Thursday 3 December 1992

Metro Toronto Reassessment Statute Law Amendment Act, 1992, Bill 94

George Milbrandt

Hugh Green

Canadian Federation of Independent Business

Linda Ciglen, director, provincial affairs, Ontario

Ted Mallett, senior economist

Canadian Railway Labour Association, Ontario Legislative Committee

Dennis Schweitzer, chair

Canadian Institute of Public Real Estate Companies

Ronald Daniel, executive director

David Stewart, member

Ontario Restaurant Association

Constance Wrigley, manager, municipal government affairs

Canadian National Railways

Allen Deegan, vice-president, Great Lakes Region

Bart Marcolini, national president, United Transportation Union

of Canada

Patrick Marum

Citizens for Property Tax Reform

Midge Day, president

Storm MacGregor, past president

CN Real Estate

Ron Ditchburn, manager, property tax

Transportation-Communications Union

Jack Boyce, national president

Taxpayers Coalition Ontario

Paul Pagnuelo, vice-president and director, eastern region

Canadian Shoe Retailers' Association

Sharon Maloney, president

Toronto Arts Council

Anne Bermonte, associate director

Michael Baillargeon

Anna Gaudio

York Mills Ratepayers Association

Yarmila Filey, secretary

Tim McDonald

Mohammad Akram

Seaton Village Residents Association

Roslyn R. Pauker, cochair

Costa Kotoulas; Bessie Kotoulas

Edna Hudson

Kingsway People

Harold Bradshaw

Grace Hunter

Eric Jones

Marion Jones

Doug Carroll

Alf Mallia

William R. Boehm

Taxpayers' Alliance

Tony Natale, vice-president

John Lavin, vice-president

Brian McConville


*Chair / Président: Beer, Charles (York North/-Nord L)

*Acting Chairs / Présidents suppléants: Miclash, Frank (Kenora L); Wiseman, Jim (Durham West/-Ouest ND)

*Vice-Chair / Vice-Président: Daigeler, Hans (Nepean L)

Drainville, Dennis (Victoria-Haliburton ND)

Fawcett, Joan M. (Northumberland L)

Martin, Tony (Sault Ste Marie ND)

*Mathyssen, Irene (Middlesex ND)

O'Neill, Yvonne (Ottawa-Rideau L)

*Owens, Stephen (Scarborough Centre ND)

White, Drummond (Durham Centre ND)

Wilson, Gary (Kingston and The Islands/Kingston et Les Îles ND)

Wilson, Jim (Simcoe West/-Ouest PC)

Witmer, Elizabeth (Waterloo North/-Nord PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Frankford, Robert (Scarborough East/-Est ND) for Mr Gary Wilson

Grandmaître, Bernard (Ottawa East/-Est L) for Mrs Fawcett

Mammoliti, George (Yorkview ND) for Mr Drainville

Miclash, Frank (Kenora L) for Mr Beer

Mills, Gordon (Durham East/-Est ND) for Mr Martin

Poole, Dianne (Eglinton L) for Mrs O'Neill

Rizzo, Tony (Oakwood ND) for Mrs Mathyssen, Mr White and Mr Martin

Stockwell, Chris (Etobicoke West/-Ouest PC) for Mr Jim Wilson

Swarbrick, Anne (Scarborough West/-Ouest ND) for Mr White

Turnbull, David (York Mills PC) for Mrs Witmer

Wiseman, Jim (Durham West/-Ouest ND) for Mrs Mathyssen

Clerk / Greffier: Arnott, Douglas

Staff / Personnel:

Drummond, Alison, research officer, Legislative Research Service

Richmond, Jerry, research officer, Legislative Research Service

The committee met at 0940 in room 151.


Consideration of Bill 94, An Act to amend certain Acts to implement the interim reassessment plan of Metropolitan Toronto on a property class by property class basis and to permit all municipalities to provide for the pass through to tenants of tax decreases resulting from reassessment and to make incidental amendments related to financing in The Municipality of Metropolitan Toronto / Loi modifiant certaines lois afin de mettre en oeuvre le programme provisoire de nouvelles évaluations de la communauté urbaine de Toronto à partir de chaque catégorie de biens, de permettre à toutes les municipalités de prévoir que les locataires profitent des réductions d'impôt occasionnées par les nouvelles évaluations et d'apporter des modifications corrélatives reliées au financement dans la municipalité de la communauté urbaine de Toronto.


The Chair (Mr Charles Beer): Good morning, ladies and gentlemen. We begin the meeting of the standing committee on social development dealing with Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992, and I would like to call Mr George Milbrandt, who is the first witness today. Mr Milbrandt, welcome to the committee. Take your seat and, when you're ready, please begin. We have 10 minutes.

Mr George Milbrandt: I'm George Milbrandt. I represent myself. I'm not representing a group, but I have been involved in the assessment reform situation for a number of years, starting in February 1987, through a ward committee in North Toronto and followed by the residents' liaison committee on assessment reform in the city. I'm presently a member of the assessment reform working group in the city, since February 1989. So I have some familiarity with the issues related to market value and the so-called market value reassessment and some alternative proposals that have been put forth.

I'll state right off that I am for real property tax reform and assessment roll updates. We sorely need that in the Metro area. I'm against the Metro reassessment proposal for a number of reasons. To me, one very important reason is that, to my knowledge, there has been no impact study, at least through the end of October. The city had a great deal of difficulty getting any information so that it could perform an impact study. They were able to do so with the 1984 data, but they have not, to my knowledge, been able to complete one with the 1988 data. So one reason is, no impact study.

It's too complicated to understand. It's even more complicated than the present assessment system. It's too costly to implement, spending a lot of time and energy and money to implement a system that's flawed. It will encourage court challenges to the assessment, to the exemptions and to different treatment of different groups. All the energy that's focused on this temporary plan delays real reform. Those are some of the reasons I'm against the Metro reassessment proposal and against market value in general.

Again, it's open to costly court challenges and too volatile in an urban area like Toronto. That's one of the reasons the assessment rolls were frozen, if that's the correct term, at the 1940 values, because the people at the time of the incorporation of Metro felt that was the most stable period we had. A market value is much too volatile for an area like this. There's a big difference if you look at the 1984 information and compare it to the 1988. Even at a cursory view, you'll notice there are big shifts in the assessments.

In general, market value discourages property improvement, it's not a reflection of ability to pay, and to use a term that I recently noted in some articles, it discourages "dense urban areas." It leads to what some would refer to as urban core rot; ie, things that have been experienced by cities, urban areas, in the US. The urban areas are taxed and taxed and taxed, and eventually you end up with the people who are most able to pay and the people who are least able to pay. You have very little in between and you lose a lot of the vibrancy of a city.

Real property tax reform and assessment roll update to me would include something like the unit assessment system that's been proposed jointly by North York and the city of Toronto that deals with a combination of building area and land area. These are fixed. They're not subject to question. You don't get the court challenges. You don't get people not understanding. To use the old system, they have so many square feet of building, so many square feet of land, and some ratio could be determined between land and building, and it could vary, depending upon the class, whether it's residential, apartment, commercial or industrial, but it's affixed.

Once it's determined, once the ratio is figured out, you have an assessment unit, if you will, that could then be used to base your assessment on. It's something that is relatively stable. It would serve the same purpose as freezing the assessments at the 1940 level or the 1953 level or whatever level you'd choose to freeze them at, and the changes to this system would depend on additions to the property; ie, you add another piece of property, an adjoining piece to your property, you increase or decrease the area of the building, and this would then adjust the assessment. Again, it's very straightforward and it doesn't have to be redone every four years. It doesn't require a huge bureaucracy to administer it.

If the unit system is, for example, unacceptable in its pure form for one reason or another, there's also a proposal that's called the unit-enhanced system where you bring in a small amount of market assessment, but still it is done in such a way that it's a relatively stable system.

Some of the reasons why a system like the unit or unit-enhanced would be preferable is, you control the volatility. You don't have huge swings up and down over a period of time in the assessment values from one location to another within an urban area. You limit the court challenges, to a very large extent. Because the assessments are so clear-cut, there's very little to challenge. Building additions or deletions and land size additions or deletions are easily adjusted.

You have a gradual phase-in period. You don't have the situation we'll be faced with in Metro if this goes ahead; that is, businesses closing and people unable to stay in the city. Once they retire, they will not be able to afford taxes this system would create. You'd have a gradual phase-in period for something like a unit or a unit-enhanced system. Once you get into the system, it's a very stable system and it's long-lasting. The phase-in could be five or 10 years, and there are no surprises at the end of the five or 10 years. With the present system, there's a surprise if you sell. There's a surprise in five years in any case when full assessment comes into the picture, and within a family, if parents decide to sell their home to one of their children, they're hit with the full assessment. Again, you're destabilizing a situation more.

The Chair: Mr Milbrandt, if I could just interrupt, I know there are a couple of people who did want to ask you a question, and I'm just afraid with the time frame --

Mr Milbrandt: I have three more points and then I'll finish, and then the questions.

The Chair: Okay. Thank you.

Mr Milbrandt: Easy to administer would be another reason for a different kind of system, easy to update, and it better reflects the ability to pay. There are just a couple of notes here, points I would want to make.

To me, real reform also means that you should separate things like police, roads, sewers, lighting, sidewalk, trash pickup and disposal and so forth, from social services -- right now that's all part of the tax system -- and also from education.


Education takes well over 50% of the property tax bill, and there are some suggestions. I made two copresentations to the select committee on education in 1988 and 1989 about how the education system could be separated from the property tax, and there are two particular recommendations in the Macdonald report of December 1985, recommendations 23 and 24 that are particularly pertinent, although the Macdonald report itself offers a very good way of separating education from property tax, which would further help deal with what I think will be a devastating blow to the Metro area, and especially the city of Toronto if we go ahead with this proposed Metro reassessment plan.

The Chair: I have Mr Wiseman and Ms Poole.

Mr Jim Wiseman (Durham West): I come from outside --

The Chair: If you could just be brief.

Mr Wiseman: Oh, I'm quick. You just used up more time.

I come from outside Metro and what you're trying to do is to convince me that Alan Tonks and Joyce Trimmer and all the other mayors and councillors from the Metropolitan Toronto area are incompetent, uncaring and do not have any idea about what they are doing to Toronto.

Mr Milbrandt: Those are your words, but I would certainly say the system they have proposed is not a good system. It's flawed. They didn't do an impact study. If you'll excuse the expression -- I'll use some words of my own -- they want to stick it to the city. Combined with the commercial concentration tax, the city already, with 29% of the population, pays 41% plus of the Metro tax. It will go up to close to 47%.

In terms of school taxes, the city of Toronto gives some $900 million to the school tax; $600 million comes back to the city. So the city is paying more than its fair share.

Mr Wiseman: My question wasn't about the statistics, because we've heard them. My question very simply is, why do they want to stick it to Toronto? Give me something that says I should use my legislative position here to override the duly elected representatives of an area like Scarborough.

Mr Milbrandt: I'll give you an example on possibly why. The city itself is a very economical place to live in terms of services and what have you. I live in a home on a 26-foot frontage, a 95-foot lot, a very small lot. The lots in my street average 25- to 35-foot frontage. They're very small.

It's very economical to carry out city services. I pay close to $3,400 in taxes already, which I think is more than enough for a 26-foot frontage. There are people I know in the suburban areas who have 50, 60, 70-foot frontages. If they pay what I'm paying, it would be unusual. I don't think it's reasonable that the city should further support urban sprawl. That's literally what it amounts to.

The Chair: We'll have to move to Ms Poole.

Ms Dianne Poole (Eglinton): George, thank you very much for your presentation today. You've certainly been one of the leaders in our area on this issue and are very knowledgeable.

One of the myths that's been perpetrated is that Metro looked at the unit assessment plan proposed --

Mr Milbrandt: They did not.

Ms Poole: -- by North York and the city of Toronto and that they did review it and they came to the conclusion it wasn't workable. Would you elaborate on your response right now, which is that they didn't and, secondly, on the lack of impact studies?

Mr Milbrandt: To my knowledge, they really didn't do any study. The information I get, talking to the finance people in the city, plus various hearings I've been at, is that at best they gave a cursory look at a variety of other systems but never really looked at them thoroughly; nor did they do an impact study with the unit assessment system or any alternative that I know of.

