Ontar­i­ans fac­ing rapidly ris­ing prop­erty tax bills due to sky­rock­et­ing real estate prices will get some relief from Queen’s Park’s tax reform

By Jeff Gray

Ontar­i­ans fac­ing rapidly ris­ing prop­erty tax bills due to sky­rock­et­ing real estate prices will get some relief from Queen’s Park, as the provin­cial bud­get aims to reform what the Finance Min­is­ter called the province’s “unfair and unpre­dictable” property-tax system.

Busi­nesses in many of the province’s towns and cities will also get a $540-million break — phased in over seven years — on the busi­ness edu­ca­tion tax, a chunk of the prop­erty tax bill that has long been unevenly applied across the province, which rates vary­ing by up to a fac­tor of four.

Finance Min­is­ter Greg Sor­bara and his Lib­eral gov­ern­ment have faced a kind of prop­erty tax revolt, with calls from Oppo­si­tion Leader John Tory for a cap, after the province’s ombuds­man slammed the sys­tem and the Lib­er­als brought in a two-year assess­ment freeze.

Under the changes in the bud­get, which come into affect with the next assess­ment due for 2009, prop­erty val­ues will be assessed every four years, instead of annu­ally. Any assess­ment increases will be phased in, also over four years, allow­ing tax­pay­ers time to adjust to any sharp swings upward.

The changes mean that a 20% increase in assess­ment val­ues, for exam­ple, would be brought in as 5% a year over the four years. Decreases would be effec­tive imme­di­ately, however.

“Every year, prop­erty own­ers don’t have to worry that the asses­sor got it right or wrong, will I have to make an appeal, how this is going to affect my life,” Mr. Sor­bara told reporters before pre­sent­ing the bud­get to the House. “This sys­tem is going to be fairer.”

In the text of his bud­get speech, he said his reforms were much fairer than Mr. Tory’s pro­posed cap, which “would tend to favour the more affluent.”

The Pro­gres­sive Con­ser­v­a­tive Leader said the plan was the prod­uct of the gov­ern­ment “scram­bling to put some­thing together.”

Mr. Tory said Pre­mier Dal­ton McGuinty was only offer­ing a tem­po­rary reprieve to strug­gling home­own­ers, say­ing: “You have four years to pack up and leave your home.”

Spi­ralling real estate prices, espe­cially in many Toronto neigh­bour­hoods, have left some res­i­dents scram­bling to pay prop­erty tax hikes. In some cases, seniors, or oth­ers on fixed incomes, worry they may not be able to stay in their homes.

Mr. Sor­bara also pledged to reform the sys­tem by which home­own­ers can chal­lenge their prop­erty tax assess­ments, which was crit­i­cized by the province’s ombuds­man as unresponsive.

Assess­ment appeals to the Munic­i­pal Prop­erty Assess­ment Cor­po­ra­tion, long crit­i­cized by many as con­fus­ing and dif­fi­cult. The bud­get out­lines changes, includ­ing “sim­pli­fy­ing” the appeal process and ensur­ing that more infor­ma­tion is shared with applicants.

Busi­ness groups and munic­i­pal­i­ties have long called for reforms to the busi­ness edu­ca­tion tax, which has rates that dis­crim­i­nate against busi­nesses in many cities and towns, charg­ing them more than in other places.

The lost rev­enue for edu­ca­tion will be replaced by Queen’s Park fund­ing, the gov­ern­ment says.

Busi­nesses clas­si­fied as com­mer­cial in Toronto will see their busi­ness edu­ca­tion tax drop by 22% by 2014, sav­ing $26-million, the bud­get doc­u­ments say. Indus­trial tax­pay­ers will see their taxes sink 19%, sav­ing $205-million.

Oth­ers will see steeper tax cuts at least in per­cent­age terms. Com­mer­cial prop­erty own­ers in Thun­der Bay will see their busi­ness edu­ca­tion tax sink by 55% by 2014, for example.

NDP Leader Howard Hamp­ton said the tax cut was likely good for small busi­ness, but was being phased in much too slowly.

“It may help some busi­nesses in six or seven years from now,” he told reporters. “But in terms of this year, not much.

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Con­tact the Jef­frey Team for more information