Feature Article January 8, 2004
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UNDERSTANDING THE PROPERTY TAX REGIME
At its Annual General Meeting in July of 2003 in the Legion Hall, the members of the Sharbot Lake Property Owners Association (SLPOA) expressed uneasiness, confusion, and even some irritation about the whole bundle of property tax issues: property assessments, role of the Municipal Property Assessment Corporation (MPAC), the municipal budget, services received for taxes paid, and so on. In the course of the numerous comments and observations made at the meeting it was proposed, and members agreed, that the SLOPA should establish a Tax Committee. This was done.
The Tax Committee, consisting of 10 active members and with me in the Chair (as Vice President of the SLPOA), has had four meetings in real-time and has met over the internet (!) on many other occasions since last July. Among our many observations and conclusions to date, the following may be of interest to readers of the Frontenac News. We intend with this article to set the stage for future articles on this important subject.
First: property tax issues are of interest to many more area residents than those who are members of the SLPOA. This is a subject with a wide audience. This is why we decided to publish what our Committee learns about the subject over the next months and - quite likely - year or two. We will be interested in feedback from readers of the News, whether you are members of our Association or not.
Second: to have a meaningful debate on the whole bundle of property tax issues requires the issues to be unbundled. In this article I will share with readers how the Tax Committee has done this.
Third: as the property tax issues become more clear, and as debates on the various elements of the tax regime pick up, improvements and changes to the regime will require a high level of consensus among all of us who pay property taxes. The goal of the Tax Committee is therefore to work with other interested parties and with the municipal government, not to just complain and throw stones. Indeed, the SLPOA has recently written to the Mayor proposing that the Municipal government engage a student or two to make a short study of property assessments in our area and provide us with an objective sense of whether assessments appear generally fair across the board, for all property owners. The SLPOA would also be pleased to participate on a Municipal Task Force on Property Tax if such a body were to be set up.
At the Annual General Meeting last Summer it was clear that if a property owner perceives he or she is being treated unfairly there is very little patience for a much broader discussion on tax issues. If unfairness in assessments is part of the problem then it must be addressed. This is why our letter to the Mayor proposed a study on the matter. If a student or two were hired to do the job there would also be an employment opportunity in the early Summer after schools and universities are out.
The SLPOA Tax Committee has unbundled the tax issues into three distinct (but always related!) subjects: the role of the Municipal Properties Assessment Corporation (MPAC), its accountabilities, and so on; the budget(s) which property taxes support, with a focus on the Municipal budget; and, tax rates. As we clear up our own understanding of each of these three subjects, and how they interrelate, we will share what we learn.
To set the stage for future articles, let me say clearly what others have said in letters to this Paper and to other papers such as the Ottawa Citizen:
Increases in property assessments do not mean that the amount of tax paid by a property owner will go up!
Because we often assume that increases in assessments and increases in taxes go hand-in-hand, we property owners often find ourselves focussing our debates on assessments. If MPAC is doing its job properly, however, and if an objective assessment affirms that property assessments are generally fair, you can see that focussing our debate on the value of our properties will not get us very far. We will find ourselves in the curious position of arguing that our properties - of which we usually are very proud and which we would sell for top dollar if we had to - are really kind of awful and not worth very much at all!
In fact, increases in taxes has a direct relationship to the amounts set in the County, Education, and Municipal budgets. The budgets is where it really all begins, and the budgets support services. What those services are, and who provides the services says a lot about whose budget a tax payment goes into; and, depending on who provides the services, there may or may not be an alternative to property taxes to provide the money that is needed.
Tax rates impact primarily on the relative shares we pay as tax payers. Our relative shares differ on account of tax category (commercial, residential, or farms) and on account of property values...which gets us back to the fairness issue.
There are so many aspects to the tax regime that merit discussion among us. I hope that this article and the ones which follow will help us have that discussion. Along the way we hope to influence short term decisions as well as longer term options. As one of the members of the Tax Committee has put it, we are interested in education, but also in holding decisionmakers to account, and in longer term reforms. So Municipal and provincial government representatives can expect to hear from us!
And let me end on a very short term issue indeed: the recent increases in property assessments, reported upon in the December 11 edition of this paper, do not mean that property taxes should now go up to the same extent the assessments have gone up. Indeed, it is quite possible for taxes to still go down for many of us! It is all a question of budgets and relative shares.
The recent increases in property assessments provide us with an interesting and perhaps important learning opportunity: increases in property values can be a good thing for our community and for our personal sense of material worth and security. Let us not ruin the moment by equating increased property values with one-for-one increases in taxes. If we do that, then we may even resent the fact that Central Frontenac is becoming a more attractive and more valuable piece of Ontario.
