Good is bad
John Thompson wants you to pay his property tax increase. John’s property taxes are higher this year because his land is worth more. He doesn’t want to cash in his windfall just yet—so he wants you to pick up the resulting increase in his property taxes. Forever.
On Thursday, John will ask council to do this for him and other farmland owners. His presentation will be chock full of numbers, ratios and percentages. He will use words like fairness and suggest, ever so subtly, that the way he uses his land is more noble than the way others do.
But it comes down to this: John wants council to open up the municipal tax codes and make it so that he pays less tax. And you pay more. Next year. And every year after that.
John will tell council he has a problem. The land he and other farmers owns is worth more than it was four years ago—or 10 years ago. Objectively, this is a good thing for John and the value of his business. But in the short term, he is liable to pay more in property taxes. So, John must convince council that a positive is a negative.
If anyone can do that, it is John Thompson. He is an able and persuasive advocate for his landowner constituency.
Let us remember, however, that each of us pays municipal taxes based upon the value of our property. The value goes up, we pay more, the value goes down, we pay less.
That is the system. That is how it works. For everybody.
But John wants to change it—to tilt the table for his benefit. And for other farmland owners.
Let us remember, that these folks already pay a distinctly lower rate of tax than you do—much lower than other businesses, much lower than homeowners. (Specifically, farmland owners pay just a quarter of the tax rate of residential homeowners.)
This discount is based on the notion that an acre of farmland requires fewer municipal services than does an acre of homes. We can debate whether this is valid or not—particularly if that acre has just one home—but it is the balance we have agreed to across most of Ontario.
But now John wants to upset this balance. More problematic, he wants council to subvert Ontario’s market value system of determining property taxes in the process.
Specifically, he wants you to pay the increase in his tax bill, because his land is worth more than it was four years ago. More than that, he wants council to fix it so that he doesn’t have to come back each year, seeking a bigger and bigger discount. He likely understands that this is a one-shot deal—that residents will clarify council members’ thinking if they acquiesce to his request.
To do this, he will ask council to ensure that his taxes never rise as a result of rising land values. He will urge council to adopt a complicated tax formula to forever protect him—and other farmland owners—from higher taxes due to higher property values.
On the other hand, should his farmland prices ever fall, he will, of course, insist on paying the lower tax. Plus, when he sells some land, he will naturally insist on pocketing all the capital appreciation he has gained with the increase in his land. It is called the “having-your-cake-and-eating-ittoo” principle.
John wants all the upside. None of the down.
Now some may be thinking,why do I care? If John has conjured a creative way to pay less property tax, then good on him. But here is the problem. For every dollar farmland owners save in this scheme, a dollar is added to residential or business land owners’ tax bills.
The County will likely raise about $35 million next year in property taxes. All of this will come from landowners in Prince Edward County. If council agrees to let John pay less, you will pay more. It is as simple as that.
No one should blame John for asking for this relief. It is smart, creative and legitimate advocacy for his constituents.
But council needs to give this a wide berth. There are a great many property owners who have watched with mounting distress as their property values hav risen over the past decade. A home in Wellington worth $200,000 three years ago is now traded for double that amount. Good for the seller. But the widow next door has lived her adult life in this house. She lives on a fixed pension and a bit of savings. She is buffeted by this storm of demand.
This year her property taxes are a thousand dollars more than they were a couple of years ago. She doesn’t have a thousand dollars. Not on hand. Yes, her property is worth more—but she doesn’t want to move. Yet she may be forced to—so that she can pay her increased taxes.
Council, if it is inclined to go along with John Thompson’s scheme, must first explain to this widow—and every other resident of the County—why she should also have to help pay the taxes of farmland owners too.