In terms of the impact study for the present proposal, I am not aware of an impact study. To me, it's extremely important that you should know how the tax structure is going to affect the areas involved. I do know that the city of Toronto did an impact study based on 1984 when it had the information available, so it would be able to tell you exactly how it was going to affect various properties in the city. They weren't given the data for 1988, they weren't able to do an impact study and, to my knowledge, they weren't able to get an impact study from Metro because Metro didn't do an impact study. They're just hoping this will work out.

The Chair: I'm awfully sorry about our time constraints. I'm afraid I'm going to have to close it off at that and thank you very much.

Mr Milbrandt: You're welcome. Could I ask a question? I heard the other day that the present government has already approved this system. I'm wondering why we're having the hearings if that's the case.

The Chair: This committee is meeting after second reading. The committee reviews the bill and then reports back to the House, where there is then another discussion and another vote on third reading. There are still several procedures. We are handling it in the normal procedure.


The Chair: Mr Green is the next witness. I'll state at the outset that if you would like to have some questions, leave some time. There is 10 minutes. If you wish to use all that time for your presentation, that is fine as well, but we are tight and I will have to be firm with the time. I apologize for that.

Mr Hugh Green: That's understandable. My name is Hugh Green. I have a company called Johnston and Green Real Estate Ltd at 571 Logan Avenue in Toronto. I've been a broker for approximately 20 years. I come from Bob Rae's old district, and it's now Marilyn Churley's, who is totally against this whole market value system.

Mr David Turnbull (York Mills): That's not the way she voted.

The Chair: Order, please. The witness has the floor.

Mr Green: I have spoken to Marilyn personally on the telephone -- as a matter of fact, during the last two weeks -- and she has told me personally that she's totally against this whole market value assessment.

First, I'd like to thank the committee for allowing me to come here in the first place. I'd like to remind all the NDP members that they have opposed market value assessment from the very beginning. Even Bob Rae, who lived on Withrow Avenue, approximately one block from my office, has always been against this system. I hope the members don't forget this. It's just that I don't want to see another broken promise by the NDP government, as with other things it has mentioned in the past where it hasn't kept its word to the people.

Market value assessment is suicide for Toronto. You can't destroy the core of anything and expect it to live. It just can't happen. This tax is totally anti-business and anti-employment. It's not a fair tax. If you believe in a fair tax system, a home in Scarborough that's valued at $300,000 and a home in Toronto that's valued at $300,000 should be based on the same tax system. You can't have a system where in Scarborough they're going to pay $2,500 a year in tax and Toronto's going to be punished now and we're going to pay $5,000 a year in tax. What we're doing is flipping the coin now, because people in Scarborough say, "We've been taken to the cleaners by Toronto."

It wasn't the people in Toronto; it was the politicians of Scarborough with their mill rate. We've got to look at these things. It's the mill rate that has been increasing taxes. It's all been due to poor management of money in the city and all the other areas.

I don't understand why market value assessment was taken for 1988, which had the highest real estate prices the city of Toronto has ever seen. Also, one of their arguments is that market value assessment is in most areas in Ontario. But most areas never picked 1988; they picked 1974 or 1978. Why did they pick 1988, the highest prices in Toronto? It's beyond my imagination.


Many homes have been appraised wrong. You can't go into an area and say, "All the homes in this area are worth $200,000." For example, on my own street most homes have been appraised within $20. I'm a broker, and I can't appraise a house within $20. It's literally impossible. All homes are not equal. Some homes on my street are worth $500,000 and some homes are worth $250,000, so you can't say, "They're all within $20." Somebody has done a poor job of appraising the properties in Toronto. They just went to the real estate board and took the average figure. You can't walk in and say, "This is the average figure, so everybody is going to pay according to this." It just doesn't work that way. I'd be out of work if I appraised a house like that.

Even in my own neighbourhood, Howard Moscoe -- always been on television, screaming, "We're going to make the rich pay." Well, let me tell you about the rich going to pay. We have some $1-million infill houses in our neighbourhood. Their taxes are going down by an average of $2,500 to $4,000. That's on average. I did the study; I went and got the figures; I couldn't believe it. "The rich are going to pay."

All the small bungalows in the area are now paying approximately $3,300 a year in taxes. The new market value assessment is to raise these taxes from $3,300 to anywhere between $4,300 and $5,000 for the small bungalows, where it's all seniors and people on fixed income. Where are they going to get the money? But Howard says, "Oh, we're going to get the rich." We sure are: All their taxes are going down.

And there's no doubt in my mind that taxes will be going up on average, with the mill rate and what the city is going to tell us, about an average of 10% a year. To take an example, by 1998 we are going to exceed market value assessment, on a average of 10%, on my own property; I'm going to be paying $5,500 a year in taxes by 1998. According to market value assessment, my taxes are only going to go up to about $4,300. Where do they get these figures from? We're always going to have tax increases because of poor management.

Again, Toronto: Its population is about 29%, I believe, but we're paying over 40% of the bills. It doesn't take a rocket scientist to figure out we're already paying our share. We're paying more than our share in Toronto, yet Chairman Tonks thinks we're not paying enough. I don't understand where he's coming from.

I would like to know from members if any of the members here have walked Danforth Avenue recently. Have you walked Queen Street? Have you walked the Beaches? Have you walked Yonge Street? Do people realize what's going on?

I brought my mini-van today and I'm willing to take out any of the members here and show you what's going on. The stores are closing. We are in the middle of a recession. Now they want to kill it. I don't know what's wrong with Mr Tonks. I don't know what he is up to. He already bought a piece of land -- for an example, I used to rent space down at Front and Parliament. They destroyed the whole neighbourhood, they destroyed the tax base -- there used to be a big commercial tax base down there -- they gave us 30 days to get out. They buy a piece of land that's polluted --

Mr Chris Stockwell (Etobicoke West): That's the city of Toronto, though.

Mr Green: But he was still involved in it.

Mr Stockwell: No, he wasn't.

Mr Green: Okay. I'm sorry. I thought he was involved in it.

We're going to have major problems in Toronto if market value is passed. In the downtown core, the builders have already stopped building; the high-rise buildings have come to a stop. They're not going to continue building, because there's deep trouble in the core.

If the market value assessment tax is passed, it could easily kill the real estate market as we know it today. When you destroy the real estate market, not only do you destroy real estate, you destroy movers, plumbers, electricians, who need the work, and everybody else who is involved in the real estate market. The real estate market is already in trouble, and why we want to put the real estate market in more trouble is beyond my imagination. We've got to realize that we're in the middle of a recession. It is not over yet.

Two things I know for sure: If market value assessment doesn't go through, there won't be one single job lost and there won't be one business that will go out of business because of it. If it is implemented, one thing I know for sure: People will lose their jobs and businesses will go out of business. That is guaranteed.

Chairman Tonks has come up with market value assessment. The first plan he came up with wasn't a good idea, but he needed to get votes from the rest of the committee to have it passed. He didn't come up with an idea that was good for the people or good for anybody. He was just trying to put a package through that everybody on the committee would vote for. It didn't make any sense.

If you're going to go on a plane and you ask the mechanic, "Are the engines working?" and he says, "Well, we think they're working pretty good," would you go on the plane, if you're not sure whether it's going to work or not? He's asking you to pass something that even he himself is not sure how it's going to work. He's admitted he's not sure how it's going to work.

The Chair: Mr Green, could I ask you to conclude your remarks. I'm afraid we're over the 10 minutes.

Mr Green: There's just a few other things. I'd like to know why it is that we can't have a study. One of the questions we have to ask Chairman Tonks is, why is he afraid of a study? What is he afraid of? These are very important questions. What source do I have if he puts me out of business? Who do I come to?

One more thing: The day after this was approved by Metro council, a small business at 1010 Logan Avenue, called Logan Variety, closed its doors after 40 years in business. He said, "There's no point in continuing." This is a fact. How many more other businesses have gone out of business in the last two weeks because of market value assessment, knowing that politicians are not going to listen, they're just going to go ahead and pass it because somebody is telling you it's a good idea, without any studies being done?

Thank you very much for your time.

The Chair: Thank you very much, Mr Green. I'm sorry we are out of time.


The Chair: Would the representatives of the Canadian Federation of Independent Business please come forward. Be good enough to introduce yourselves for Hansard and please begin.

Ms Linda Ciglen: My name is Linda Ciglen. I'm the director of provincial affairs for Ontario of the Canadian Federation of Independent Business. With me is my colleague Ted Mallett, one of our senior economists. I'm going to turn it over to Ted.

Mr Ted Mallett: The CFIB represents 83,000 small and medium-sized businesses across the country. We have 40,000 members in Ontario and about 4,500 members in Metro Toronto.

We've been involved in this issue for the past three and half years or so, when this plan first reared its ugly head, and from the word go we've seen it as a cowardly piece of reform in its timing, its design and in its presentation. The push came more from political considerations than from the need for fair and effective property tax reform.

In its original form, this reassessment plan was designed to soak the commercial business community for $200 million a year, an additional $200 million a year to subsidize the residential community. When we complained about this financial hijacking, the word from Metro and the Ontario government of the day was, "The business sector has plenty of money and, if not, they can simply raise their prices."

It took the most serious recession in living memory to convince many politicians that the small business sector is not made of gold; it never has been made of gold. But we are still, despite the changes made to this plan so far, haunted with an overall system that's built on the basis of, "Let someone else pay," and that someone else is the small business community.


The problem is not unique to Toronto. Businesses all across the province have to grapple with the uncertainty of MVA and the high cost of property taxes in general. The lack of business competitiveness is a serious problem for this economy. Most significantly, it's the preponderance of profit-insensitive taxes like the property tax, the employer health tax, workers' compensation premiums and unemployment insurance. These taxes hit new firms the hardest and it's been new firms that have created the jobs in the economy.

When you compare, if you refer to figure 1 in our brief, the small business property tax load in Toronto with that of larger local businesses and of small and large businesses across the border, you'll see just how serious the problem is. The situation is not that much different in other municipalities across the province.

MVA is one of these concepts that appears to be just fine in theory, but falls down in practice. The reason it doesn't work in practice is because it is so arbitrary and subjective. If you ask a dozen different experts on a single piece of property, you'll get a dozen different values on that property. Theoreticians say these variations will work themselves out on average. The trouble is that individual property owners are not averages. Every property has a random chance of being overassessed or underassessed, and that doesn't give anybody comfort in the belief that the tax system is fair and treating him fairly.

Multiply that by regular reassessments every four years and you get a near constant state of uncertainty and bitterness. It's certainly not sensible economic strategy to rely on such an unstable system for such large volumes of money. Yet that's what Metro and the province appear to want to do.

By giving the green light to this plan, you'd be saying that any form of MVA is better than the status quo. But the status quo, despite all its warts, still has some semblance of stability, and stability is a virtue a tax system should never disregard. On the other hand, MVA means regular reassessments, reassessments sometimes mean radical changes in tax levels, radical changes in taxes mean business risk, business risk means constrained investment and constrained investment means fewer jobs.

The proponents of this assessment plan disregard stability as important. Instead, they leap to the notion of equity to justify their actions. Equity is a noble cause, but let's take a closer look at how they define it and we'll find the definition is quite one-sided. Metro's plan opts for a within-class section 63 reassessment. If they were truly concerned about equity, then they would have also reassessed across property classes. But currently we're now faced with situations where the average commercial business pays about three times the rate of tax as a similarly valued residential property. It's little wonder the small business sector complains about property taxes in Toronto and the rest of Ontario.

This differential, which is mentioned in figure 2, is not based on any meaningful notion of what businesses should pay versus home owners. It doesn't reflect use of services. It doesn't reflect ability to pay. The differential is completely arbitrary. Metro wants to lock in this differential for property classes as a whole and certainly make it uncertain for property owners through regular reassessments. It would be difficult to design a worse property tax system in Ontario, yet that's what we're facing.

Our recommendation is that this government should halt the progress on Metro Toronto's reassessment plan, not because of Metro government's handling of the issue but because there must first be work done at the provincial government level to improve the property tax system across the province.

First, you should work to stabilize the assessment methodology within the Ministry of Revenue. If property has not undergone significant changes from one assessment time frame to another, there's no reason why I should have to face significant tax changes. Situations where small business tenants of a large mall complex are hit with 100% tax increases while large tenants in the same mall are given tax decreases should not be allowed to occur.

