Shire Hall

Redistribution

Posted: January 19, 2017 at 2:14 pm   /   by   /   comments (16)

Council increases homeowners taxes to pay for reduction to farmland owners

Andrew Stronach, heir to the Magna auto parts empire, owns several thousand acres of farmland in South Marysburgh. He and other wealthy landholders are the big winners in council’s decision last week to reduce his property tax bill and raise those of County homeowners.

The Thomson family—the richest family in Canada—are also the beneficiaries of County council’s bout of generosity. So too is Bob Hunter, with thousands of acres in Hillier. Hunter lives a in a magnificent home on about 10 acres overlooking Lake Ontario west of Wellington—with a stunning view of the sandbanks.

Neither Stronach, Hunter or Thomson spoke to the committee of council last week that approved the redistribution of property taxes they pay onto residential homeowners in the County. Instead, Prince Edward Federation of Agriculture head, John Thompson, orchestrated a procession of young farmers to the podium at Shire Hall.

The land they own or rent is worth more than it was in 2012—in some cases considerably more. Under other circumstances, rising land value would be seen as a good thing. The problem here is that property taxes are allocated based on the value of the land—the more valuable the land, the more taxes one pays. Every four years, a provincial agency, the Municipal Property Tax Corporation (MPAC), tabulates the increase in value and phases it in over four years. Each municipality uses this data to allocate its tax levy between land classes and individual properties.

A few years ago, the value of waterfront property surged higher. Overnight, these landowners were faced with massive property tax increases as a greater share of the County tax burden fell on their shoulders.

Now it is farmland that has increased in value relative to other property classes. In many cases, the assessed value of farmland has increased much more than residential land—at least in the last four-year span. Some farmland owners say it means a doubling in taxes payable to the municipality.

Many of the folks filling the seats at Shire Hall last Thursday told council the rise in property taxes threatened their ability to farm and to grow their business. Some said rising land values and taxes discouraged young people from getting into the business, predicting that when the existing generation retired, farming might disappear in the County.

It was an appealing argument. While some councillors knew instinctively that tinkering with the tax rate and taking tax money from one class of landowner and giving it to another was likely a bad idea—the stern, mostly young, faces in the gallery in Shire Hall made a compelling case for council to act in their favour.

Some council members, however clearly didn’t understand the solution being proposed. Some, lacking a solid grounding in how property taxes work, were easily led. Others simply couldn’t face the idea of turning down the assembled group of voters.

John Thompson was exceptionally skillfull in laying down a path for council to follow.

THE ARGUMENT
Registered farmland owners represent about 10 per cent of all landowners in the County, but pay about 1.6 per cent of the County tax levy. This is mostly because farmland is taxed at a quarter of the rate of residential land, and is generally valued lower than residential land. The province limits municipalities from taxing farmland to no more than 25 per cent the rate of residential landowners. This is done to reflect the fact that farmland commands fewer municipal services than does residential land.

It has worked pretty well. That is until farmland values began to rise across North America.

Thompson pointed out that if council stuck with the current tax rate, the farmland owner share of the County tax levy would rise from 1.6 to 2.9 per cent. In an inspired bit of salesmanship, Thompson argued that reducing farmland taxes wasn’t a tax break (it is), but merely maintained the farmland owner share of the tax levy closer to 1.6 per cent, where it had been before land prices increased. To do this, however, Thompson had to persuade council to reject the principle of current market assessment—a principle of municipal taxation employed across the province for three decades—for this single class of land in Prince Edward County.

Thompson did it well. Some councillors awkwardly mimicked his arguments, either overlooking or not fully understanding what they meant.

North Marysburgh councillor David Harrison suggested, most bizarrely, that farmers weren’t asking for a reduction, that “there is no redistribution. That this keeps everything status quo.”

That is neither accurate nor what Thompson said. Thompson knows this is redistribution. He knows that residential homeowners will pay for this tax reduction to farmland owners—but he argues that the impact on this land class will be small. Reducing the burden for a few, increasing it on many.

Other councillors simply saw the opportunity to reward and assist an important constituency. Others displayed a poor understanding of economic development suggesting that taking from one land class and giving to another was equivalent to the investment in County’s economy.

Councillor Janice Maynard led this tack. Maynard pointed to list of initiatives the municipality has undertaken aimed at spurring investment and growth. She suggested shifting the tax burden between tax classes was a way to balance the ledger.

“I’m not afraid of setting a precedent,” said Maynard. “This is a real deal.”

She cautioned that council should avoid pitting farmland owners against urban dwellers—while doing precisely that.

THE UNREAD REPORT
It was unclear how many, if any, council members had actually read the report prepared by Chief Administrative Officer James Hepburn. It is thorough (12 pages) and clear in its recommendation that council reject the proposed redistribution.

