Assessment system needs to be fixed

February 18, 2015   ·   0 Comments

THERE’S NO DOUBT about it: promises of a “zero per cent” tax increase are keys to political success. That certainly was the case in Orangeville last fall, when Jeremy Williams’ promise to vote against even an increase in the Town’s budget helped him defeat Mayor Rob Adams.

But now some chickens are coming home to roost, thanks in large part to the complexity of Ontario’s system of market value assessment and its subjectiveness, which can lead to challenges by every type of property owner.

Nowhere is this more evident than in Orangeville, where major commercial property owners like Walmart, Canadian Tire and Loblaws have challenged a reassessment process carried out more than three years ago that set values as of the start of 2012.

Budgeting in a hypothetical community that had a stable population would be relatively simple. In the absence of inflation, the local council would be able to hold the line on taxation by simply keeping to the previous year’s level of spending. The tax levy would be the same as last year and with it the level of each property’s tax.

But in the real world everything’s a dynamic, and in Ontario the advent of market value assessments determined every four years by the province’s Municipal Property Assessment Corporation (MPAC) has led to situations where it’s virtually impossible for local politicians to keep such promises.

As explained by Town Treasurer Brian Parrott, the 2012 reassessment has made it impossible to assure all property owners that their taxes won’t increase this year.

That’s because the 2012 reassessment led to a finding that while the average increase in property values since 2008 was about 10 per cent, some properties had significantly bigger or smaller increases in their deemed value.

And that, dear readers, is because it’s really “all in the eye of the beholder.”

In this case, the beholders are thousands of employees of MPAC, which boasts in its website that it is “the largest assessment jurisdiction in North America, responsible for accurately assessing and classifying nearly five million properties in Ontario in compliance with the Assessment Act and regulations set by the Government of Ontario.”

And nowhere is the challenge of “accurately assessing and classifying” properties more challenging than when it comes to commercial and industrial properties which haven’t changed hands. For example, how would you assess a half-empty commercial property like Orangeville Mall, or any plaza with a Target “anchor” that’s set to close?

And as complex and potentially unfair as assessments can be, they can become ridiculous when, as in the case of wind turbines, provincial legislation prevents the use of market value and simply places a lid on taxes that’s a tiny fraction of their real value.

The solution? As we see it, an ideal situation would see MPAC scrapped altogether, and the job of setting assessments returned to municipalities, who would have the option of replacing subjective appraisals with easily calculated measurements of each property.

Although property taxes were a primitive form of income tax, based on the assumption that owners of large homes or businesses could afford to pay more than the average owner, there’s no good reason today for having pensioners who want to stay in their large homes pay more property taxes than couples or individuals who prefer to live in a small condominium.

It would make more sense to base property taxes on the size of the lot and the occupiable space in the home or business place, with the tax rate on each being determined annually by the municipal council, based on the municipality’s revenue needs that year.

While such a system wouldn’t be perfect, it would cost far less while encouraging owners to keep their properties in good shape.

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