Second, you should require all municipal reassessments in Ontario to be phased in gradually so that tax shocks are softened. The phasing-in approach should apply equally to both increases and decreases so that it puts an end to the type of political shenanigans we see in many municipalities across the province. In addition, one class of property should not have to subsidize another in the course of phasing in new assessment bases.

Third, you should ban the practice of applying the full impact of assessment changes upon the sale of a property. It creates significant inequities within neighbourhoods and can seriously lower property values for those who have worked long and hard for their nest egg.

Finally, you should speed up the critical review of the property tax system in Ontario and how it has become a serious millstone around the necks of the job-creating sector. Reviewing the use of section 63 as a reassessment tool should be included, as well as a broader analysis of the costs and the use of local government services by all who use them.

Only after these issues have been dealt with should the province allow municipalities to undergo wholesale reforms of their property tax system, because the impacts of such changes are far too great to be left in the hands of narrow interests.

The Chair: Thank you very much for your presentation. We'll begin the questioning with Mr Turnbull.

Mr Turnbull: Mr Mallett, thank you very much. Wouldn't you say it's a fundamentally flawed system that bases taxes, both the property tax and the business tax component, for a tenant particularly, on the value of a property?

Mr Mallett: It bears no relation to the ability to pay. It's the rates applied to business tax. Commercial retailers, for example, are assessed 30% above their property tax. If you're a travel agent, I believe it's 50%. These differentials are not based on any meaningful notion of tax fairness. They're simply arbitrary, and I believe they should be looked at seriously.

Mr Turnbull: For example, for the manufacturing operation, it would make a lot of sense to move away from an area where property values are high, simply because it drives the taxes, to a low property value area.

Mr Mallett: That's right.

Mr Turnbull: I see by your table that Buffalo compares very favourably with Toronto in all taxes.

Mr Mallett: That's right.

Mr Turnbull: My next question is about the cost of the tax assessment system. Do you not think the cost of constantly reassessing, as compared with a stable system which doesn't need constant reassessment, is money which would be better spent on the economy or reductions in taxes?

Mr Mallett: I believe the province spends about $100 million a year on assessing properties in Ontario.

Mr Turnbull: Actually, in addition to that $100 million, by the time you factor in all the costs of appeals, it's probably something like $200 million.

Mr Mallett: I can think of far better uses for that money to be put to, especially at this time.

Mr Turnbull: Would not the absolute prime objective be to have fundamental tax reform?

Mr Mallett: We're advocating fundamental reform, and we believe it should be looked at from the ground up by the province and not left in the hands of individual municipalities, which will choose different aspects of reform depending on their particular situation.

Ms Ciglen: If I could just add to that, the need for tax reform goes even beyond property tax reform, and this kind of ad hoc tinkering with the tax system that pretends that one can do that in isolation and that there is more than one taxpayer out there, when there really is only one taxpayer and all these different taxes are coming out of the same pocket, is one of the reasons we're in the mess we're in right now. There needs to be a fundamental change in attitude on the part of all three levels of government in the taxing authorities, and a realization that there really is only one taxpayer.

Mr Turnbull: I have one particular problem.

The Chair: Just one final --

Mr Turnbull: Yes. In the respect that the NDP has staffed its benches with people from the suburbs or out of town -- they have the majority of members in the city of Toronto, but there isn't one city of Toronto member sitting on this committee -- we have a problem, inasmuch as the constituents of the people who come from the suburbs are going to see reductions in taxes, and understandably they may be fighting for the position that they want to get those reductions. We saw the government, to a man, vote for this platform of accepting it. At the same time, they had fought on an election platform of being against market value assessment.

Interjection: To a person.

Ms Poole: Person; every darned one of them.

Ms Anne Swarbrick (Scarborough West): Thank you, Dianne.

Mr Turnbull: Here's the problem: How do we get them to understand that it isn't a question of us fighting for our people, that we want fundamental reform because it's fair?

Mr Mallett: We're looking at it from the long-term point of view, because five or 10 years from now it may be a completely different story, where we may find the suburban areas faced with large tax increases compared to the inner cities and we're going to have people switching sides. Our position will be the same. We want stability in the system. We want a good definition of fairness, and that is that local interests should not be allowed to drive the issue; it should be as widespread an issue of fairness as possible.


Ms Poole: Thank you very much for your presentation. I think you really outlined in a very eloquent way the impact on small business.

One technical point before I get to my questions: You've mentioned section 63 in your brief, and I, and probably every other person in the province who has talked about assessment, have been talking about section 63. I just learned last night that the numbering has been changed under the Revised Statutes of Ontario and it's now section 58.

Mr Mallett: Deflation.

Ms Poole: The confusing part is that the new section 63 is actually full market value where there are no classes, so the old section 63, which provided classes, is now -- it's very confusing, but somebody out there I'm sure, Mr Chair, will write us and ask what we're talking about, because it doesn't match the numbers.

The Chair: If not the Chair himself.

Mr Mallett: A rose by any other name.

Ms Poole: Is still bad.

One question I wanted to ask you: On the first page of your brief you outline the different taxes affecting small business, and one of them is business tax. For members of the committee who aren't as familiar, the property taxes and ownership tax and then the business tax is an occupancy tax, although in the first case the ownership tax ends up getting passed on to the tenant in many cases anyway.

The business taxes: Under this plan there is no provision to cap business taxes if there is a change in tenancy. We're not talking here about where one small business sells to another small business and it's a continuation of the same business. We're talking about if a tenant in a building moves out and a new tenant moves in, the business taxes will not be capped. I think this is something many businesses are not aware of. They will have the full impact of market value on their business taxes.

Mr Mallett: No, I'm sure they're certainly not aware of that situation. We'll run into the same situation where at present, in the residential community, if you sell your property the full impact of the assessment will take effect. You will find neighbouring businesses with wildly different rates of tax, even though they are perhaps in very similar areas dealing with the same kinds of customers. This is not a form of fairness; this is actually a big step in the wrong direction.

Ms Poole: The second point I wanted to talk about is that you addressed what will happen to residential properties at the point of sale. I am going to propose an amendment, which I hope the government will accept but which I have no guarantee it will accept, that at the point of sale, residents will still be protected by the cap, and secondly, that when there is a change of occupancy in the businesses, they too will be protected by the cap, insomuch as 25% is a protection.

The bottom line, I have to tell you, is that although I'm proposing this amendment, there is no guarantee it will pass and it is up to the members of the New Democratic Party, the members of the government, to make that determination. In the Legislature on second reading, 60 New Democrats voted on second reading and all voted in favour of this particular proposal.

Mr Mallett: Well, this amendment would not cost anybody any money. It would stabilize the system.

Mr Wiseman: Can you get the voting records of everybody else?

Ms Poole: I certainly can.

The Chair: For the record, will you allow the witness to respond. We have a time problem and there is another question or so. Please allow the witness to respond.

Mr Mallett: As I said, I believe this would not be a large, and certainly not an onerous, suggestion to make to Metro. It improves fairness in the system, and we'd certainly support that.

Ms Poole: One of the things members of the committee may not be aware of is that in the interim plan sent by Metro to the province of Ontario, they estimated it would be $6 million they would gain from putting in this point-of-sale, full market value provision -- $6 million in a budget of $4.4 billion. I say to members of the government, if Metro tells you that this plan will fail if you don't accept that amendment, then it's nuts. Six million dollars is a pittance out of $4.4 billion, and it does not jeopardize Metro's plan. Thank you for your presentation.

Ms Swarbrick: One thing said by my colleague from Eglinton had triggered in me that I thought it was wrong, so I was just checking. I'd like to correct that. The instructions from the Metro chairman in fact clarify that when one business moves out of a building and a new business moves in, the protection would remain in force; that is, the new business would be treated as if it had been there since reassessment. I just wanted to clarify that, because I would have grave concern also if that had been correct.

Ms Poole: Mr Chairman, a point of order.

Ms Swarbrick: Excuse me, it's not a point of order; it's just a correction.

The Chair: I have to hear the point of order.

Ms Poole: But you were correcting my record, so I did want to say --

Ms Swarbrick: There are all kinds of things you've said that I haven't corrected.

Ms Poole: -- that senior officials in the Ministry of Revenue say very different things about that, and they say this legislation does not provide it.

The Chair: We have points of opinion here. Perhaps we'll question our witnesses, and we'll debate in the House.

Ms Swarbrick: The briefing note I'm referring to of course would have been prepared with consultation by the Ministry of Revenue.

You've raised a number of very good points. In terms of my own representation on this committee, I want to clarify that I come from a riding, Scarborough West, where almost as many people will end up paying more as paying less, and I'm one of the ones who will be paying more. If we had full MVA, my taxes would go up by 25%, so I want that clarified.

In terms of the presentation you've made, on number 1 of your recommendations, you hopefully have learned by now that no small business tenants in a mall complex, as you referred to, would be hit by 100% tax increases, because the plan that Metro has proposed is not full MVA in terms of anybody existing, at least. I appreciate the flaws in terms of resale properties and the public lands, but --

Mr Mallett: The recommendation was directed at any municipality across the province. We've been getting calls from Cambridge, from Brantford, from Ottawa, in situations where this kind of capping arrangement was not put in place but they've seen these kinds of changes because of a large-scale reassessment.

Ms Swarbrick: I see. Thank you for clarifying that.

I share and our government shares a lot of the concerns you've raised, and we very much want to look at how we get a fair system in place for the future. The problem is, given Metro's proposal to us now, can we as the province immediately now try to correct the decades of injustices under the property tax system as it has existed under past governments? We certainly are very serious in wanting to move towards correcting them.

In terms of some of the things we're looking at, which include things like the education financing report that will come to cabinet in the new year, the property tax working group report from the Fair Tax Commission due shortly, and a number of the other issues like the disentanglement negotiations between the province and the municipalities, I just wanted to ask if the Canadian Federation of Independent Business is saying that you would support moves like moving the financing of the education portion of what's now under the property tax bill to be financed through the income tax system, where it would be more based on people's ability to pay.

Ms Ciglen: We'd really have to poll our members on that specific question. I don't know how well you know the way our organization works. Ted and I don't make the policy; we always ask our members.

But certainly the way the education system is financed now is of grave concern to our members, mostly because of the lack of accountability. Being hit themselves by fixed taxes -- property taxes, payroll taxes -- they are particularly sensitive to this ability-to-pay issue. They feel their ability to pay is not what's being taken into consideration in the amount of taxes they pay.

So we couldn't give you a specific answer to that proposal without putting it to the membership but, generally speaking, they do feel their ability to pay tends to be disregarded, because so much of their tax burden comes from fixed profit-insensitive, revenue-insensitive taxes. I don't know if that's a help to you. We couldn't be more specific without polling the membership directly.

Mr Mallett: In other provinces, we are on record as supporting initiatives to disentangle provincial and municipal responsibilities so that people services are paid through the income tax system and property services are paid through the property tax system.

Ms Swarbrick: I just raised that because I think in terms of our trying to look at moving towards greater fairness for the next assessment period, those are issues we need to start floating for public debate now, to be building that foundation for change.

Ms Ciglen: It's an important issue, and as I said earlier, it's so difficult to make any changes to the tax system that are fair without looking at taking on the enormous task of looking at the entire tax system at all three levels of tax in government. It's a huge task, but these little piecemeal ad hoc changes often just increase the unfairness and the burden.

The Chair: Thank you very much for your presentation. The prospect of looking at the entire tax system does fill one with a certain amount of trepidation, but undoubtedly that is coming. We thank you very much for your presentation and being with us this morning.



The Chair: I'd like to call the representatives of the Ontario legislative committee, Canadian Railway Labour Association, if they would come forward. Gentlemen, if you would be good enough to introduce yourselves, please proceed when you're ready. You have 20 minutes for your presentation; if you wish to have some questions, keep that in mind.

Mr Dennis Schweitzer: My name is Dennis Schweitzer. I'm the chair of the Ontario legislative committee. With me are James Houston, vice-chair; Pat Tiller, our secretary-treasurer; and Ron Bennett, who is the national legislative director for United Transportation Union -- Canada.

