This week’s piece on MPAC’s reassessment of agricultural woodlots is sure to drawn much scorn for the already much-maligned agency.
The Municipal Property Assessment Corporation has been the subject of much derision since its formation in 1998. Some of that is the direct result of the agency’s failings. Some it has to do with market value assessment itself, a system that is bound to be both wrong on many occasions – off high and low – and unfair.
Supporters argue wrong assessments can be righted over time. Steps have been taken since damning reports by the province’s Ombudsman and Auditor General began scrutinized the agency’s tactics and accounting practices more than a decade ago.
As for unfair, well, it’s less unfair than other systems if we have to put up with the evil of property taxes, they argue.
Opponents note the inaccurate assessments, but also stress that market-based taxes are inherently unfair, not being at all related to the property owners’ ability to pay.
From either perspective, property taxes are entirely regressive, taking up a much larger percentage of low-income residents’ wages than those of more affluent Ontarians.
The well-worn argument against market value assessment involves the little old lady who’s lived in the same home for 60 years. What was a modest home purchased for a few thousand dollars in a modest neighbourhood is now land situated in a hot location, valued at hundreds of thousands or even millions of dollars. The pensioner, eager to remain in her home, struggles to pay taxes that exceed what she paid for the house in the first place.
A flat property tax or, better still, a system based on provincial income taxes – removing municipalities from the equation – would be much fairer.
However, we can expect local politicians to keep boosting taxes well above increases in income, even as the economy slows down and puts more private-sector workers in jeopardy. If that won’t change, we certainly shouldn’t hold our breath for real reform – local politicians don’t want to lose the power, and there’s no political will at the provincial level to do what’s right.
When it comes to MPAC and property taxes, the best that we can hope for is to smooth out some of the worst affects
With four million properties to judge, mistakes will happen – but that’s the norm, not the exception, critics charge.
Sweeping changes are needed, but unlikely to happen. For now, the goal of reformers is to remove uncertainty and to limit the size of assessment increases and the resultant tax hikes.
Ridding the system of its inherent inequity is a much larger job, the kind seen in some of the tax revolts in the U.S. That’s fraught with peril, too, however. California’s system has pegged the value of a home at its sale price, the rate remaining in place until the home sells again, the idea being that those buying a home at a higher price – the theory of increasing real estate prices having taken a beating in 2008 – can afford the taxes that go with it. That leads to wild fluctuations in neighbourhoods, and has also handcuffed many cash-strapped municipalities, though the U.S. resistance to taxation goes beyond anything seen in the grumblings of Canadians.
Unrest leading to real changes are not a likely scenario in this part of the world. More’s the pity.