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Municipalities look for more taxes from gravel pits

Gravel pit operators aren’t paying enough to the municipalities that host them, a situation local governments are looking change.

To that end, the Top Aggregate Producing Municipalities of Ontario (TAPMO) has hired a firm to help bring the provincial government onside with its efforts to get more out of the aggregate industry.

Currently, gravel pits pay less in property tax than single-family homes and small businesses, a situation that falls short of what municipalities should be getting, says North Dumfries Mayor Sue Foxton, who chairs TAPMO.

“This is something that, in my mind, has been a problem for some time. These producers are paying far less in taxes than your average residential homes – I think it’s 75 cents on the dollar [for households and small businesses] compared to 25 cents [for producers]. We’re trying to make sure that there’s fairness for those paying more than the properties,” said Foxton. “We feel that’s wrong. We feel they are making a lot of money, and they’re not paying their fair shares.”

She says a few years ago the aggregate industry lobbied to have sites taxed at the farm rate. The rate under which they fell was Level 5, the lowest for taxation.

TAPMO wants to see reforms such as the Ministry of Finance creating a separate property class for aggregate producing properties, as well as issuing a directive to the Municipal Property Assessment Corporation (MPAC) on how to assess these properties.

The current property tax valuation structure used by MPAC is deemed unfair by TAPMO, which says the low assessment of aggregate properties has been extreme to say the least, with a review conducted showing that in some Ontario municipalities, the current methodology doesn’t work.

The low tax revenue from gravel pit sites means property taxes are shifted to residential properties, said Foxton.

Also deemed unfair to municipalities is the low royalty revenue they receive from these sites, something Foxton says ends up costing municipalities yet more.

“North Dumfries is the third or fourth top aggregate producing municipality in Ontario. We got $600,000 last year, which is a good amount. However, one kilometre of road costs us just under $900,000 [to repair].”

She says the use of heavy trucks – one of these loaded with gravel is the equivalent of 8,000 cars – is causing significant damage to roads in the municipality.

In their township, there are many signs along roads prohibiting truck traffic, though drivers choose to ignore the signs, which in turn shows on the crumbling roads, said Foxton.

In one example, she says there is a road where a steep slope is starting to get worse towards an embankment due to truck traffic. She estimates the cost to upgrade the road in the millions, just so the trucks – which are not supposed to use them – can drive down them.

Woolwich Township is one member municipality of TAPMO that signed on to the new initiative, providing $2,100 towards hiring the outside firm.

Director of finance Richard Petherick says that over the last three years, the township received an average of $29,756 annually – $19,536 in 2018, $29,185 in 2019, and $40,547 in 2020.

While Woolwich may not see the impacts that other townships such as North Dumfries experience related to the gravel pits, Petherick says signing on to the attempt at changing provincial policy can potentially help the township down the road.

“It could always come to us in the future, because you never know what the future is going to hold. When gravel pits or gravel companies are looking to wherever they can find the gravel and depending on how important it is to the province, they’re the ones that dictate the rules around what gravel companies can and can’t do and where they can be. Sometimes while they have to go through a zoning change here locally, you’ll find that the province at times may trump what the local municipalities do. So, you never know what kind of an impact this may have in Woolwich in the future. And I think this is why our council was very much supportive giving $2,100 to TAPMO for them to engage [the outside firm].”

Petherick says there are 15 gravel pit sites in the township, which is not a large supplier of sand and gravel.

TAPMO has hired the Upstream Strategy Group, a government relations firm intent on identifying the inequity in the assessment model, and potential methods for MPACs review. The goal is to have the province adopt an improved assessment approach.

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  1. This is so not true I know for a fact that small family run gravel pits pay way more then a single family dwelling. My family owns and operates a small gravel pit and their taxes are outrageous for a small family run business this will without a doubt hurt them. Once again, small family run business will be the ones effected.

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