I would say at the outset that we view this issue as one of many that have national implications for our railway workers in Canada, and that's why Mr Bennett has accompanied us here. Individually, I represent United Transportation Union -- Canada members train and yard service personnel in Ontario; Mr Houston represents locomotive engineers, and he is from the Brotherhood of Locomotive Engineers; Pat Tiller comes from the Brotherhood of Maintenance of Way Employees, the railway employees who build and maintain the track infrastructure.

Together we represent 15,000 workers and their families in the province of Ontario. We've been before various legislative committees on numerous occasions and on a wide variety of topics. Normally and usually we've always included our very real concerns about taxes, particularly fuel and property taxes as they are applied to Canadian railways.

In our 1992 submission to the government of Ontario, we noted that fuel and property taxes are driving the railways to operate below the Canadian border. CN Rail, as you will probably hear later today, through ownership and various partnerships in the United States, has the ability to operate west coast to east coast below the 48th parallel. When the new CN Rail tunnel is completed at Sarnia, we would ask -- possibly rhetorically; hopefully it will never happen -- will there be a need for the northern route above the Great Lakes?

CP Rail, through its ownership of Soo Line, Delaware and Hudson Railway and other partnerships in the United States, can also operate below the border. There is no need in Canada to operate trains west to east for either railway, when they can operate south of the border in a much less taxed atmosphere.

As the members of this committee well know, many towns in north-northwestern Ontario are railway towns. If there is no railway, there's no tax base. We have seen a very clear indication of things to come from CP Rail. The recent announcement of termination of service east of Sherbrooke, Quebec, by CP Rail is a sign of that railway's financial plight.

We've asked, through our various committees throughout Canada, that the railways, our employers, be treated fairly, that they be regulated fairly and that they be taxed fairly; in other words, that they be made to pay their fair share but not more than their fair share.

The four of us at this table represent a number of years of service to CN Rail, CP Rail and Via Rail. We've seen and lived the decline of railway predominance of the transportation scene. We've heard the term "fat cats" used of the transportation business. That may well have been the case 40 or even 30 years ago, but it's not the situation today. We in the labour movement know the price that has been paid by the workers to keep our railways competitive with other transportation modes and indeed with other railways in the United States.

Our unions have signed innovative working agreements allowing CN and CP to remove cabooses, to operate with fewer crew members, to allow CN and CP to lower their operating costs to be competitive. We've done all those things. Don't you think we've paid the price? We believe we have.

In 1952, CP Rail had 83,000 employees in Canada. In 1988, that same railway had 24,000 employees. The figures for CN Rail are even worse. In 1965, when I started working for CN Rail, there were approximately 120,000 employees; today there are fewer than 36,000. In three to five years, according to CN in its recent announcement, there will be 10,000 fewer employees than there are today. Now Bill 94 threatens to hasten that process at CN by adding $30 million to its yearly tax bill. Bill 94 will allow Metropolitan Toronto to grab an additional $13 million from CP Rail.

The message we have for the standing committee is clear: We as workers can't give any more. The province must realize that we've bled enough. The government has to realize that CN and CP cannot be treated differently from other property taxpayers in Metro Toronto.

Prior to 1990, railway rights of way were categorized as separate property classes, probably because they were unserviced land, relatively worthless except for the purpose for which they were intended: to run trains. That classification system at least ensured that rights of way paid increased taxes in the same proportion as other property classes. We've been told that such a distinction or tax category for rights of way has been eliminated. Add that to the fact that adjoining properties are somewhat protected by the capping formula. The railways, CN, CP and GO Transit, are subject to the full force of immediately applied market value assessment if this bill passes.

We've been told that Metro Chairman Alan Tonks came before the standing committee and suggested that there would not be a tax shift from one property tax group to another. Our committee believes that $40 million in total represents a significant shift in tax burden to the railways and a substantial shift between tax groups. This burden, we believe, will create an insurmountable obstacle to the railway's ability to compete with all other modes of transportation in this province.

At the beginning of this brief, we spoke about the effect of fuel taxes on railways. What of the effect of an increase in property tax of 220% or more, particularly when the cost of doing business, taxwise at least, is already 40% to 50% lower in the United States for these same railways?

What of the truck situation? Truckers don't have to maintain their own roads; truckers don't pay taxes in the same way railways are expected to. Effectively, when taxes are increased for railways, we're assisting the government to take money to build and maintain better roads so that our truck competitors can better or more effectively take our jobs and our business away from our employers.

Ladies and gentlemen, I, as do my counterparts at this table, represent railway workers in most parts of the province, and we're very much afraid that this bill, and with it Metro's ability to increase property taxes for the railways, will be responsible in great measure for the further undermining of our railways, to the point where the next announcement from one of them might be to the effect that a major Canadian railway has ceased to operate in Ontario or in Canada.

We've been here for the last three presentations and I picked up on a couple of the comments. One of the members on this side of the table suggested that it would seem that Metro is either sticking it to the city or that the city was being stuck by this Metro proposal. We would ask why the railways are being centred out. Our employers can't afford this.

We have stopped short of making recommendations. We believe CN and CP have made recommendations that are in keeping with what we would propose if we were recommending to the committee.

I suggest one other area of great concern to me as a New Democratic Party member: It's my understanding that in recent conventions the party debated market value assessment and/or reassessment, and I'm concerned that we would put a bill into effect now, before the results of the Fair Tax Commission are known, before the recommendations are made. To allow this situation to exist and to carry on at this time seems like we're playing with some real fire. We cannot stress enough to this side of the House that our jobs, our people's jobs, are on the line. We talked to some of the members the other night and we talked about 6,000 jobs at CP Rail in Ontario. That is a lot of jobs and we're very concerned.


The Chair: Thank you very much for your submission and comments. We'll move to questions.

Ms Poole: Thank you very much for your presentation today. It really reinforced what we've heard so far from CP and Marathon. I believe CN is coming this afternoon, and also CN Real Estate. The message is becoming very clear.

The government's response to this is that this is Metro's plan. In fact, a direct quote from the minister is, "This is not our legislation; it's Metro legislation," which concerns me greatly, because the last I knew Metro council could not pass legislation in the Ontario Legislature. The government's answer is that it did put in a provision that Metro council could reconsider vacant lands and railway rights of way after the province approves this plan.

Given the fact that $48 million in taxes is estimated to be shifted to this other classification, in which you are a major player, and given that this is a fairly substantial total in the overall picture, do you place any reliance on Metro council revisiting this situation, exempting you from its plan and giving you the protective cap?

Mr Schweitzer: Personally, I don't. I reviewed the exchanges between Mr Turnbull, yourself and Mr Tonks, and obviously Metro's got a problem. They need to get the money from somewhere, and the easiest place to get it is from those who can least afford to defend themselves. I believe that if Mr Tonks got the straight goods from CN and CP, he would look to other alternatives.

What we're afraid of is that CP Rail can't afford to wait. They have to answer to their stockholders, and if they're assessed with this immediate grab of money, they're going to say something very drastic. CN Rail is already in dire financial straits and I don't know what it can do or what it can say. I know they can't go running to the feds for more money, because there is no more money. I mean, we heard about $8 billion in cuts last night. I don't place any faith in Metro's willingness to make changes for the railways. I believe it's up to you people.

Ms Poole: Your only hope, then, is if the government listens to you right now, puts a protective measure in and exempts the railway lands from that full market value provision.

Mr Schweitzer: Exactly. That's our position. The government has to realize that it has to play fair with the railways. We're not asking that they not be taxed, period; just treat them like other property tax owners. Don't hit them with the full shot. They can't afford it, period.

Mr Wiseman: As the member for Eglinton has already indicated, we have heard a number of deputations from people like Transport 2000 who are interested in the rail system. I've had some interest in rail haul, rail transportation of goods and just-in-time delivery services as they could apply to the rail system. I've been interested in this. I have three lines running through my riding and I've always thought they could be better utilized than they are.

To that extent, I have discussed this issue with the Minister of Transportation on a number of occasions. I can confirm right now that the ministries of Transportation and Revenue have issued a letter to both CN and CP to meet to discuss this whole question of assessments of rail lines and rail rights of way. I hope that out of those meetings some kind of plan can be developed that will not only save the rail systems in Ontario, but enhance them as a low-cost, efficient means of transportation of goods.

I think there is an economic niche for the railways and how they can deliver goods in an efficient way. With that in mind, as Ms Poole has already indicated, Metro does have the option in all this to have the same powers of caps on the increases for rail rights of way. I would hope that the Metro chairman and others would exercise this right.

You have commented on this already and I've asked this question to others before. I have the third largest constituency in Ontario, but the mayor of North York and the mayor of Scarborough are elected by more people than I am. Their constituents are in Metropolitan Toronto; mine are not.

In the democratic process, given where the British North America Act sets out rights and so on, and the development of the relationship between councils, regional councils and the provincial government, I wrestle with the dilemma of coming from outside Metro to overrule and say that the mayors and regional councillors duly elected in this jurisdiction don't know what they're doing, haven't thought it through and I, as the big outsider daddy coming in, am going to make things right. There's a real problem in this debate.

Perhaps you could comment on those two things.

Mr Schweitzer: The last one first, Mr Wiseman: I'm not from Metro Toronto, so I don't directly elect Chairman Tonks or any of the people here, but we elect you people. As legislators, seemingly you have a responsibility. On this proposal by Metro, I'm not about to sit here and tell you that they didn't do what they had to do to think things through. I don't know the process they went through; I have heard some of it.

When it is pointed out to this standing committee that there is a need for protection for two major, major employers in this province, then surely we cannot leave it to Metro, which obviously needs to come up with that $57 million or $87 million shortfall from the changes they're making.

I don't think we can leave it to them. I believe you have a legislative responsibility to take hold of the situation and ensure that those two major employers in this province remain viable, and in doing so that your tax bases throughout the province -- I'm not just talking about Metro; I'm talking about where I live in Hamilton and I'm talking about Schreiber and Sault Ste Marie and Chapleau at CP and Hornepayne at CN. If those railways cannot operate in Toronto, don't for heaven's sake think they're going to operate in Hornepayne or Schreiber or anywhere else.

Mr Wiseman: Could you comment on the meeting?

Mr Schweitzer: Pardon me?

Mr Wiseman: Could you comment on the meeting between the ministers of Transportation and Revenue and CP and CN?

Mr Schweitzer: That's great. This committee has met with Gilles Pouliot, the honourable Transportation minister, on two occasions. We have urged the minister, and the minister listens, and with predecessor governments we've done the same thing. Yes, we expect that will be fruitful for them to meet with CN and CP.

The Chair: I must, I am sorry, turn to the last questioner, Mr Turnbull.

Mr Turnbull: Mr Schweitzer, I have two questions and I put them to you because you're a good source. You've said you're a member of the NDP. There are two questions that arise in my mind. One is the need to have a different assessment method. There's been a lot of talk about unit assessment. It's quite apparent that the method that is applied to railway rights of way at this moment is totally inappropriate because taking the average of adjacent lands is highly unfair.

Railway lands don't get any services, which was very apparent when there was the spill in Mississauga. In fact, for all the firefighters and the police, the railways were billed for that. They don't get any services for the taxes they're paying even though they're paying, in many cases, the highest taxes. You take it further in the neck. There's that question, because most of the people who've been coming before this committee have been talking about the need for fundamental property tax reform, and this is an opportunity to do it.

The other is the fact that to the best of my knowledge -- I actually have a copy of a document from the 1984 policy convention of the NDP where it said it opposed further expansion in the province of market value assessment, and several of the NDP members who were in the last election ran on a platform of being against market value and now have voted for this in the Legislature. Unfortunately, it is evolving down to a political issue, and it really shouldn't be. This should be a question of cutting across politics and saying: "This is a tax issue. How do we address it?"

Could you comment on those two issues for me?


Mr Schweitzer: Whether it's NDP policy, I have read the same documents you've read and I read them probably the same way you read them. I think you're right that it transcends politics. On the whole tax issue, everybody hates paying taxes. I don't like paying them. If I can get out of them, I will. But the point is that you can't address the issue piecemeal. It's probably the first time I've ever agreed with the Canadian Federation of Independent Business people when they said, and the point is correct, "You can't address a bit here and a bit there and a bit there." Politics aside, yes, you have to do something with the whole issue.

To me, I understood that's what the Fair Tax Commission was going to do. If I were to make a recommendation, I would ask the House to do whatever it could do to stop this bill at least until the Fair Tax Commission has reported. I don't know if that's possible or how you would do that. Maybe royal assent wouldn't be forthcoming or whatever or an amendment would be made; I don't know.