Hepburn offered a general note of caution that council should avoid shifting the tax burden between classes as principle—that it is likely to stir up the newly burdened class and indeed would set a precedent for other land classes seeking similar relief

Hepburn noted, too, that while Council had the power to shift the portion of the tax burden collected for the municipality—it could do the same for the education portion.

He explained that MPAC has improved its assessment methods and that a better route for farmland owners was to appeal significant increases to the agency.

Hepburn noted that farmland owners already receive a 75 per cent discount relative to residential homeowners and that according to a position paper prepared by the Eastern Ontario County Treasurers, the farm tax ratio should remain unchanged.

But Hepburn’s report got little mention in the long debate.

PRETZEL LOGIC
One councillor voted in favour, not because he believed it was a good idea, but rather as a means for council to maintain “community cohesion”. Treat Hull changed his vote during the debate to show empathy to the assembled landowner and farm tenants.

“It’s a small token,” said Hull. “It’s a way to show we are all on the same team.”

Sophiasburgh councillor Bill Roberts was sympathetic to the plight of young farmers. As Thompson had argued, farming is a generational business—that gains made in land values don’t help cash flow. That faced with higher taxes, farmers—particularly younger farmers—would find it difficult to stay in the business or grow.

But Roberts worried about using tax ratios to address this issue. He worried aloud that the large farmland holders would be the big winners in this decision.

It was Picton councillor Lenny Epstein who would stake this ground most firmly. Epstein argued for establishing a fund to target young farmers facing the most acute difficulty.

“I don’t want to give it to mega farmers who already have a huge tax break,” said Epstein. “I want to show we can target assistance to young farmers.”

His suggestion got no traction.

LEADERLESS
Despite conversations with other municipal leaders in Eastern Ontario, most of whom were unwilling to tinker with tax ratios, in addition to the report from the County’s CAO, Mayor Robert Quaiff timidly tiptoed around the debate.

He listed a variety of reasons why council should leave tax ratios alone—then he went along with the herd.

“It’s going to be delicate,” Quaiff told council and the assembled farmland owners.

In the end, Mayor Quaiff and 12 councillors voted— against their most senior staff’s recommendation—to reduce the portion of the tax levy payable by the farmland class to 20 percent, from 25 per cent, for this year and next. When the final vote came however, Epstein too appeared to raise his hand in support, making it unanimous. Councillors Kevin Gale and Steve Graham had already left when the vote was called.

The decision will come back to council on January 24 for ratification before becoming a bylaw. It’s unlikely the Stronachs or Thomsons will be there to offer their thanks. There may be a few homeowners, however.

Comments (16)

  • January 24, 2017 at 8:49 pm Jan

    Wow, I found this article very manipulative. Why did the author only talk about the three largest land owners to represent the farming community in the county? As if all Farmer’s had that kind of money. Was this article an official opinion piece or was it supposed to be actual covering of news?! REAL farmers, not investment buyers, need many acres to actually farm. Inputs are costly and the profit margin in farming is pretty darn skinny. If the county wants to save some money, how about they re-visit the decision to truck the snow from the roads of Consecon, Wellington and Bloomfield all the way to Picton.

  • January 24, 2017 at 7:34 pm Since 1857

    I’m not too sure just why the size of Mr. Hunter’s home, or vast wealth of Mr Stronach have anything to do with this issue. These men did not make their fortunes strictly from farming. Maybe we should just wander fancy door to ritzy door demanding money from the rich people? I work a full time job while milking cows and trying to invest in my family’s farm. I’m doing alright, but I also put in a long day, 7 days a week. I know I’m not the only one who’s working 2 or 3 jobs out there, on farm or off.
    Just sayin’…. We ain’t all loaded.

  • January 24, 2017 at 6:57 pm TIRED

    The truth is that farmland should not be taxed at all. Do you not need food to survive? Why should there be tax on it? Increase the taxes on junk food and non-essential food products, and other sin taxes. The average age for a farmer in Ontario is 54.5 as of 2011. Isn’t that when many of us are retiring? Aside from supply managed farm occupations like dairy and broilers….. farmers don’t know what their paycheck is going to be when they sell their commodities. Many only get paid a couple times a year such as in the fall when crops come off or when livestock are sold. Farmers buy retail and sell wholesale….it’s an old story. Commodity and livestock prices are at the whim of traders in Chicago and elsewhere, who make there profits off the farmers back by pushing buttons. Soaring input prices are created by Monsanto and other huge conglomerates who consolidate and monopolize to make gargantuan profits…. again off the farmers back. But yes we should tax the farmers land some more as CEO’s make outrageous salaries and avoid paying taxes using offshore accounts. Farmers are not Stronach’s and Thompson’s and sensationalizing the article to make this statement is totally irresponsible. Buy Local….Buy Canadian!

