Property taxes a focal point of needed tax reforms

In recent weeks, the Toronto dailies have had story upon story about the budget crisis supposedly being faced by the city, a crisis we see as largely the result of politicians being unwilling the face realities.

In this case, one reality is that in at least the last decade, Toronto politicians have been unwilling to raise the local tax levy to anything approaching the levies outside the city.

As a result, properties in the 905 portion of the GTA, are paying far higher property taxes, and all too often for vastly fewer municipal services.

In Toronto, Mayor David Miller has thus far been stymied in his bid to use new taxing powers given the city by the McGuinty Liberals. Faced with a critical city council vote next month on plans to impose those taxes, the mayor now says he wants Torontonians to mobilize in favour of his scheme and pressure elected politicians.

Faced with a multi-million-dollar shortfall for the city's 2008 budget, city staff had proposed a new land transfer tax and a vehicle registration tax that would have raised $356 million. But council surprised the mayor in July by voting to defer the tax debate until after the election Oct. 10.

The Toronto Transit Commission decided it will have to raise fares in November.

Thanks in large part to the downloading required by Mike Harris's Common Sense Revolution, property taxes in Ontario have been soaring while municipal infrastructures have been crumbling.

The downloading has had an uneven impact, with some municipalities having to pay much more than others for social services, highways and other amenities formerly financed by the province.

As one small example, the downloading of highways saw property owners in Dufferin saddled with the costs of maintaining about 40 miles of former provincial Highways 9, 24 and 25 while 2.5 million Torontonians were left with just the costs related to five miles of the former Queen Elizabeth Way between Highway 427 and the Humber River.

In recent years, the federal and provincial governments have helped the municipalities a little, initially by giving them a tiny share of the federal gasoline tax revenues and latterly by "uploading" some of the social services deposited on them by the Harris Conservatives. However, such help has clearly fit the label, too little, too late.

Another aspect of downloading is the elimination of a longstanding provincial program that recognized the value to all Ontarians of having a healthy farm economy.

Under the program that existed before the CSR, rural municipalities were able to levy taxes on farm properties at their full assessed value, and the farmers could then apply to the province for rebates equal to 75% of the tax. Instead, the Harris government required the municipalities to charge the farmers only 25% of the tax, leaving other property owners to pay the 75% that previously came from the provincial treasury.

The absurd result was that in a hypothetical township where all properties were farms, all the farmers were left having to shoulder all the expenses previously paid for by the Province!

To us, an unsatisfactory aspect of the current provincial election campaign is the debate over the misnamed health premium imposed by the Liberals despite an election promise not to introduce any new taxes.

Without a doubt, this premium is really a form of income tax which has produced upwards of $3 billion a year in revenue that was clearly needed to implement promises in the areas of health care and education.

Recognizing the unpopularity of taxes generally and the health tax in particular, Progressive Conservative leader John Tory has promised to rescind it while somehow maintaining all existing provincial services and funding all faith-based schools.

NDP leader Howard Hampton is also talking of scrapping the tax, at least for everyone with modest incomes, while McGuinty simply concedes that the tax is necessary.

As we see it, any real reform of our tax system should see property taxes being used solely for local services that truly benefit the property owner, among them water, sewers, streets, police, fire and local recreation facilities - not for things like arterial roads, ambulance services and farm grants.