All we're saying to you is, let's get the whole tax question settled properly so that our particular concerns -- our employers are still here tomorrow or the next year or whatever. I don't know if that answers your question.

The Chair: Thank you. I apologize that we have run out of time. Perhaps, again, that optimistic note that you find common ground with the Canadian Federation of Independent Business may guide us in our deliberations.

Mr Schweitzer: That's hard.

The Chair: We thank you very much for coming today, gentlemen, and for your presentation.


The Chair: I call in the Canadian Institute of Public Real Estate Companies, if their representatives would come forward. Please be seated. If you would be good enough to introduce yourselves for Hansard, and when you're ready, please go ahead. You have 20 minutes.

Mr Ronald Daniel: Good morning, ladies and gentlemen. My name is Ron Daniel. I'm the executive director of the Canadian Institute of Public Real Estate Companies. CIPREC is the acronym. With me today is David Stewart, director of property tax, Cambridge Leaseholds. I want to thank you for allowing CIPREC the opportunity to address you with respect to the proposed plan to implement market value assessment in Metropolitan Toronto. I know you've already heard from one of our members, Marathon Realty, and that you'll be hearing from another this afternoon, CN Real Estate.

We've delivered -- and I noticed it was being handed out -- a short written brief expressing our concerns. I'll summarize these in approximately the next 10 minutes and then David Stewart and I will be pleased to answer any questions you may have regarding our representations.

First a few words about CIPREC. The Canadian Institute of Public Real Estate Companies is the primary voice for the Canadian real estate investment and development industry. It's a small group. We have 35 members, but they are national in scope and international in their investments, with $60 billion in assets, and just to show you real estate is changing, approximately three years ago that was $75 billion in assets. We've provided you with a copy of our annual report and you get some more information there on the various members.

As a background to my remarks, I'd like to talk for a moment about taxes in general on the real estate industry, as other people have in earlier presentations today.

We do a survey annually on taxes paid by our members across the country. We've been doing this for three years. It includes income tax information, as well as property taxes and property-related taxes such as the commercial concentration tax, capital taxes and so on. This year, we were startled to see that over the three-year period, property-related taxes collected and paid to municipal and provincial governments in Canada had risen by 50% over the three years.

In total, in Ontario, CIPREC members pay around $650 million in taxes, municipal and property-related, which would include development charges, lot levies, commercial concentration tax and capital taxes. This rate of growth is rapidly making Canadian business uncompetitive with cross-border opportunities and a variety of others.

We're making this point -- I'll be very brief -- to as many levels of government as we can. We're working with the Federation of Canadian Municipalities, which has the same concerns we have. We've talked to three or four different provincial governments and we are continually in contact with the federal government on this issue.

The single largest component of the cost of doing business in the real estate development industry, and I think most other industries today, is taxes: realty taxes, municipal payments and so on, as I've described. It is against this background that I'd like you to assess the concerns we are going to express with respect to the concept of market value assessment as a means of establishing and maintaining equity in the tax treatment of properties of the same class.

We have had a continuous dialogue with the chairman and staff of Metro council over the last 18 months. CIPREC was and remains committed to assisting Metro council develop an acceptable approach to implementing a market value assessment program that would move towards improved equity in and between property classes across Metro.

We have no problem with the concept. To our understanding, it is the dominant system in North America, and we've been unable to find in any detail in any literature any alternative scheme that is close to being implemented in the way that market value has been implemented.

The problem we had was that we considered the interim reassessment plan approved by Metro in September 1989 highly discriminatory, requiring commercial and industrial classes of property to provide protection for the residential class. We recommended a phase-in of market value over 10 years equally across all three property classes. These discussions were held prior to the release in August 1992 of the Revenue Ontario 1988 market valuations for all of the property in Metro Toronto.

Subsequently, Metro Toronto council decided to obtain council approval for the implementation of a modified version of the approach approved by Metro council in September 1989. The Metro council debate was preceded by the examination by Metro staff of as many as 20 options -- I'm sure that's the low estimate -- for protecting various property classes. It became obvious to everyone that reassessment and rejigging of the scheme was going on constantly throughout that debate.

During our discussions with Metro staff throughout 1991 and 1992, there had been no indication of a fourth property class now known as "other property." There was no indication that was under consideration. This change was referred to for the first time in Metro correspondence received by CIPREC dated October 15, 1992. Metro council approved the market value assessment proposal that's currently before the Legislature on October 29, 1992.

The creation of this fourth property class gives rise to serious concerns of the inequitable treatment of properties within the commercial class, the extremely onerous burden placed on land held for future development and the additional tax burden placed on Ontario taxpayers as a result of the increased taxes on railway, pipeline and hydro rights of way. In addition, as two CIPREC members, Marathon and CN, will point out to you, there is potential loss of economic growth and jobs.


The current Metro Toronto council proposal presented for provincial approval and requiring that the province pass enabling legislation before it can be implemented contains concepts that have not been tabled in earlier discussions with CIPREC and others, and the significance of financial impact and the total package which you're being asked to provide enabling legislation for has not been part of the public debate. CIPREC is concerned that the proposal now under consideration by this committee receive thorough analysis. We don't believe there was the kind of time available during the council debate to give it that kind of analysis.

The fourth classification, "other property," includes vacant land generating no business tax, together with railway and other rights of way. These are comments with respect to the package:

The creation of this separate class, "other property," is discriminatory as properties in this class will be treated differently from other commercial properties by not being afforded the protection proposed in the Metro scheme for commercial properties. Not only will vacant land pay higher taxes than property with operating businesses but it will be further penalized as it will not avail itself of most other municipal services.

Up to this time, we've been unable to obtain lists of the specific properties included in the "other property" class. Therefore, the total impact and significance of these changes is unknown and not quantified.

The impact on Toronto's railway lands, as I indicated previously, will be discussed with you directly by the land owners of those properties, but it is important to recognize, as a couple of groups have done this morning, that these additional taxes on the railway lands specifically, which are the lands being held for future development -- quite separately from railway rights of way, which are the operating rights of way -- will have an extremely negative impact on the viability of that major project. The railway lands were to produce a major economic stimulus and be a major job creation opportunity. That will be postponed if these taxes are levied on those properties.

From Metro documentation, it is estimated that the current Metro proposal will generate approximately $80 million of additional new tax revenue from this "other property" class. A recent news report indicated that Ontario Hydro rights of way alone in Metro would have an additional tax burden of about $30 million to $40 million, presumably payable by all the residents of Ontario.

It appears that the entire Metro package of the proposed caps, the protection afforded industrial, residential and commercial, is dependent on the generation of this $80-million revenue from an undefined and unclear source. Should this revenue not be generated for a variety of reasons, some of which you've heard this morning, then the entire proposal package is in jeopardy.

As stated earlier, CIPREC's preferred position was that market value assessment be phased in evenly across all three classes over a minimum of 10 years. This reinforces the obvious, that a problem that took 40 years to create cannot be solved in one year.

In earlier discussions and presentations to Metro, CIPREC made the point that the provincial enabling legislation should mandate regular future evaluation and assessment cycles.

The current Metro proposal makes no firm commitment to the further steps required to achieve a situation reasonably close to a true market value assessment scheme in 10 to 15 years. Without this commitment, Metro Toronto could well end up in five years with a more complex property assessment and taxation system than at present, with little or no improvement in equity.

The proposal before the Ontario government will significantly increase the tax burden, as I've said before, on vacant land currently being held for future development and will hinder the efforts being made by governments and business to initiate development projects to help stimulate economic activity. In the last few days, the chairman of Metro has called on Ottawa and the province to help get the construction industry moving again.

The recent unprecedented decline in real estate values has led to almost a complete stop in new commercial activity in Metro Toronto and the surrounding regions. The further addition of the tax burden on vacant land held for future development will cause the real estate development industry and the construction industry further financial distress and further postponement of major commercial projects.

We urge the Ontario government to critically review the Metro MVA proposal and to enact enabling legislation only if all properties in a class are treated equally, if there is a reasonable certainty that the revenue flows and protection afforded the various classes are in balance -- which we doubt very much at this point in time -- and if the enabling legislation contains a legal and firm commitment to future regular reassessments.

The Chair: Thank you very much for your presentation and also for the copy of the annual report you provided to all the members. We have three questioners: Mr Mills, Mr Turnbull and Mr Grandmaître. Could we keep that to one question, please.

Mr Gordon Mills (Durham East): My question has two parts, but they're brief. You're probably aware that the government has legislation that permits Metro to put a cap on vacant property, so my first question is, when this bill is passed do you intend to go to Metro to pursue that, to ask for that?

Mr Daniel: To pursue it at that time?

Mr Mills: Yes. Are you going to go back to Metro and ask for this?

Mr Daniel: Yes, we will pursue it at that time, but we feel very seriously that this is the time to pursue that.

Mr Mills: My second question is that as a government we're committed to working with Metro to initiate a new tax plan. I'd just like to ask you if your organization is as committed to work with Metro to help that new plan.

Mr Daniel: As I indicated in the presentation, we have been consistently, over the last part of two years. However, we are somewhat concerned that the vacant land issue came up at the last minute, not having been discussed before in the previous 18 months. Having said that, we have very serious concerns and doubts about how effective we're going to be at the next round of discussions.

Mr Turnbull: Am I correct in thinking that it's been reported that the large buildings are mainly going to get a reduction in taxes under this MVA?

Mr David Stewart: It wouldn't necessarily stem from the size of the building, but rather whether it was overassessed in the first place. There will be a lot of ups and downs, and we can see there's already uncertainty as to who's going to go up and who's going to go down, and by how much, and what the impact will be if they move or don't move.

Mr Turnbull: But on the big buildings, the built buildings that your members have, are they going to get reductions?

Mr Stewart: Not necessarily, depending on where they are in Metro. As I say, it is not going to flow from the size of the building but the new valuation of the building versus the old.

Mr Turnbull: My understanding is that, to a great extent, the large buildings are getting reductions and it's being taken essentially on an income-flow basis; whereas for the small buildings it's being taken on market value in 1988 as an approach, which was based upon a redevelopment potential.

Mr Stewart: I can only answer that there are several properties going up and several going down, but if you're speaking of the major office towers downtown, some of them are obviously going to be going down, at least on the last numbers we've seen.

Mr Daniel: But not all. I think on balance it's probably a break-even situation.

Mr Turnbull: No, it's not a break-even. The large ones are going down. I just want to get it on the record that the large buildings, which substantially you represent, are going down.

Mr Daniel: I'd like to add to that. I will write to you and give you some form of analysis of that.

Mr Turnbull: So you're in favour of MVA, but for the development sites you own which are getting increases you're not in favour of it.

Mr Daniel: How do you mean, not in favour? We're not in favour of their being treated differently from regular commercial property.


Mr Bernard Grandmaître (Ottawa East): As a follow-up on your firm support for full market value and your extensive discussions with Mr Tonks and Metro council for the last 18 months or 24 months, a fourth property class was never mentioned in the last two years and it was a total surprise to you that a fourth class was added. I just heard the parliamentary assistant saying, "Well, this enabling legislation will permit Metro to amend the proposal that's before us."

If in the last two years Metro never brought this fourth class or this proposal to your attention, do you believe Metro will amend this model so you will be included in the commercial class instead of "other property" class? Do you believe Metro will amend its model?

Mr Daniel: It's highly speculative. I have no idea what Metro will do. We haven't had discussions since the council resolution was passed.

Mr Grandmaître: But the fact this was never mentioned to you in the last 24 months -- that it was a complete surprise.

Mr Daniel: As I've indicated, I'm quite sure it came up at the last minute.

Mr Grandmaître: At the last minute. So do you believe that Metro --

Mr Daniel: It's difficult for me to predict that.

The Chair: I'm afraid our time has come to a close. I want to thank you again for coming before the committee and for answering the committee's questions.


The Chair: I now call the representative from the Ontario Restaurant Association, if you would be good enough to take a seat and introduce yourself for Hansard.

Ms Constance Wrigley: I just have to return something.

The Chair: There's a mission of mercy as you return the briefcase. You will receive the good Samaritan award this morning.

Ms Wrigley: Thank you. Good morning. My name's Constance Wrigley. I'm the manager of municipal government affairs for the Ontario Restaurant Association and we welcome the opportunity to speak today to present our concerns over the proposed market value assessment.

