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Toronto Star: Assessment issue rattles Liberals; More study, freeze on property assessments possible government response

Ian Urquhart

April 29, 2006

The provincial Liberals have been a pretty disciplined lot since taking power in 2003. For the most part, backbench MPPs have toed the government line.

That's why it was a surprise two weeks ago when 11 of them voted with the opposition to give second reading to a private member's bill introduced by Conservative MPP Tim Hudak to slap a 5 per cent cap on property tax assessment hikes.

As a private member's bill, it has little chance of becoming the law of the land. But the vote is nonetheless having serious repercussions around Queen's Park.

Liberal backbenchers have been getting roasted by constituents about skyrocketing tax bills as a result of current value assessment, a system under which properties are regularly reassessed according to their presumed market value.

The governing Liberals hasten to point out that they inherited this system from the previous Conservative regime. But their constituents don't care who is to blame; they just want it fixed. For months, the backbenchers had been bringing these complaints to the weekly Liberal caucus meetings, but there they seemed to fall on deaf ears. Particularly hard of hearing, say caucus sources, was Finance Minister Dwight Duncan.

"I don't think there was an appreciation of how strongly we felt," says one of the 11 backbenchers who backed Hudak's bill.

"Standing up and voting for the bill was sending a message to Cabinet: Get this fixed, boys," says another.

Premier Dalton McGuinty certainly got the message. In an interview with his hometown newspaper (the Ottawa Citizen) a week after the vote, McGuinty said: "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."

As if on cue, Duncan told the Legislature last week that he would conduct "a careful, thorough, thoughtful review" of the property tax assessment system. At the same time, however, he couldn't resist taking a shot at the Conservatives for leaving behind "a huge mess." Duncan also raised doubts about the solution put forward in Hudak's bill. "A cap on property taxes may, in fact, cause more problems than it solves," said Duncan.

Indeed. Capping assessment increases at some arbitrary level would merely shift the burden of taxes from some property owners to others.

Under current value assessment, there are winners and losers. The losers are those with properties rising upward in value faster than the average; the winners are those with below-average increases in assessment. Cap one and you affect the other.

Duncan has compared the exercise to a whack-a-mole game.

But the Liberals cannot afford to refuse to play, for the losers are complaining loudly while the winners are largely silent.

If the Liberals don't address the complaints, the Conservatives are likely to appeal to the complainants with a Hudak-like plank in their election platform.

One Liberal backbencher compares current value assessment to an "albatross" and says: "If we don't get it off our backs, we're going to get hammered in the election (scheduled for October 2007)." As if to underscore this point, a new coalition bringing together some 700 ratepayer groups with almost 500,000 members across the province was launched at a Queen's Park news conference this week. The coalition is calling for a cap on assessment increases.

"We hope that the government, facing as it does a fight for re-election in a little more than a year, will listen to the legitimate concerns of Ontario homeowners and move swiftly to deal with an issue that has begun to spread like wildfire across the province," said Bob Topp, spokesperson for the coalition.

And if the government doesn't move? Topp promised that the coalition would be "very active" in the election campaign.

What is the government to do? There are alternatives to current value assessment Ñ including assessments based on lot or building size, or on a property's actual selling price. But they have their own inherent inequity problems.

Uploading social services from municipalities to the province would take a big weight off the property tax base and ease the pain of reassessments. But that is too expensive a solution for the provincial government to contemplate in the short- or medium-term.

With no obvious solution in sight, then, the government is likely to freeze property assessments at their current level and appoint a blue-ribbon panel to study the problem.

Whether that panel reports before or after the next election is open to speculation.

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