Helping plenty

Farmland owners need to knock on another door. Residential homeowners have given already. Plenty. For 20 years, homeowners have paid 75 per cent of farmland tax. They didn’t agree to do this. It was thrust upon them in a basket of bad ideas conjured by Mike Harris and his team at Queen’s Park in the ‘90s.

Today, some farmland owners, enjoying rising land values, want neighbouring homeowners to pay an even larger share of their, also rising, property taxes—say, 80 per cent or so? Some on County council seem inclined to go along.

Some background: Prior to 1998, farmland owners and residential homeowners all paid the same rate of tax to the municipality. Each year, farmland owners filed for a rebate to the province equal to 75 per cent of their municipal tax bill. The province sent them a cheque. The municipality received the money it needed to run local government. Everyone was happy.

But Mike Harris’s government—short on funds to pay for his Common Sense Revolution— decided to shift the cost of the farmland rebate onto property tax payers.

This is how he did it. His government declared a new farmland class. Qualified land owners in this class would, from that day forward, pay property taxes at a rate of 25 per cent of the residential rate. Rather than apply for a rebate each year, farm land owners simply paid a quarter of the rate of residential homeowners.

But here’s the thing: Prior to 1998 it was the province that paid the rebate. Since then, it has been municipal taxpayers picking up the tab. In places like Prince Edward County, that means mostly residential homeowners. The County simply doesn’t have a meaningful commercial or industrial tax class generating tax revenue. So, it’s on homeowners.

What does this add up to? According to the County report prepared for its January 25 committee meeting, farmland generated $649,035 in property taxes last year—a mere two per cent of the $33.6 million total tax levy raised. Had these land owners paid the full residential amount, they would have owed about $2.6 million. The difference, about $2 million, still had to be paid by someone. Every year since 1998, part of your property tax bill has funded the discount to farmland owners.

So perhaps a thank you is in order? Certainly, before anyone indignantly insist that residential homeowners should pay an even greater share of the farmland tax bill.

Consider too, some of the other ways residential homeowners help farmland owners in Prince Edward County. A letter writer complained last week in The Times, that this columnist was hypocritical to support lower development charges as a means to encourage new homebuilding, but not farmland owners seeking to shift their taxes onto residential homeowners.

Set aside the apples to donkeys comparison— it’s interesting he would bring up development charges. Interesting because farmland owners don’t pay development charges on farm buildings. When any other business erects a new 5,000 square foot building, it is liable for about $10,000 in development fees. A new barn of the same dimensions pays zero. Perhaps the letter writer didn’t know this. It’s likely most folks don’t know this.

Development charges are collected to fund the cost of future growth related to such things as firefighting, roads and parks. One business pays the full rate—the other pays nothing.

Unless it is a winery or a beer maker or spirits producer. Even if these folks harvest all the ingredients on their land, and they construct a new building to process these ingredients into wine or beer or vodka, they pay the full development charge.

Like property taxes, this development charge bill must be paid by someone. But it’s not the farmland owner.

Now, in fairness, I must point out again, that farmland owners pay the full residential rate on their farm home and an acre around their home. The discounted rate applies only to farmland.

And perhaps this is as it should be. There are reasonable arguments to suggest that farmland ownes pay a lower municipal tax than residential homeowners. Furthermore, most residents are supportive of agriculture in its many and varied forms in the County—either, directly through the purchase of local food or indirectly through a web of supports including discounted property taxes and exemption from development charges. Yet there are limits to this fealty.

There was an equilibrium, of sorts, before John Thompson came to council asking that homeowners shoulder a greater share of farmland owner’s taxes. But he risks overplaying his hand.

The truth is that farmland owners have a wealth problem. And, at the end of the day, these are businesses. With all the opportunities, challenges and responsibilities of other businesses.

Their land is worth more than it was a decade ago. In some cases, much more. Even if they don’t wish to sell, the increase in land value enhances their balance sheet. And their net worth. They can borrow more. At better terms. They can sell some, or part, of their land at a windfall profit. It’s a good kind of problem. The kind businesses deal with every day.

There may yet be a solution found to assist those small farmers hardest hit by rising MPAC assessments. But it’s not by putting the touch on council to shift more of the tax burden of every farmland owner onto residential property tax payers. They’ve helped enough.

rick@wellingtontimes.ca