On behalf of our approximately 3,500 members representing 7,000 foodservice establishments throughout Ontario, half of which are in Metro Toronto, I would like to state that the Ontario Restaurant Association is solidly opposed to the Metropolitan Toronto reassessment plan as approved by Metro council.

Market value assessment, as it was proposed, will without a doubt mean an end to many small business operations throughout Metropolitan Toronto and will have a devastating impact on tourism by decimating downtown Toronto.

Small business, which is acknowledged to be the backbone of the business community, will be seriously undermined by the proposed MVA scheme. This MVA plan is being portrayed as a system of tax reform which will resolve all tax inequities throughout Metropolitan Toronto. It seeks to correct nearly 40 years of inadequacies in the current tax system in an extremely short period of time.

Unfortunately, it will not create an equitable system for all property owners across Metro, but instead it will destroy the small business community, it will put people out of work, it will severely undermine Toronto's position as a premier tourist destination, it will force business owners to become tax delinquents because they cannot afford to pay their tax increase and it will mean that higher-density areas, such as the city of Toronto, will no longer be a place to do business. Restaurants will close down and move to other, more affordable communities or will close down for ever.

The Ontario Restaurant Association supports any system that promotes tax fairness, but the proposed plan does not treat all taxpayers equally because it shifts the tax burden from residential to commercial properties. Residential properties that will have an increase will pay a maximum 10% increase phased in over two years, while commercial properties will pay a 25% increase phased in over three years.

Many of the commercial properties experiencing an increase in property taxes are small businesses. It is our position that balance has not been restored as a result of MVA but rather an imbalance has been established throughout Metropolitan Toronto and across property classes.

As I am sure you are aware, the hospitality-tourism industry has been severely hurt by the current recession. The restaurant industry has been damaged by the introduction of the GST, cross-border dining and a marked decline in tourism.

Unfortunately, the hospitality industry has been squeezed on both sides during this recession. Not only have sales declined but our industry has been impaired by escalating costs. Many of the cost increases are as a result of government tax and administrative initiatives. This combination of a decline in sales and an increase in operating costs has enhanced the job losses in our industry.

The restaurant industry in Ontario, over the last 24 months, has lost in excess of 60,000 jobs. This represents more than 30% of our workforce. Thousands of these jobs losses have taken place in Metropolitan Toronto and a further increase in operating costs in this environment will add even more job losses.

Considering that restaurants are operating at a 0% to 2% profit margin, any unplanned increase in cost will have devastating consequences on the viability of a business. Even a cap on property tax increases will not protect a business from closing its doors for ever and putting many people out of work.

Toronto acts as a gateway to Canada and Ontario for the tourism industry; 65% of all tourist visitors to Canada come through Ontario and 80% of these visitors come to Toronto. By increasing the cost of visiting Toronto by dramatically increasing property taxes, it will encourage some visitors and conventioneers to visit other jurisdictions in North America.

In consideration of the difficulties being experienced by the restaurant industry and the unfairness of the proposed market value assessment plan, the Ontario Restaurant Association would like to make the following recommendations:

(1) Request an early release of the Fair Tax Commission property tax working group report. The report may have some alternatives to MVA that are workable and equitable.

(2) Consider other methods of assessing Metro property taxes such as the use of municipal services and property size.

(3) Request that treasury conduct an economic impact study so that the full effect MVA will have on all properties is understood.

(4) Only support legislation that promotes fairness.

(5) Treat all property classes equally, and we would like to add to this, phase in all tax increases over a 10-year period.

(6) The Ontario Restaurant Association calls upon the provincial government to remove the commercial concentration tax entirely or, at the minimum, remove it from tourism and accommodation establishments in Metropolitan Toronto. This tax further disadvantages Toronto when competing with other major North American tourist destinations, especially in the area of lucrative but very competitive convention business. The removal of the commercial concentration tax will at least address some of the inequities in the existing tax system and the market value assessment proposal.

Finally, I'd like to say that we believe that the market value assessment plan is seriously flawed because it does not treat all properties equally. We are very concerned that if enabling legislation is passed and market value assessment is implemented without benefit of an economic impact study, the results could be unpredictable and possibly catastrophic.

The Chair: Thank you very much for your presentation.

Mr Stockwell: Not a lot new in that statement, but I have a question anyway. Everyone who comes in talks about an impact study. Are you in favour of an impact study for all those businesses and homes that don't get decreases, all those restaurants in Etobicoke that will close up because they're paying unfairly high taxes?

Ms Wrigley: My answer to that is that if they are going to close because they're not going to get their decreases, my question is, how is it they've survived this long?

Mr Stockwell: So: "Damn the torpedoes. Who cares? They survive even though they're paying too much." I am asking how come they've survived this long because of a self-centred special interest group based in the city of Toronto with actually no care for the suburban restaurants.

Ms Wrigley: We're not a self-interest -- we're not just concerned about restaurants in Toronto. It just does not impact --

Mr Stockwell: Still, you just said, "How did they survive so long in the suburbs even though they have disproportionately higher taxes?"

Ms Wrigley: No, our position is that we agree that tax reform is required. There are restaurants in Toronto as well that will be receiving a decrease, although the decrease is not the full decrease that they may be entitled to.

Mr Stockwell: The increase isn't the full increase. But you're solidly opposed to MVA regardless of the benefits that accrue to the suburban restaurants that have been overpaying the taxes. You're solidly opposed?

Ms Wrigley: No, if you were listening to my final point which is --

Mr Stockwell: I heard your point when you said you're solidly opposed.

Ms Wrigley: What we did suggest is that all properties should be treated equally and that there should be a phase-in over a period of time. We cannot undo 40 years of inequity. So as a result, what I'm suggesting is that it be phased in over a period of time.


Mr Stockwell: Quickly, my first question still stands: Are you in favour of this impact study on those restaurants and businesses that have been overpaying their taxes for 45 years to determine whether they're going to stay in business and whether they're going to hire any more people as opposed to just an impact study on those people who are going to be getting increases? It seems to me what's good for the goose is good for the gander.

Ms Wrigley: Mr Stockwell, I think that an impact study, if done, should be done right across all properties.

Mr Stockwell: And in the meantime we'll hold off any tax changes and let them keep sucking up the difference.

Ms Wrigley: I don't think that -- I'm sorry.

Mr George Mammoliti (Yorkview): On this rare occasion, I'm going to have to agree with Mr Stockwell.

Mr Stockwell: Oh, oh.

Mr Mammoliti: I've been listening to a lot of the deputants over the last four days, individuals such as yourself who have come and have said that this is going to ruin the restaurant business, everybody's going to shut down. We've heard from CN that it's going to close the railways. We've heard from ratepayers who are going to have to sell their homes, abandon their homes, get rid of them. We've heard from pretty much every group within the area this is going to affect.

My conclusion is that anywhere south of Highway 401 is going to become a ghost town. Nothing's going to exist except air. The trees are even going to die because of this. Frankly, I can't believe that. I think it's just a total exaggeration. The suburbs have existed for 40 years. This is where I agree with Mr Stockwell. How have they existed? They've existed through some hard work. They have paid their fair share of taxes and more. They have subsidized the people in the lower part of Metro. I think it's time to give them a break. As much as this particular proposal is flawed, I agree with you: You've got to give them something and this is fairer than the system we have now. Do you honestly think it's going to create a ghost town?

Ms Wrigley: Again, I emphasize the job loss in the industry because I think that's a pretty clear manifestation of what is actually happening out there. It's not just happening in Metropolitan Toronto; it's happening in outlying areas including Downsview and so on. Again, we are talking about, I emphasize, the undoing of the inequity in the tax system. I honestly don't believe that the timing is right.

Mr Mammoliti: When is the timing going to be right? Another 10 years from now? Another 15 years from now?

Ms Wrigley: If you were a small business person and you did not have any margin to have any increase of any kind, whether it be administrative fees, food cost increases, liquor, beer, that sort of thing, and you were told that you would have to pay up to 25% more taxes than you did the previous year and you were not able to budget for that because it was within the last --

Mr Mammoliti: Explain that to all of my constituents who are going to get a substantial decrease with this particular proposal. Come on up to Yorkview one day and explain to all of those businesses that you say are having a hard time -- and they are -- and that are looking forward to this decrease so that they can perhaps create a few jobs in my particular suburb.

Ms Wrigley: In those areas such as Scarborough and Downsview, when they were told they were going to get a decrease they were told they were going to get the full decrease.

Mr Mammoliti: They've compromised.

Ms Wrigley: Unfortunately, it was a political platform. Some people were trying to get in. They were trying to get on city council. Yes, there is a compromise. I can understand. If I was expecting I was going to get $1,000, I would be pretty upset too.

Mr Mammoliti: My people aren't demonstrating. They're not holding placards. They're not running up and down Islington Avenue saying this is unfair. They're not getting the 100%. They're saying they want the 100%, but they understand the compromise and they're waiting for this. They're waiting for it and frankly they're very upset at people such as yourself coming here and trying to stop this for them.

Mr Grandmaître: Let's go back to the foodservice industry. In your brief you're saying that over the last 24 months some 60,000 jobs were lost?

Ms Wrigley: Yes.

Mr Grandmaître: You've known about this new assessment scheme for a number of months now?

Ms Wrigley: Since it was initially brought up at Metro council, yes. We've known about it for a couple of years.

Mr Grandmaître: A couple of years?

Ms Wrigley: Yes, but we've only been involved with it just recently.

Mr Grandmaître: How active have you been? Have you been working with Metro on this assessment scheme?

Ms Wrigley: No, we haven't worked on the scheme with them, but we have made presentations to Metro council, and we've met with the municipal mayors' offices and expressed our concerns, and we've heard their side as well.

Mr Grandmaître: Let's talk about additional job loss. You were saying that a good number of restaurants will close their doors because of this new assessment scheme. How many restaurants will close their doors?

Ms Wrigley: I can't answer that.

Mr Grandmaître: What about your membership? Have they told you? Have they reported to you?

Ms Wrigley: A lot of our members are saying this is just the thing that will push them over the edge, and they're not just in the city of Toronto; they're also in North York and other areas. They're saying this is just enough to push them over the edge, because of the past three years and what's been happening.

I think we can consider the restaurant industry perhaps as an economic indicator of what's actually happening out there. When times start to get tough, people don't eat out. As I said, we're being squeezed on both sides. The tourism industry is way down. The cost of maintaining and keeping a restaurant open is extremely high. There are fewer customers coming in the door. So an increase such as this could just be the straw that breaks the camel's back.

The Chair: Thank you very much for your presentation.

Ms Wrigley: Thank you very much.


The Chair: I now call the representatives from Canadian National Railways, if they would be good enough to come forward. Good morning. Please take your chairs, and perhaps you'd be good enough to introduce the members of your delegation. You have 20 minutes and we look forward to your presentation.

Mr Allan Deegan: Thank you for the opportunity. In 20 minutes, what I propose to do is to make about a 12-minute deposition, which certainly allows time for questions, and then with your permission in advance, I would also like to make a two-minute closing statement.

The Chair: Okay.

Mr Deegan: My name's Allan Deegan. I am vice-president with Canadian National Railways and I have accountability for CN Rail's operations and business activities in Ontario. With me this morning is Bart Marcolini, who a lot of you know by now is national president of the United Transportation Union of Canada.

The Chair: We welcome him back.

Mr Deegan: Mr Ron Ditchburn is the manager of property tax for CN in Toronto.

I'd like to speak today on behalf of the 7,000 CN people whose mission it is to develop and deliver the kinds of transportation services that keep Ontario industries competitive. It's also their role to satisfy the increasing public demands for expanded rail commuter services in the greater Toronto area.

I do not exaggerate when I say that CN people are astounded and dismayed at the market value assessment plan for Metropolitan Toronto, astounded by the patently unfair treatment of railways as compared with other property owners, which translates into a tax grab of monumental proportions, an increase of some $29 million for CN on the rail operation alone. We are also dismayed because these additional enormous costs will severely limit the ability of CN to do the job that's required of it.

We derive nearly 90% of our revenues from the movement of freight; some 17 million tons handled in Ontario last year. In this, we compete not only against CP Rail and Ontario-based trucking companies, but also against aggressive and low-cost American railways and truckers which operate in Ontario.


