Tax in­creases could ruin main street

Sys­tem needs a re­think and we need to start talk­ing about it

Bayview Post - - News - JOHN SEWELL

“Sleepy” would not be the word to de­scribe the Toronto mu­nic­i­pal po­lit­i­cal scene dur­ing the last few months. All sorts of things burst onto the scene from Doug Ford an­nounc­ing a 2018 may­oral run to chief plan­ner Jen­nifer Keesmaat an­nounc­ing her res­ig­na­tion and Ama­zon an­nounc­ing it was look­ing to es­tab­lish a sec­ond head­quar­ters for North Amer­ica, em­ploy­ing some 50,000 peo­ple, per­haps right here in Toronto.

I thought the most in­trigu­ing news was that small shop own­ers on Yonge Street have ob­jected to the steep rise in prop­erty taxes.

It’s a story we will hear much more of in com­ing months, since its a gen­eral prob­lem and not just af­fect­ing a few.

The is­sue is mar­ket value assess­ment (MVA).

The tax rate is ap­plied to the as­sessed value of a prop­erty to cre­ate the prop­erty taxes that must be paid, and that assess­ment is based on mar­ket value. With the rapid es­ca­la­tion in sale prices in the city — par­tic­u­larly in the Yonge Street cor­ri­dor where the con­do­minium mar­ket is hottest — mar­ket val­ues of many prop­er­ties have risen quite as­tro­nom­i­cally.

The pro­vin­cial agency re­spon­si­ble for de­ter­min­ing as­sess­ments eye­balls a par­tic­u­lar area and then ap­plies the in­crease in the value of a prop­erty re­cently sold for con­dos to de­ter­mine the assess­ment of neigh­bour­ing prop­er­ties, mak­ing their prop­erty taxes in­crease sig­nif­i­cantly.

It is very un­fair, since the small shop owner has done noth­ing to merit this large in­crease.

In many cases the shop owner is a ten­ant, not a prop­erty owner, but the lease re­quires the ten­ant to pay the prop­erty taxes.

Mar­ket value is a great way to drive out small shops even though they are of­ten the lifeblood of a neigh­bour­hood.

Mar­ket value assess­ment af­fects oth­ers as well — it is the prob­lem faced by the com­plex of very cre­ative arts and cul­ture busi­nesses at 401 Rich­mond St. W., and it af­fects some older fam­i­lies with­out the in­comes to cover the higher taxes on homes they have owned for decades.

Mayor John Tory re­sponded to the com­plain­ing Yonge Street mer­chants by ask­ing the pro­vin­cial govern­ment to in­ter­vene.

Cer­tainly pro­vin­cial leg­is­la­tion is at the root of the prob­lem — MVA was in­tro­duced by then pre­mier Mike Har­ris as he led an as­sault on cities with his many pieces of leg­is­la­tion (in­clud­ing im­po­si­tion of the megac­ity against the wishes of 76 per cent of vot­ers who op­posed it in ref­er­enda) at the turn of the mil­len­nium.

But what’s needed are some al­ter­na­tives to MVA as a way of cal­cu­lat­ing prop­erty taxes.

Should taxes be based on rev­enues and ex­penses if it’s a com­mer­cial prop­erty? On fam­ily in­come if a res­i­den­tial prop­erty? Should it re­late to use? Pur­chase price? A com­bi­na­tion of these things?

Sadly, tax sys­tems are not some­thing the pub­lic likes to talk about and un­der­stand: wit­ness the dif­fi­culty the fed­eral fi­nance min­is­ter is hav­ing with leg­is­la­tion to close some tax loopholes that in­formed opin­ion seems to agree should be closed.

If the pub­lic isn’t in­ter­ested in talk­ing about a sub­ject, chances are that politi­cians won’t wade into it. I learned that les­son when I was mayor and led a process to re­vise the prop­erty tax sys­tem, only to find that few coun­cil­lors wanted to grap­ple with the is­sues, and the re­form pro­posal dis­ap­peared af­ter the next elec­tion.

But a dis­cus­sion on MVA must be­gin and it should hap­pen at the mu­nic­i­pal level, which is where the prob­lem is.

We clearly need a strong ini­tia­tive from Toronto City Coun­cil to look hard at the sys­tem we have now and put for­ward some ideas for change and im­prove­ment if we hope to con­vince the prov­ince to pass new leg­is­la­tion. The city has to step for­ward: it can’t keep act­ing like a cry­baby to the prov­ince.

Maybe we’ll need to wait for the out­cry about MVA to be­come louder. Post City Mag­a­zines’ colum­nist John Sewell is a for­mer mayor of Toronto and the au­thor of a num­ber of ur­ban plan­ning books, in­clud­ing The Shape of the Sub­urbs.

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