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Speech to Gravenhurst area ratepayer associations

June 17, 2006

In putting together some comments for this meeting today, I went back over reports we've made to our members, and speeches we've given and looked at how our efforts to achieve property tax reform have evolved over the past few years. It has in fact been almost 2 ½ years since we established WRAFT and it's been five years since the Muskoka Taxation Task Force was set up in the summer of 2001. I can give you a long list of the things that have been done; the research into alternate tax systems; the building of a coalition of 200 ratepayer associations; the lobbying of politicians; the fund raising; the communication efforts with our member groups and the development of reform proposals. But the reality is that over that period we have not saved you or any of our membership or anyone on waterfront in this province one single penny in property taxes. Not only that but over that five year period we've had three more assessments and you all know what's happened to your tax bills. Any day now, if you haven't already, you're going to get the second installment of your 2006 taxes and for most of you, those whose assessments were up more than average, you'll get hammered again.

So why have we not been successful in achieving meaningful tax reform? Should we just give up, sit back and watch our share of the property tax load continue to climb? Let me try to answer the first question first.

Many years ago, there was an extensive study of various systems for distributing property taxes and it was concluded that the fairest system was market value assessment. While we've had some form of MVA in Muskoka for 30 odd years, it's only been province-wide since 1998 when Mike Harris made it mandatory. The bureaucrats are convinced it's the best system and have been able to persuade the politicians to think the same way. When the Liberals came into power they had some misgivings and in fact, in the first budget in May for 2004, stated that they were going to make the system more fair. But it was not a priority of the government, there was not a lot of pressure for reform and basically nothing was done. The only province-wide group calling for reform, in fact, was WRAFT, but we were perceived to be elitist, a bunch of second-homeowners who surely could afford to pay a little extra. When many of you wrote letters pointing out that you got little for what you paid, that you weren't even here most of the year, you were told that what you paid had nothing to do with what you get in services. You were told, and I quote from a letter many of you received when you wrote your MPP:

" 1) We believe individual municipalities are in the best position to determine how to deal with the tax impact of higher assessments. It is important to note that an increase in the assessed value of a property does not necessarily result in higher property taxes because municipalities can adjust their tax rates to offset the average impact of reassessments."

In other words, don't bother us. Your municipality will help you out. Talk about passing the buck. You really wonder whether the people in charge at Queens Park even understand the impact the system is having on our tax bills. In any event, I have to say that we have not been successful to date because until very recently the Liberal government believed the system was working. Cottagers were complaining but they were a small minority and it was felt they could afford it.

Now for the second question: should we give up the fight, pay our taxes and if we can't afford it, sell our property to someone who can. You know what. Until recently some people thought that might be the answer. But in the past few months things have changed. The Ombudsman issued a scathing report on MPAC's assessment practices. At Queen's Park, the PC Finance critic introduced a private members bill calling for a 5% cap on annual assessment increases. The bill has now passed second reading with unanimous support from PC and NDP members and the majority of Liberals in the House. The Mayor of Ottawa, well-connected in provincial Liberal circles, has called for a moratorium on assessments and a task force to study reform. And finally, WRAFT has taken the leadership in forming a much broader alliance of Ontario property owners, the Coalition After Property Tax Reform, affectionately known as CAPTR. Founding members are WRAFT, the Federation of Ontario Cottagers Association and three large urban ratepayer coalition, representing in total 700 ratepayer associations. It has in its first month of existence added a federation of ratepayer associations from lower Georgian Bay, a group of Township Councillors from the Peterborough area, and just last week a major Ontario Senior Citizens alliance. CAPTR already represents well over 500,000 Ontarians and we expect this broad non-elite coalition will grow dramatically in the coming months. It is apparent that while waterfront property owners are hardest hit by our volatile and unfair property tax system, there are few Ontario home owners who are not vulnerable to the impact of tax shifts brought about by Current Value Assessment. This is the case in Toronto where many parts of the city, currently experiencing hot real estate markets, are feeling the impact of higher taxes. In fact, all homeowners are vulnerable due to shifting markets. In Muskoka over the past decade, those not living on the lakes have been the beneficiaries of the shift of tax onto waterfr ont. But if we experienced a downturn in waterfront values as occurred in the early '90s there could be a major shift of tax back onto the Muskoka residents not living on the water.

The present property tax regime is not working and finally it appears that the Liberal government at Queens Park is getting the message. They cannot ignore the combined impact of the developments I've just outlined nor the onslaught of letters, many of yours included, from disgruntled Ontario citizens. It appears even the Premier is now aware the property tax system is broken. He has said that the government is "seized" with the issue. I think that means they're going to try to fix it. Our job now is to see that they move ahead promptly with reforms. An easy and immediate fix would be to cap assessment increases at 5% a year, as proposed by the PC private members bill. This would reduce volatility and protect all taxpayers. We would support the 5% cap but believe that the starting point should be the 2004 assessment. Recognizing the flaws in the assessment process as clearly spelled out by the Ombudsman, at least with the 2004 assessment, the appeals have been cleared through the system. There has been some indication that a moratorium might be placed in assessments and a task force established to recommend reforms. The risk with that approach is that the end result and the timing is unknown. All we know for sure is that two years ago the Liberal government in its first budget promised to address inequities in the property tax system and nothing has been done. We're going to keep building our new coalition, lining up support for reform, telling our story to the media and doing whatever's necessary to get action before we are faced this fall with yet another assessment and shift of even more tax onto waterfront properties across Ontario.

Finally, getting back to basics, it is important to recognize that there are a number of fundamental principles that must be applied in evaluating a property tax system.

• A fair system should relate taxes paid to benefits received
• A fair system should relate taxes to ability to pay
• Taxes should not fluctuate dramatically from year to year
• The tax system should be easy to administer

The present pure assessment based system meets none, NOT ONE, of these criteria. We will continue to point out these facts to the decision makers at Queens Park until we have in place an equitable property tax system for all residential property owners.

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