  • January 24, 2017 at 3:15 am m

    What a slanted biased story. perhaps you should get your facts straight before writing such a slanted biased story. Shame on you!
    If you had read the data properly you would see local farmers are not asking for a tax break but rather asking for taxes to not increase! with farm land MPAC appraisal doubling that means some local farmers will see up to an 100% increase in land taxes.

  • January 23, 2017 at 7:53 am Jen

    Not all farmers are rich. The ones that are have income from somewhere else (ex son of Magna). Most of us need this tax break to make food and live in our houses and keep the lights on too. Ever see another retail item that expires or depends on mother nature’s nasty mood swings? There are expenses that go into farming and many of them go into debt just trying to make ends meet. This tax break helps them. Every farmer. Rich or poor.

  • January 22, 2017 at 8:30 pm Erin Dunlop

    Very disappointing!!!!

  • January 22, 2017 at 7:29 pm Chuck

    same crap different day. pretty much the rich mans version or welfare. I have to ask what exactly is a farm. is that a huge waste land with an old barn on it? you know one that used to be worked, with cattle in the barns now its just a piece of land that is hayed off each year by another farmer who happens to actually own a tractor. I think first off they have to establish what exactly constitutes a farm I have no issues with the landowner who happens to be a farmer. this means equipment, barns. livestock. the rich guy who bought up land and lets it just sit there until the time is right to sell it off does not make them a farmer who deserves a farm credit , and letting another farmer work his fields for a split in profit. does not make him a farmer either .

    • January 23, 2017 at 7:46 am Jen

      To be a farm you need a government paper stating it’s a farm or else you pay regular taxes. We lost our farm tax for a season because the guy who rented our land was a flake and didn’t file. We paid a boat load for land with no well no structures no hydro but had to pay for it as if it was there.

  • January 22, 2017 at 6:31 pm BM

    What’s wrong with far and even taxing across the board? Not right that residential should have to take up the slack in taxes.

  • January 22, 2017 at 5:57 pm PJGraham

    I find this appalling. First to ignore senior staffs 12 page report shows me that this Council has no interest as to what staff reports. To sit in a circle and play like children with no regard to what this means to those this tax redistribution will fall on. I for one do not want pay towards another’s farmland taxes. I work and it’s a tough job but I don’t get a break. Prices go up I like many others have to work harder and get less. Now I have to work harder to support the farming community. This Council from what I know and the decisions made on various issues show no regard for their taxpayers, money handed out willy nilly all the while telling taxpayers we have to raise taxes to sustain services. Well I will be sustaining another tax class, contributing to economic development which caters to those who visit along with council reps who obviously are to busy to read understand 12 pages. Who knows maybe I will be buying your lunch from one of our farmers as a thank you for job well done at shoveling dirt.

  • January 21, 2017 at 11:30 am Andre Gratton

    Couple of things….Councillors needed to make an informed decision which in this case was read and understand what would appear to be a thorough report. Ignoring it is not appropriate. Secondly “redistribution of the pain from few too many” is not an alternative. Although I am in agreement that farming is a tough job, not sure it’s more incumbent on the rest of us to pay their share to make up the difference. Lastly another solution of adding this additional portion of the tax over a period of time to these farmland owners might also be a solution to consider. Because what I will say is when my tax assessment on residential property goes up,do I have the same recourse to ask for it to be redistributed to a broader group?

  • January 21, 2017 at 10:13 am evil

    John Thompson was so damn good at pulling the wool over our councils eyes they had no idea what he was saying he is one of the many well to do farmers that will gain from shoving the tax burden onto the residential folks same on you Thompson and council

    • January 23, 2017 at 9:48 pm Biz owner

      This is a patently unfair and misguided decision. As a rural residential taxpayer in the county, I am already paying an outrageous amount of property tax relative to the services I receive. And MPAC has proposed increasing those taxes based on a completely uninformed and bogus market value assessment. I am also a small business owner, and I buy all the inputs that I can for this business in the County. Why should the farmers get special consideration? We all work hard to scrape by, pay our bills and the tax rolls.
      By pitting residential landowners against the farmers Council is making a huge mistake and setting a terrible precedent.

  • January 20, 2017 at 9:00 pm Janice

    This is incredible!! What is wrong with this County council!! They are just a bunch of sheep–with absolutely no backbone!! Epstein had the right approach and then folded like a wimp!! The Stronachs and Thomsons must be laughing all the way to the banks!! This needs to be reversed!!!!!

  • January 20, 2017 at 12:51 pm Carolin

    this is outrageous! I am supporting our farmers by buying their produce. I am for small businesses and I own a small business to. nobody helps me paying my taxes or water bills or hydro bills. Why must we give the rich and the wealthy people a tax break!

  • January 20, 2017 at 10:55 am wevil

    if we residential property owners must help pay the farmers taxes then it is also fair for the farmers to help pay for our water and sewage costs

Comments are closed.