Clearing the air on property taxes
Given the public’s confusion, suspicion and sheer befuddlement over how property in Ontario is assessed for municipal tax purposes, it is a good thing provincial ombudsman André Marin is investigating the system’s methods and its “ integrity and efficiency.” Whatever the outcome of that probe, it should help clear the murk that now surrounds the way property is taxed in this province. If incompetence and unfairness are detected, reforms can be put in place to improve the system. And if there are minimal problems beyond a lack of clarity, a well- written ombudsman’s report can go a long way in boosting understanding and public confidence in the system. The worth of a house or condominium apartment, for tax purposes, is set by the Municipal Property Assessment Corp. and regularly updated. Each property’s assessment is supposed to capture its current value, according to the twists of the real estate market. The corporation bases its calculations on the selling price of similar surrounding properties. And it recently sent out about 643,000 notices shocking some homeowners with dramatic jumps in their assessments. The average assessment on a single- family dwelling in Toronto, for example, has risen by almost 12 per cent since the corporation’s last tally in June 2003. Some homeowners, living in particularly “ hot” sections of the local real estate market, report having their assessed value rise by almost 40 per cent, leaving them fearing soaring property taxes. Even though a homeowner’s municipal taxes may not rise as fast as the assessment, some nonetheless will indeed face a tax bill potentially thousands of dollars higher than they had expected.
It is important to note there is no windfall for city hall here. The system operates in a state of balance. Areas of Toronto with soaring real estate values, and where the latest property assessment increases run highest, can expect a heavier tax load. Conversely, neighbourhoods experiencing a lower- than- average increase in assessed value should see a dip in the taxes people have to pay. That said, there is widespread bafflement over how assessments are calculated, and why certain homes are pegged as being more valuable than others, even though the houses in question may appear to be not very different from their neighbours. We hope Marin’s report, expected in four to six months, will provide some answers. His main task is to clear the air and end the mystery around assessments. But if shortcomings exist in the assessment process, they must be identified and quickly fixed. Marin seems determined, as well, to sort out a complaint that people who succeed in appealing an unfair assessment, and have it rolled back, confront the same excessive estimate in subsequent years. In essence, they are forced to launch the same appeal again and again. If this is happening, it should be corrected. Paying taxes is painful enough without lingering suspicion that these charges are arbitrary or unfair.
Public confidence in the tax system is vital in promoting trust in government and support for needed spending.