Provincial Property Tax System
The Strategic Policies and Priorities Committee:
(1) recommends the adoption of Recommendation (2) embodied in the following
transmittal letter (March 26, 1998) from the Assessment and Tax Policy Task Force
as follows:
"(2) that the Province of Ontario be requested to:
(a) end the business education tax rate that forces Toronto businesses to
pay more education tax than other businesses in Ontario; and
(b) re-evaluate in 1998, commercial and industrial properties, with the
idea of having an average of the 1996 and 1998 figures as being the
property assessments to be used.";
(2) submits without recommendation, the following Recommendation (1) embodied in
the aforementioned transmittal letter to Council:
"(1) that the following resolution be adopted:
WHEREAS there have been problems identified with the methodology
utilized by the Province of Ontario in the creation of the new Current Value
Assessment (CVA); and
WHEREAS highest and best use is an unfair assessment tool; and
WHEREAS there is insufficient time before the return of the Tax Roles
(April 30) to explore meaningful measures for long term solutions to assist
those hardest hit by the negative impacts of CVA in the business community;
and
WHEREAS it is generally believed that Graduated Commercial Rates would
result in an unfair and unworkable tax system;
THEREFORE BE IT RESOLVED that the Province of Ontario be requested
to defer implementation of the commercial, industrial, residential and multi-residential components of CVA for at least one year to allow time to explore
measures for long term solutions."
The Strategic Policies and Priorities Committee submits the following transmittal letter
(March 26, 1998) from the Assessment and Tax Policy Task Force:
Recommendations:
The Assessment and Tax Policy Task Force on March 23, 1998, recommended to the Strategic
Policies and Priorities Committee and Council:
(1) that the following resolution be adopted:
Whereas there have been problems identified with the methodology utilized by the
Province of Ontario in the creation of the new Current Value Assessment (CVA); and
Whereas highest and best use is an unfair assessment tool; and
Whereas there is insufficient time before the return of the Tax Roles (April 30) to explore
meaningful measures for long term solutions to assist those hardest hit by the negative
impacts of CVA in the business community; and
Whereas it is generally believed that Graduated Commercial Rates would result in an
unfair and unworkable tax system;
Therefore be it resolved that the Province of Ontario be requested to defer
implementation of the commercial, industrial, residential and multi-residential
components of CVA for at least one year to allow time to explore measures for long term
solutions"; and
(2) that the Province of Ontario be requested to:
(i) end the business education tax rate that forces Toronto businesses to pay more
education tax than other businesses in Ontario; and
(ii) re-evaluate in 1998, commercial and industrial properties, with the idea of having
an average of the 1996 and 1998 figures as being the property assessments to be
used.
The Assessment and Tax Policy Task Force reports, for the information of the Strategic Policies
and Priorities Committee and Council, having requested the Chief Financial Officer and
Treasurer to:
(1) report to the Strategic Policies and Priorities Committee and Council, on the resolution
set out in the foregoing recommendation No. (1);
(2) report back to the Assessment and Tax Policy Task Force:
(i) on whether or not the City should examine an assessment system based on the
average of a property's 1997 assessment (appropriately normalized), 1988 MVA
assessment, and 1996 CVA assessment, and the legislative amendments that
would be required to effect such;
(ii) with information as to the number of sales in each category taken into account in
establishing assessed values in each category, and also the number of vacancies
for commercial and industrial properties during the assessment period;
(iii) on the taxation of golf courses in the City; and
(iv) on whether or not another supplementary tax bill based on 1997 rates can be sent
out;
(3) report back to Assessment and Tax Policy Task Force on the idea of City Council
requesting the Province to:
(a) implement business reassessment on the basis of value in current use; and
(b) provide City Council with the power to cap total business property tax increases
for individual properties; and
(4) work with the Province in detailing the regulations and legislative changes that may be
required and report to the Strategic Policies and Priorities Committee and Council on the
implementation of the above.
Background:
The Assessment and Tax Policy Task Force on March 23, 1998, had before it communications
from the following with respect to the Provincial Property Tax System:
- (March 19, 1998) from Councillor McConnell; and
- (March 23, 1998) from Councillor Bossons.
The Chief Financial Officer and Treasurer gave a slide presentation on her findings with respect
to the Commercial Graduated Tax rates, and provided copies of her report titled "1996 CVA City
of Toronto Commercial Properties, Graduated Tax Rate Options", as well as a Summary of the
Commercial Graduated Tax Rate Scenarios Preliminary Estimates.
Mr. Larry Hummel, Director of Appraisal Services, Property Assessment Division, Ontario
Ministry of Finance, gave a slide presentation and provided copies of a document titled "Property
Valuation Overview - Ontario Fair Assessment System".
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(Communication dated March 19, 1998, addressed to the
Assessment and Tax Policy Task Force, from
Councillor McConnell)
The Task Force on Assessment and Policy has done a great deal to clarify the impact of the
provincial government's new tax system.
I have met with business leaders and constituents across my ward and clearly their understanding
of the impact of the changes is growing. That is why, on March 12, the business people from the
Chinese Chamber of Commerce in my ward marched in the streets to oppose C.V.A.
Several other business associations in Don River will be taking to the streets in the next two
weeks. Business leaders in my neighbourhood are very, very angry.
They are angry about all the issues that you and our colleagues have discussed over the last
several weeks: punitive education taxes; a commercial property tax class that does not
distinguish between a mom and pop corner store and a 50-storey bank tower; and a hastily
administered assessment system that is riddled with errors.
The business leaders in Don River are not simply angry at the province's tax system that put
them in this mess. They are angry at City Council for not taking a sufficiently clear and strong
stand. I believe it is time for Council to take that stand, and that we cannot wait until the next
scheduled Council meeting.
