CAPTR

News

• « News Index

Globe and Mail: Property-tax reform: the great, big, untalked-about issue of this campaign

John Barber

September 19, 2007

Everybody's talking about religious schools, but today's hot issue will likely be dead cold a day after the election. Any form of Liberal government, minority or majority, would sweep it away, and no Tory minority would dare embrace it.

Meanwhile, the issue that nobody is talking about - property-tax reform - is almost as likely to jump to the top of the order paper. A Liberal majority would kill all hope for assessment capping, the essential reform both the Progressive Conservatives and the New Democrats have promised. But given that unlikely opposition alliance, serious reform of the destructive Liberal tax system would become an automatic priority of any minority government.

Apart from his stand on schools, Conservative Leader John Tory's promise to hold assessment increases to 5 per cent a year is one of the few definitive policy alternatives he has offered to the Liberal status quo. But the NDP has gone even further down the road of anti-tax populism, offering a radical solution that would effectively freeze assessments, allowing only cost-of-living increases.

The New Democrats call their plan "Freeze till Sale," because assessments would change only when a property is sold, at which point the new price becomes the new assessment. Others call it a "Welcome, neighbour" system, because newcomers generally pay far higher taxes than long-time residents. It creates bombproof stability that suits real people but horrifies the market-value purists who still rule Ontario.

The Tory scheme is less radical, closer to the model recently adopted in Nova Scotia, but likewise designed to prevent a perverse tax system from pricing established residents, especially old people, out of their homes and neighbourhoods.

But Liberal Finance Minister Greg Sorbara rejected such popular proposals, arguing that they would distribute wealth "from Rexdale to Rosedale." That's the orthodox view, as dictated by the Queen's Park priesthood to former premiers Mike Harris, Ernie Eves and now their latest Liberal mouthpieces. The "best research" says it's so, according to Mr. Sorbara.

The problem is that the Finance Minister has never cited any research to back up his sound bite, and nobody has ever seen it. In Ontario, the regressivity of assessment caps is a matter of faith in a theory. The only contemporary research done on the question, based on the actual tax rolls and sponsored by the Coalition After Property Tax Reform, suggests exactly the opposite of what theory predicts: It shows that the vast majority of Ontario properties that stand to benefit from an assessment cap - 80 per cent of the total group of beneficiaries - are worth less than $300,000.

One wonders whether Mr. Sorbara has priced a shack in Rexdale recently. But it isn't any wonder why the Liberals recently retreated a few steps, offering caps to seniors: They're on the wrong side of a gut issue. Nor is it any wonder why Mr. Hampton's New Democrats have proposed the hardest assessment freeze imaginable - not if you look at the actual makeup of the small-property owners who stand to benefit from it.

The obvious conclusion is that assessment caps are deeply, if not widely popular with the Ontario electorate. Regular wage-earners, not Rosedalians, fear being forced out of their homes - and especially their treasured family cottages - by a ruthless and volatile tax system. Caps kill that system, and the anxiety it causes, like a silver bullet.

And despite what Mr. Sorbara claims, nobody will suffer much as a result. Those whose properties appreciate at investment-quality rates - but not as fast as some others - will no longer "earn" tax reductions every year, even when the tax rates go up. When city hall raises tax rates 3 per cent, everybody's tax bill will go up by 3 per cent. What's wrong with that?

Source: Globeandmail.com

• « News Index