, e-mails, and calls received on the PLT to maximize access for interested individuals.
The ministry also plans to hold one or more evening teleconferences to accommodate those who are not able to attend these sessions.
Further questions or comments, and information on the land tax reform, can be found through the Ministry of Finance’s website at www.fin.gov.on.ca or by telephoning the Ministry of Revenue’s call centre at 1-866-668-8297.