Transportation deregulation and free trade have created a new North American marketplace and have exposed our traditional markets here in Ontario to new high levels of competition. Major American railways already extend into Ontario and are targeting Ontario businesses and industries as never before.

There are three dominant reasons why CN so strongly denounces Metro's plan, which has been put forward with no regard at all for its potential impact. Firstly, the most obvious reason is that the proposed tax on railways discriminates against railways. Secondly, the tax will weaken our competitive position in transportation because of the higher costs we will face. Thirdly, the tax will discourage the use of rail as an effective means of public transit.

What do I mean when I say that the tax discriminates against railways? Let me be quite clear that my concern relates to the proposed tax levels on land actually used in the railway operation. These are right-of-way lands, as well as additional lands required to support the running of trains.

The additional lands I refer to are the marshalling yards, storage areas and other parcels of land required for repair shops, storage etc. These lands are used in the same manner as lands of other industries such as trucking companies, warehousing operations and construction businesses, yet despite railway lands having a similar use to those of other industries, the proposed Metro reassessment plan denies the railways the protection of capping afforded to these other industries.

Let me now draw your attention to the situation regarding railway rights of way. These are the long, narrow strips of land on which our tracks are located. Typically, they are 100 feet in width or less and are utilized only as transportation corridors for our trains.

Clearly, these rights of way have unique characteristics. They rarely, if ever, require municipal services such as sewer and water, police protection, snow and garbage removal, education and social services. Why these rights of way should be subject to municipal property tax at all is a question still awaiting a logical answer, yet we have quietly carried our tax burden for many decades, even though two provincial commissions of inquiry have found such a tax to be unfair.

Prior to 1990, provincial assessment methodology prescribed rights of way as a separate class of property, a recognition of the unique characteristics I have mentioned. This system at least ensured that any increases in property taxes were applied uniformly to all classes of property: rail, industrial, commercial, residential. This system at least ensured that railways would not be singled out in the payment of municipal property tax.

Since 1990, however, this relatively fair approach has changed. The separate class factor for railway rights of way is eliminated. Municipalities across the province are now able to calculate the right-of-way taxes based on the value of adjoining properties, using a market value that bears no relationship at all to the values of the rights of way. Given the nature and scope of our operations in Metro Toronto, it is here that we would feel the brunt of even a normal progression of a tax of this type.

We can no longer be quiet on this issue. The Metro plan is unlike any other reassessment in Ontario to date.

Whereas the classes of properties adjoining rights of way will be protected by capping provisions, no such protection is being extended to the railways. We are to be reassessed in accordance with 1988 market values on lands that we adjoin, and our tax payment increases are to be paid in full without any phase-in provisions.

Metro's proposal violates one of the basic principles of market value reassessment: that there be no taxation shift between classes of property. In this case, there will indeed be a significant shift in taxes towards the railways.

In truth, the railways are being required in part to subsidize the shortfall in taxes that will result from capping provisions being applied to other classes of property.

This in itself patently discriminates against railways. When considered in the context of the competitive environment in which we operate, the inequity becomes even more glaring.

This brings me to the second of our objections: the weakening of our competitive position.

I have mentioned the intense competition we are facing from American and Canadian carriers, and especially from trucks. The trucking industry does not have to worry about the effect of market value assessment on its right of way. Truckers do not have to pay direct property taxes on their transportation corridors, which are the public roads and public highways they utilize in order to compete with us for the movement of freight.

This is a major cost advantage enjoyed by trucks, which continue to nibble away at the railway markets.

I mentioned also that we compete directly against American railways. I would point out that railways in Canada already pay at least one and one half times the amount of taxes our US competitors do. In fact, most states in the United States have laws that forbid discriminatory taxes against railways of the kind being proposed by Metro Toronto.

Higher costs for CN in the form of discriminatory and punitive taxes will weaken our ability to compete. Competition is driving freight rates ever downward, and to expect that CN can simply pass these costs along to our freight customers is very wrong.

Our services must be competitively priced, and if our costs are not kept in check, the consequences are quite clear: We will lose customers, we will be unable to make the investments in Ontario needed to maintain our plant, our business will suffer, employment will decline and the railway network will continue to shrink and wither away.

Many of our employees and union officers have written to the Premier and his ministers to express their dismay at the market value assessment proposal and its harmful effects upon CN. I quote Mr Ahmad of the machinists and aerospace workers, in his letter to Premier Rae, "Railway workers shouldn't be asked to pay for this MVA proposal with their jobs."

The third main issue relates to the impact of Metro's MVA plan on public transit.

More than 40,000 GO train trips take place on CN trackage every year. Our agreement with GO Transit provides for property tax increases to be passed on, and so GO Transit's share of these tax increases will rise by some $12 million in 1993.

It seems ironical that the province recognizes the great benefits of a commuter rail system in easing highway traffic congestion and in easing pollution. But we have to ask, will rail commuters now be asked to pay the higher fares? Is this not in conflict with the province's concerted efforts to expand the GO Transit system and encourage the use of public transit?

I believe I've demonstrated that Metro's MVA plan is not only discriminatory but highly damaging to CN's freight and public transit activities.

We believe there is potential for growth in the rail business. We hope to be able to continue to make investments in our plant and facilities to help Ontario's industries compete in their new and expanded both continental and global markets.

Wise public policy is needed to ensure that the rail mode is able to realize its full economic and social potential.

You have the authority, and we believe the duty, to consider the long-term economic impact of Metro's proposal. It is clear that Metro council gave no thought at all to the impact on the viability of railway operations, CN employment levels or the competitiveness of Ontario manufacturers.


It has been said that nothing is more certain than death and taxes. We believe what we have here is yet another form of death by taxes: an unfair level of taxation we are faced with that will surely affect the vitality of railways and hasten the demise of parts of the rail system.

I recommend to you two alternatives: (1) that you request a delay in enacting this proposal until the broader economic impacts of the right-of-way tax and the tax on the additional lands required for railway operation have been fully assessed, and (2) at the very least we recommend that the legislation as drafted should be amended in order to give the railways the capping provisions that apply to other classes of property.

I hope you will agree that Metro's proposal is clearly not in the public interest and must not be enacted in its present form, opposite the wellbeing and betterment of the railways.

Mr Chairman, that's the end of the deposition. Mr Marcolini, Mr Ditchburn and myself would welcome any questions before I go ahead with the closing statement.

The Chair: And you would like a few minutes, so I'll keep that in mind.

Mr Wiseman: Thank you for coming. I have a lot of questions; I don't know how to do it in just one or two.

The Chair: Thank you.

Mr Wiseman: Let's not get carried away.

Perhaps you could indicate to me exactly what the consequences will be. In Metro, will you close down your yards if you cannot afford these taxes? Will it drive you into bankruptcy, receivership? Will you be forced to close down lines throughout the province of Ontario? If the answer to those questions is yes, have you made the regional and local councillors and mayors of Toronto aware of this circumstance, and what have they responded to you?

Mr Deegan: I similarly cannot answer with just one answer, because I would have to suggest to you that this initiative on the part of Metro, as well as a number of initiatives to do with taxation, be it to do with diesel fuel, be it to do with any of the other range of taxation issues and other financial issues we have that basically come out of government, all of those in total will eventually, yes, lead to some of the consequences which you are talking about.

This exact proposal itself is a proposal that will affect our bottom line, the net income of our company, by $46 million. I would not want to speculate to you how many freight cars we would have to move in order to generate net bottom-line dollars of $46 million. This is a very serious consequence.

I know what concerns us and what concerns the labour unions is the fact that of the businesses in the railway, 60% of our expense is tied up in labour, in wages. No matter how you take a look at a figure like this, the attack on labour rates has to be one of the consequences of a move such as this, apart from the absolute discrimination and unfairness to one particular industry.

Mr Wiseman: The other part of the question was, would you be forced to move out of Metro to survive, and in having done that, would you be forced to perhaps close some of the branches in, say, the Sault or up north?

Mr Deegan: We only operate in any particular territory where we have customers and where we have pockets and markets of business. Our main business in Metro right now, and particularly in the immediate downtown core, is our business with a very good customer, GO Transit. That is a very substantial part of our business in downtown Metro. Other businesses are migrating out to the suburbs and hence we have facilities in that part of Ontario. Other businesses in fact are migrating down to the United States, and it's certainly taxation moves like this on our industry that, if anything, are going to accelerate that trend. Businesses cannot afford the cost of rail transportation that is artificially inflated by taxation moves such as this. They will seek other alternatives. They will seek other locations to manufacture their products.

The Chair: I must move then to Mr Stockwell.

Mr Stockwell: I'm a proponent of market value assessment. I'm fully in favour but I'm also very concerned. I think somebody screwed up along the way here on this particular issue. I think you have a very valid case and your arguments have been well positioned. It does seem rather onerous that this $46 million would be passed on to you. The difficulty that I think council faces, that clearly this government faces -- I'm not part of this government but I voted for the legislation. I'm not so sure this is a question; it's just a point I'm going to make.

The Chair: We'd be interested in your thoughts, none the less.

Mr Stockwell: The difficulty they're faced with is that they've designed the process to generate $46 million from the rail area. If they do concede and change, they've got to generate that money elsewhere, and I don't know where they're going to go to generate that money, considering the caps that they've put on.

In the best interests of your particular groups and associations, I think you're going to have to offer alternatives that are a little more comprehensive maybe than the one or two you've given, maybe a way of drafting a process that would change the neighbouring zoning or neighbouring assessment, the assessment that's applied to your property because it's next door to an office tower or something and you're applied the same assessment.

Right now I don't know but I think we'll end up going back to research, at least in our caucus, and reviewing how this can be handled. The only message I'd leave you with is that it was, to a degree, hastily put together because of the process they were in, and I think this was clearly an oversight. I don't think anyone intended this to happen. If it's any comfort at all, we'll be reviewing it within our research department or division to see if there's anything at all that can be offered up as an amendment that could address the situation.

Ms Poole: I thank CN for coming today and outlining the depth of this problem for us. I have a couple of questions. The first is that there have been comments made by the government as to the willingness of the government to meet with the railways to discuss this. I have just talked to representatives from CP, and despite efforts over the last month, there have been no meetings set up with either the ministers of Municipal Affairs, Revenue, Transportation or the Premier. I wonder if you had any luck in setting up any meeting to discuss this very urgent problem.

Mr Deegan: We have been discussing this very urgent problem of the ministries you've been outlining both directly and in correspondence for about the last two years and have had no success whatsoever in developing an interministerial approach to the solution to the problem.

Ms Poole: I was thinking specifically of the rights of way and the fact that they have not been capped under Metro's proposal, which just came to your attention at the very last minute and you've had no opportunity to actually go to Metro and have it revise this.

You say in your brief very clearly that the province has "the authority and the duty," to use your terms, "to consider the long-term economic impact of Metro's proposal." The government's response to that has been to say, "Well, we've put in a provision which allows Metro to rethink its position if it chooses to do so."

I for one don't place much credence in this, because I think Metro needs your money in order to make this plan work. In fact, it became very clear, when they created this "other" category at Metro in this last-minute compromise, that they well knew what they were doing and that they were providing more decreases in the residential class by putting on the right-of-way provision.

Do you place any credence or do you have any indication that Metro would rethink its position, or do you believe that the provincial government should deal with it now and that is your only protection?


Mr Deegan: Unless Metro is prepared to resubmit its proposal to you, then our only solace comes from the action that the provincial government is in a position to take. Certainly, any consideration provision on the part of Metro is very thin solace to a company that's facing a tax bill $46 million higher than it was last year. Faced with an amount like that, we would look to the security of legislation as opposed to the goodwill of consideration.

The Chair: Thank you. Would you like to do your conclusion?

Mr Bart Marcolini: I wanted to make one statement. You've already heard from the United Transportation Union and I don't want to repeat myself. Everybody thinks it's scare tactics, but I think you have to take a good, hard, long look at it, you people here, because if one of the railroads goes out of business, which it likely will, where are you going to get the taxes then, if you don't mind my asking? If this bill goes through the way it is, I would say that in a short time one of the railroads will go the way of the dodo bird. I'm just going to leave that with you. These are not scare tactics. You people had better sit down and have a good, hard, long look at it.

I keep hearing people say, "Go back to Metro." I know a lot of the people on Metro, and I don't want to go back to Metro. That's where it came from.