I believe that most Councillors agree that there are some steps that we must take to address the
most pressing issues. I recommend that the Task Force on Assessment and Tax Policy adopt the
attached resolution at their next meeting.
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(Motion Regarding the Provincial Property Tax System
by Councillor McConnell)
WHEREAS the Ontario Government is the only body that can create meaningful subclasses
under the new tax system; and
WHEREAS most of the new tax threatening businesses is composed of the province's education
tax levy; and
WHEREAS the province's hastily-implemented system has resulted in confusion, errors and
oversights that are significant enough to threaten the survival of some small businesses; and
THEREFORE BE IT RESOLVED:
(1) That the City of Toronto call on the Province of Ontario to create a separate "retail strip"
subclass that would allow a separate tax rate for small businesses.
(2) That the City of Toronto call on the Province of Ontario to end the punitive business
education tax rate, that forces Toronto businesses to pay more education tax than any
other businesses in Ontario.
(3) That the City of Toronto demand a one-year deferral of any implementation of the new
tax system, while the errors and problems of the system are resolved.
(4) That these matters be presented to a special meeting of Council to be held prior to the 4th
of April, and that this special meeting resolve itself into Committee of the Whole to hear
deputations from the public.
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(Communication dated March 23, 1998, addressed to
the Assessment and Tax Policy Task Force, from
Councillor Bossons)
It is clear that the effects of reassessment and other provincially mandated business property tax
changes will be to destroy many independent small and mid-size businesses in retail strips
throughout the New City. Key strategic businesses - particularly in the arts - which attract
tourists to Toronto will be devastated.
The provincial Minister of Finance, Mr. Ernie Eves, has made it clear that these effects are as
unacceptable to the Province as they are to us. We consequently have an opportunity to work
with the Province to re-design the tax changes and their implementation. I believe City Council
should agree on a set of principles to govern business property tax reform and on a strategy to
implement these principles.
Principles for Business Tax Reform:
(1) Our first priority should be to prevent business closures. No business should face a
property tax increase that forces it to shut down.
(2) Business property taxes should be based on businesses' ability to pay taxes out of their
current income. Any tax increase based on hypothetical forecast of profits from
redevelopment of a property should be postponed until such time as redevelopment
actually occurs.
(3) No class of business property should benefit from business tax reform through shifting
taxes to other classes.
(4) Within any class of business property, tax changes that may be reversed in a subsequent
reassessment should be prevented.
Implementation Strategy:
(1) Staff should be requested to recommend subclasses of commercial and industrial property
for which different average property tax rates would be required to raise the same total
tax revenue from each class as at present. At a minimum, such subclasses should include:
office buildings
small retail stores
arts-related businesses (galleries, cinemas, theatres, bookstore, etc.)
malls
others, as needed
(2) In analyzing the impact of graduated tax rates within each subclass, staff should examine
the equity of such graduation and the potential for tax avoidance (e.g., through creating
business condominiums).
(3) City Council should request the Province to implement business assessment within the
City of Toronto on the basis of value in current use, as recommended by the Crombie
"Who Does What" panel. Recognizing that this will take time to implement, Council's
request should be that this be done by the time of the next general reassessment (2001).
(4) In the interim, pending such reassessment, Council should cap any business property tax
increase on any individual property at a maximum of 30 percent, phased in over the next
three years at 10 percent each year. To do so, Council should request the Province to
provide it with the power to effect this and to ensure that this cap applies to the total of
education as well as municipal property taxes.
Recommendations:
(1) That City Council adopt the tax reform principles and implementation strategy set out
above.
(2) That City Council request the Province (1) to implement business reassessment on the
basis of value in current use by the time of the next general reassessment, and (2) provide
City Council with the power to cap total business property tax increases for individual
properties.
(3) That staff be requested to work with the Province in detailing the regulations and
legislative changes that may be required and to report to Council on the implementation
of all of the above.
The Strategic Policies and Priorities Committee also submits the following communication
(April 7, 1998) from Councillor Duguid:
I understand that the Committee will be considering the above item at 3:00 p.m. this afternoon.
Regrettably, due to a previously scheduled commitment, I will be unable to attend and have put
my concerns about Recommendation No. 1 of Item 13 in writing for your consideration.
While I recognize the difficult position many members of Committee are in as they consider how
CVA impacts on the residents of your respective Wards, I consider it a priority to move forward
with residential property tax reform without delay.
Without doubt, the adjustments to CVA will impact negatively on some of the older areas of
Toronto. For that reason, I support the proposal of property tax relief for low-income seniors and
how-income disabled persons. However, I cannot support any proposal that would delay justice
being served on residential property owners who have been paying more than their fair share of
property taxes for over a decade.
The increases that property taxpayers in older parts of the City will be experiencing would quite
likely pale when compared to the cumulative amount of extra property taxes that those benefiting
from CVA have paid in the past.
I would like to advise the Committee of my opposition to a one year delay or any other proposal
that would pre-empt those property owners entitled to a decrease from receiving that decrease
immediately. These residents have waited as successive provincial governments under intense
pressure from the former City of Toronto backed off property tax reform time and time again. In
1992, when Metro Council finally reached a compromise, pressure from the former City of
Toronto forced the Provincial Government of the day to back down. As a result, six years later,
the property tax inequities still exist.
With each delay, the injustice of our property tax system worsens. I would ask Committee
members to remember that justice delayed is justice denied.
While a compromise would have been appropriate and acceptable to my residents six years ago, I
believe that after so many years of injustice, they would be fiercely opposed to any delay in
receiving fair and equitable treatment.
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