Premier Dalton McGuinty promised for the first time yesterday to reform
Ontario’s property tax system, saying his government is now “seized” with
a problem that has plagued Ottawa for decades.
Speaking to the Citizen editorial board, Mr. McGuinty acknowledged that
the system is in shambles and needs fixing.
“ I don’t think anyone argues that there is not a problem and the minister
of finance has now become seized with this. As a government, we’ve become
seized with this issue,” he said.
Mr. McGuinty said the current system, which is the product of eight pieces
of legislation passed by the previous Conservative government, is so
complex that a quick fix is not possible. And he has no idea what plan the
government might come up with and whether it would be in place before the
next election.
“ We are going to take some time to find a better way to address this and
whatever we come up with will also be the subject of an extensive
consultation,” he said.
The Liberals have made some minor changes to the property tax system since
they came into office, such as giving the city the power to decide how
much of the tax burden should be borne by homeowners and businesses.
But this is the first time the Liberal government has committed to reform
the entire property tax system that has drawn severe criticism from
everybody from homeowners and politicians to the Ontario ombudsman.
Ottawa homeowners, who are among the highest taxed in the country, have
complained for decades that property taxes, which are based on an annual
assessment of property values, are unfair. The problem goes back to 1998
when the Conservative government introduced market value assessment and
reduced how much property taxes businesses pay. This was later changed to
current value assessment under which property values were assessed every
year based on selling price. Since property taxes are based on the value
of a home, the result has been huge jumps in property taxes even when
municipal taxes are frozen. Last year’s assessments saw an average
increase of about 14.35 per cent across the province, but as much as 55
per cent in Ottawa.
Public anger over the assessments prompted provincial ombudsman Andre
Marin to launch a probe into the system and in a scathing report, he
called it “unreasonable, unjust, oppressive and wrong.” Even though he
made 22 recommendations for changes, he stopped short of suggesting the
entire system be scrapped.
Yesterday, Mr. McGuinty said an “overwhelming” number of Mr. Marin’s
recommendations would be adopted, but he acknowledged that they won’t be
enough to tackle the core issue at the heart of the flawed system.
The problem is finding the right system to use to pay for municipal
services.
Some have suggested abandoning property taxes and switching to income tax.
Others disagree, saying the best way is to end the yearly assessments,
and instead base values on the last sale and then add on the annual
increase in inflation. Still others say the problem is that property
taxes are used to pay for things like social services, education and
public transportation, which while useful to society, are not directly
linked to owning a home. Property taxes should be used solely to pay for
things directly related to owning a home and everything else paid from
income tax or sales tax, they argue.
Yesterday, Mr. McGuinty refused to be drawn into a debate over what he
considers the best system, saying the government will come up with its
proposals when it is ready.
The NDP has established a committee to study the issue and party leader
Howard Hampton will speak at a public meeting in Ottawa on Monday on how
the system can be revamped. The meeting will take place at the Glebe
Community Centre at 7 p.m.
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Ottawa Citizen