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Sorbara budget fails homeowners:
Why we need a cap on assessment increases

By Bob Topp, Coalition After Property Tax Reform

March 30, 2007

Ontario Finance Minister Greg Sorbara's plans to spread property assessment hikes over four year cycles is just tinkering: it doesn't fix the unfairness and it prolongs the tax increase agony.

It means the property tax pain for hundreds of thousands of Ontarians will be inflicted over a longer period when their double-digit assessment hikes lead to higher property taxes.

There is nothing in the budget that will prevent a return to dramatic, double-digit increases in property assessments, nothing to stem the tide of volatility.

And the Finance Minister is way off base when he says that a property assessment cap would benefit "the more affluent" as he claimed in his budget speech.

The cute "spin line" that Toronto's expensive "Rosedale" would benefit at the expense of working class "Rexdale" just doesn't happen to be true.

It is the existing uncapped system that remains in place that favoured Rosedale over Rexdale in the last assessment: the highest increases in Toronto were on the Danforth and in Parkdale. Those folks got clobbered. The lowest increase was in Rosedale and it was half as much as the assessment hike in Rexdale.

The Coalition After Property Tax Reform, which represents about a million Ontario property owners, believes assessment hikes must be limited to no more than 5 per cent annually. Otherwise, the combination of hot real estate markets in some areas and a crude assessment methodology will continue to lead to massive volatility in valuation and hence in property taxes.

We chose a five per cent annual cap because it is the average annual increase in residential real estate prices in Ontario over the past 25 years. It is therefore a fair and realistic cap which will allow assessments to rise in line with past trends and not with overheated current market conditions.

In the last assessment in 2005, more than 100,000 properties in Ontario were up between 30% and 150% compared to the average provincial increase of 12%. In Toronto, increases by ward averaged from 5% to 19%.

The Sorbara four-year cycle will not change this unfair system: It just means the person who gets the 100 per cent assessment increase in 2009 will have four years to deal with the heavy tax impact. Then the next assessment notice will arrive.

This is a completely unfair system and the province has failed to fix it. When the assessments start landing in mailing boxes in 2009, they will still wreak havoc with many homeowners.

The promise the McGuinty government made in 2004 to fix the volatile assessment and property tax regime which has been in place across Ontario for nine years remains unfulfilled.

Ironically, it is John Tory, leader of the Ontario Progressive Conservative party, who recently announced a 5% cap on annual assessment increases as part of his election platform; after all, it was a former PC leader, Mike Harris, who made the system mandatory that we are burdened with today.

To their credit, the Ontario New Democrats set up a task force and held hearings across the province on the assessment system, and they too have recognized the need to end its volatility and unfairness.

If Mr. Sorbara had combined his new four-year assessment cycle with our five per cent assessment increase, he would have solved the problem.

Bob Topp is Chairman of the Coalition After Property Tax Reform (CAPTR), a coalition which through over 700 ratepayer organizations and a major senior citizens alliance, represents close to one million Ontario citizens.

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