property tax

- David Clark

A house in Toronto, valued at $812,000 (real estate sale) paid $2,986 in property taxes (2019). Another, sold for $2.8 million (assessed value $1.67 million), paid $9,681. Another, a semi-detached in my childhood neighbourhood (Scarborough), is assessed for $799,990 paid $2,414.

My property in Owen Sound is assessed for $226,500 and had a 2019 tax bill for $3,879. It will be up in 2020, yet again. (Note: These tax amounts include the various other levies like school and county. In Owen Sound, the municipal portion is about 72% of the levy.)

Let that sink in. A property in Owen Sound is assessed at 28% of the value of a house in Toronto and is taxed about 61% higher. This applies to all houses in Owen Sound.

Let’s be clear, the assessed values (or current value assessment) are not the problem. The municipal budget and the tax rates for various classes of properties (residential, commercial, and industrial) are the problem. Council sets the budget and then assigns a share of the budget to each property based on assessments. So when your taxes go up, that is because the budget has increased. Although, sometimes, certain types of houses might increase in value more than other types, and, barring a budget increase, might pay more taxes relative to others which have not increased or have declined in value.

In 2008, the council decided to shift the tax burden from commercial and industrial properties to residential. As posted on the city’s website: “The City of Owen Sound began a process to shift the tax ratio to reduce both commercial and industrial tax rates a number of years ago.”; “Between 2008 and 2015, business tax ratios decreased by 15.57% for the commercial class, 12.85% for the industrial class, and 31.95% for the large industrial class.” Note how it is worded as a positive for commercial and industrial properties when in fact it is, at the same time, a negative for residential properties.

We are now paying higher residential property taxes so the Big Box stores and industry can pay less. The “selling point” was to entice commercial and industry to locate and stay here.

You be the judge as to how well that has turned out. Between 1996 and 2016, employment in primary industry dropped by 21.7%, manufacturing/processing dropped by 15.2%, and sales/service dropped 4%. Of the ten employment categories, six declined anywhere from 4.0% to 25.2%, although total employment rose by 3.5%. Across Grey-Bruce three of ten categories dropped (ranged from 10.9% to 59.5%) and Ontario showed a drop in two categories (25% and 31.6%). Employment growth in these categories was 9.5% for Grey-Bruce, Ontario was 29.1%, and Owen Sound was 3.5%. It appears Owen Sound has not fared well in growing jobs in the categories which have received preferential property tax relief through lower tax rates.

If we look back to 1980, Owen Sound had 2,550 manufacturing jobs (excluding processing and utilities which is now included in this category). This represents a minimum loss of 72.8% of manufacturing jobs, or 1,855 jobs, which is greater than Ontario which lost a minimum of 65.8% of manufacturing jobs.

The recent resurgence of the idea of selling park land for development (this is not a new idea for the council) stems solely from the desire to increase the assessment base and at the same time increase the tax rate to cover continually increasing budgets. An increased assessment base should decrease all property taxes. But this never happens because council always increases the tax rates to fund higher budgets. By the way, there is never a “surplus” of park land. The mayor states he wants to see the population hit 30,000 in 2030, and ironies of ironies, council considers selling parkland: Less park land for more people.

I compared Owen Sound’s tax rates (residential, commercial, and industrial) to nine similar sized cities in Ontario. Owen Sound’s residential rate is the third highest, 10.38% higher than the average; commercial is the sixth highest, 11.12% higher than the average; and, industrial is fourth highest, at 6.76% higher than the average.

Looking to within the Grey-Bruce area, Owen Sound has the second highest tax rates for residential and commercial, and third highest for industrial.

Additionally, looking at all forty-five cities in Ontario, Owen Sound is more or less in the middle of the pack, but below (lower) the mean and the median.

Owen Sound needs a council (and councillors) that has the fortitude and gumption to reverse this direction, and get its budget under control. Big business does not need to be, and should not be, subsidised at the municipal level - that is a job for provincial and federal tax credits. They come here for the sole purpose of extracting dollars from our pockets to enhance their “bottom line”. They will leave (and have done) when the cost-benefit no longer works in their favour. I strongly disagree with a former mayor who stated a particular business was building a new retail outlet, showing support for the community and its people. Nope. It was and is the bottom line for which they were, and are, showing support.

Mr Clark is an Independent Researcher and Data Cruncher in Owen Sound. He worked as a property assessor with the province for 15 years.