Apparently, house prices have jumped 20 per cent across Toronto in the last while. So fear-mongers have been warning citizens to expect a 20 per cent jump in property taxes once the freeze is lifted on assessments this summer.
Utter nonsense.
In fact, if your property has gone up less than 20 per cent in value, you'll be getting a tax cut.
If it jumped exactly 20 per cent, you're whistling along, unaffected.
And if you're fortunate enough to live in a hot neighbourhood like Riverdale, where prices have jumped 31 per cent, then you are staring at an 11 per cent increase – the difference between the mean increase and your high point.
Yes, double-digit hikes are not pleasant, but even these come with an ameliorative plan. The Ontario government, which created the problem by freezing assessments for two years, says it will phase in the new hikes over four years.
So Riverdalians are facing a rise in property taxes of less than 3 per cent per year – not nearly the apocalyptic scenario circulating this week.
No one should be shocked that if you freeze tax assessments, when you remove the cap the result will be skewed. All those who were lobbying the government to impose the freeze should be willing to pony up now. But, of course, they are not. Their agenda is to totally change the property tax system so that the high-priced downtown properties pay a lot less while those in the suburbs pay more.
So, should your share of the cost of municipal services be linked to the value of your home?
Don't expect to get an answer to that age-old, befuddling question when the province lifts the freeze on property tax assessments sometime this summer.
Volumes have been written, millions spent and much political capital consumed in pursuit of property tax fairness. Needless to say, "fairness" is as elusive as ever.
For as long as any of us can remember, two factors influence a homeowner's tax bill; the house's value and how much money the city needs to deliver services.
If the city has its sights on $1 billion, it calculates the combined value of all taxable properties and multiplies that sum by a number (the tax rate) to deliver the $1 billion. This tax rate is applied in the same way to the value of an individual property to determine what share of the $1 billion you will pay.
So, if the city freezes taxes till hell freezes over, your assessment would still rise if your property value has a higher percentage gain than everyone else's; you'd pay less taxes if the value of your home lagged behind others.
This market value system is prevalent around the world. It's volatile. And it can require a house-rich but cash-poor senior to pay more taxes because his property is in a hot neighbourhood.
But one study by Anne Golden concluded the alternatives have even more egregious inequities.
The most vocal opponents of the property tax assessment system have been downtown owners, along with their media advocates, opinion leaders and local politicians. When they get their way, it means higher taxes in the suburbs.
Those downtown forces got a gift in a report by Ontario Ombudsman André Marin that lambasted the agency that assigns a value on homes for tax purposes. "Arrogant; secretive; inaccurate" were some of Marin's criticisms. But he never recommended a better assessment system. Or imposing a freeze.
The freeze may have been good politics for the McGuinty government; now you pay.
Royson James usually appears Monday, Wednesday and Friday.
Email: rjames@thestar.ca
1 comment:
thx for the link, I own a house in the 'hot' area (incidentally Jack Layton's riding) and hearing john tory et al paint such a disaster scenario I admit I was a little worried about our next property assessment. We first bought it in '99 and our tax bill was 129/month. Those were the days.
But, when the feds cut transfer payments, everybody else is yelling tax cuts, tax cuts, tax cuts, the money has to come from somewhere, so this illusion of getting a tax cut becomes a little more clearer as the 'fat lady songs'.
No offense to, large ladies.
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