Mr Deegan: I'd like to wind up by saying that the Premier's office has told us that Metro Toronto council is responsible for its own deliberations and decisions and that, "The province must respect that market value assessment plan as Metro's responsibility." We would like to point out, however, that the Ministry of Revenue made it possible in the first place for Metro to tax the railway so unfairly. It was the ministry's change in assessment methodology which laid the groundwork for this astonishing tax grab.

We would also say that this is just another example, frankly, of what we consider, in the broader context, the bewildering dichotomy we find here at Queen's Park regarding policy on railway transportation. On the one hand we find that within the Ministry of Transportation itself there is a good level of understanding of the real benefits of rail. I'd like you to know that we work closely with MTO in advancing the rail mode as a central part of a balanced and economic transportation system for Ontario. Yet at the same time these efforts are thwarted by what we consider curious if not misguided policies within, for example, the Ministry of the Environment and the Ministry of Revenue. Each of these ministries seems to have developed its own special technique for making it very difficult for the rail mode to succeed as a viable mover of freight and people.

We've got to ask the question: Will the real Ontario government please stand up? This is your chance to say no to a proposal that will be harmful to Ontarians, and it's also your chance to say yes to our plea to ensure a viable and effective rail transportation system that will benefit Ontario industry and commuters alike.

In closing, let me say as a final sentence that we at CN, our colleagues at the other Ontario railways, our partners in the labour organization and all the 15,000 railway workers in Ontario will be following with great interest and expectation the recommendations of your committee. Thank you very much.

The Chair: Thank you very much for your submission.


The Chair: I now call our last witness for the morning, Mr Patrick Marum, if he'd be good enough to come forward. Please introduce yourself for Hansard and then proceed.

Mr Patrick Marum: My name is Pat Marum. I feel a little intimidated, to be quite honest with you, coming in behind CN with a presentation like this and it's able to hand everything out.

The Chair: Please don't feel intimidated.

Mr Marum: I'm squeezed in between that and the rush for the restaurant to quell the growls from the stomach, but I'll do what I can in the meantime, if I may.

The Chair: We'll hold our growls and listen to your food for thought.

Mr Marum: Market value assessment is being blamed by almost everybody in the city of Toronto for just about everything. It seems to me that about the only thing it has not been accused of causing is raising the price of coffee in Brazil.

However, I believe that the truth is slowly slipping out to the many. I believe that people are actually asking questions that now research the real issue. I believe that the vast majority will eventually realize that market value assessment does not cause the outrageously high property taxes demanded of us each year. The majority will, without question, recognize that the escalating value of property does not cause the increase in property taxes. The common sense of the majority will cause them to focus in the right direction and to place the blame fairly and correctly where it should be placed.

Someone once said that you can fool all of the people some of the time, and you can fool some of the people all of the time, but you can't fool all of the people all of the time. The proponents of the view put forward by the city of Toronto would have you believe that the rest of Metro was trying to close every small business in the city because of the unfair burden being placed by the proposed Metro suggestion, which is, after all, a compromise.

The reality is that this problem was caused during the last round of negotiations about three years ago. Mr Stockwell was down there at that time. At that time, the city of Toronto wanted the residential properties protected and agreed to loading the burden on the other side of the scale. Now small businesses are screaming that this is not fair, so the city of Toronto spends almost $200,000 trying to convince us that their businesses should be protected also.

The Toronto Star addressed this issue. They quoted the management of a car dealership on Yonge Street who indicated they would no longer be able to compete in the open market with the new proposed taxes. I felt sorry for these businessmen at first, then I thought about it logically. I set up an imaginary deal in my head. I thought, if there was a contract for a large fleet and there are two competing dealerships, one on Yonge Street and one in Scarborough, how level is the playing field for these businesses to compete for the order?

They are both Chrysler dealers, therefore they pay the same price for their cars. This sale will be won on costs to the dealership other than product cost. Staff I don't consider a factor, because their numbers are relative to volume and likely balance on a cost per unit. Other costs balance in much the same fashion, but a really big difference does appear when we view property costs. In both, the capital cost of the property is relative to the market value in their area, but a serious imbalance does occur when property tax is considered.

There is a strong case, I suggest to you, to say that taxes on Yonge Street property are being paid in part by the suburban competitor, who will, because of this, always have to play uphill and against the wind until you impose a fair and equitable tax situation.

I've also heard it argued that people bought their property and businesses in the suburbs knowing what the taxes were, so why should they now ask for a reduction? I thought that was a valid argument for some time. The old legal term, caveat emptor, was uppermost in my mind: buyer beware. A person should be able to say: "You knew what you were doing when you signed the deal. Now honour your commitment to that deal and pay the price."

But when a person is deceived and relies on false or misleading information to make a decision that is to his detriment, that situation is called fraud. The victim of a theft just calls the police, the action is immediate, there is no embarrassment involved, while the victim of a fraud, on the other hand, must suffer the humiliation of admitting that he was suckered by the falsehoods of the bad guy. This is hard to do, and many prefer to hold their silence rather than admit to being taken for a sucker.

I have swallowed my pride. I admit I was deceived, that the false and misleading information put out by the city of Toronto suckered me. A citizen who's been defrauded by an individual lays out his complaint to a police officer. I have only you, the lawmakers, to make this situation right for me.

I'm not asking, by the way, that you gouge those who will increase so that we can have the overpayment back. No, sir, all I ask is that you make it right for the future. Before you brush off that concession too quickly, for not asking for the overpayment to be paid back, let me illustrate the magnitude.

There are two widows who live a few doors from my own home. I have been their neighbour since 1978. Between then and now, they have been compelled to pay almost $17,000 more than their fair share in property tax. This is not money that was used to feed the hungry or to house the homeless. This dreadful situation is compounded by the fact that residential property tax is not deductible and must be paid in after-tax dollars. The average employee would have to earn more than $30,000 to be able to pay that --

The Chair: Mr Marum, if I can interrupt, the rules of the House require us to go there when a vote is called. The vote is going to take place in about two and a half minutes. We can go and come back to hear the end of your presentation. I apologize for interrupting, but the rules require that we do that. I would therefore say that we will adjourn, and as soon as the vote is concluded in the House, we will come right back.

Mr Marum: I am of course in your hands, Mr Chairman. May I ask, can you give me an estimate?

The Chair: It won't take very long.

The committee recessed at 1202 and resumed at 1211.

The Chair: The vote in the House being completed, I again apologize for the interruption in your presentation. If you want to pick up a few sentences back just to get the flow, please do so.

Mr Marum: Mr Chairman, I got as far as trying to explain to the committee that I wasn't asking for the Ontario government to gouge those who will get increases, or asking that what had been overpaid by the many be given back to them. I had just indicated that one should not brush off that concession lightly, because it is really a substantial concession to make.

I began to explain that there were two widows who live a few doors from my own home. They have been my neighbours since 1978, and between then and now they have paid $17,000 more than their fair share. That's over and above what they should have paid under a market value situation. That extra money they paid wasn't used to feed the hungry or look after the homeless. This is a dreadful situation which is compounded by the fact that residential tax is paid by after-tax dollars. It would take earnings of approximately $30,000 for a normal person to be able to pay the $17,000 that had been greedily grabbed to pay the tax for another person here in Metro. The redistribution of assessments will only benefit those two widows and people and businesses who have been unwittingly overpaying year after year.

Property tax is a form of wealth tax. That is simply a fact that has existed since its first use was recorded in 500 BC. I'm sure that the politicians of the wealthy, then as now, were heard bleating and yelping. They wanted at that time to continue to take from the poor and to give to the rich. They object now to increasing property tax on Post Road, Forest Hill, Rosedale and in parts of the city of Toronto.

They also argue that the timing is not right. Well, will the time ever be right? I say to you that it will not, that there will always be an apparent fall guy, and it is clear that you must do what you can in the situation that now exists.

I am disappointed that there was not the will there to achieve the full implementation of market value, but frankly, on reading Bill 94, I can only say that it's like a very long and heavy train. First you've got to get it stopped, and slowly you begin the journey in the other, and correct, direction. But Bill 94 now has the train on the right track. Your responsibility, with respect, is to ensure that it stops at the right stations.

The Chair: We'll have one question from each caucus. Just one, if you please.

Mr Turnbull: I noticed that you looked in this direction when you said "the politicians of the rich." What do I say to the retired couple who live next door to me in a two-bedroom bungalow of very early 1950s vintage, the road not properly made, no storm sewers, they are not using many municipal services at all, and they're already paying $5,500 or so in taxes, and their taxes go up under this scheme?

Mr Marum: What do you say to them? I think you'd be very remiss, Mr Turnbull, if you didn't -- there's a little piece of legislation that was put on the books here in this building in 1965. It's called the Municipal Elderly Residents Assistance Act. It allows for the increases to be deferred and to be placed against the title of the property. Then, when the people pass on, the building can be sold, the taxes can then be paid and the province and other citizens in this city are not subsidizing the inheritance of that couple.

Mr Turnbull: You're talking about a deferred capital gains tax.

Mr Marum: It's not a deferred capital --

Mr Turnbull: Yes, it is.

Mr Marum: It's a municipal elderly residents act.

Mr Turnbull: Your people are not paying, in two-bedroom bungalows, as much as my people are, quite frankly.

Mr Marum: Since 500 BC it seems to me that it has been a wealth tax, but you're saying --

Mr Turnbull: If we want to make it a wealth tax, let's make it a wealth tax and be honest about it.

Mr Marum: It is.

The Chair: I think the opinions are clear there.

Mr Grandmaître: I agree with you that section 265 of the Municipal Act does permit this kind of arrangement. You're asking us what we can do as politicians. Clearly, on this side of the fence, except for Mr Stockwell, we're saying, "Hey, take a second look, because too many people are affected by this kind of legislation."

We talked about timing, and I agree with you. When is the right time when you're talking about taxation or taxes? There's never a good time. But now that we've opened the Metro book of assessment, I think we should spend more time, come back to this committee with a more viable scheme. And I'm not saying five years from now, 10 years from now: There should be a time limit, maybe 12 months.

But what the government is trying to do is to put through this enabling legislation, accept this scheme, work it out for four years, and while people are paying taxes, let's have an impact study. I say, put a stop to it now. I feel sorry for people who pay more than their fair share of taxes, but I don't think this scheme will correct the inequities. What are your thoughts?

Mr Marum: Mr Grandmaître, you said the magic words somewhere in the middle; it was a very long question and I have small retention. You said something like, "Now that we have opened the books," and you implied that this had been done willingly. If my recollection is correct, you were the Minister of Revenue when I took your ministry, kicking and screaming, through the freedom of information exercise and they had the first public hearing. It was demanded of you that you open the books; there was nothing willing about it, as I recall. I believe we had to go to the full public hearing before you finally consented to give us the details. That's my recollection of the situation.

Mr Stockwell: I can remember that one too, Ben.

Mr Grandmaître: But at the time, you will agree with me, we were looking at section 63 of the Assessment Act.

Mr Marum: That's true. However, section 63 of the act has been looked at since 1970. We have got nowhere.

Mr Grandmaître: I wasn't here in 1970.

Mr Marum: And I hadn't even arrived in the country yet. But that's when they began to look at section 63 seriously for Metro. It has gone nowhere under section 63. It was thrown by your government to Metro: "You guys do it and give it back to us. We will be delighted to do your bidding. You take the shots for all of the bad stuff." Now Metro has bit the bullet and swallowed that difficult pill and it comes back here, and all of a sudden you're singing a different song and dancing a different tune. Isn't it strange?

The Chair: As we are approaching lunch, Mr Mammoliti for the last question. Can we have a third party member present? No.

Mr Mammoliti: I must add, and blaming a different government as well.

I was interested when you said that originally property tax was introduced as a form of wealth tax. I'm going to ask you to elaborate on that a little. But before that -- he's not here right now, but every time David Turnbull opens his mouth I'm compelled to talk about his particular riding.

The Chair: In his absence, can we be charitable?

Mr Mammoliti: We will. I just want you to comment in terms of possible statistics for Mr Turnbull's riding that would enable us to better understand how many of his constituents might be taking advantage of a write-off at the end of the year in terms of their mortgage payments and their tax payments in his community. How many of them actually own businesses and run them out of their homes, perhaps, and are able to take advantage of our system at the end of the year? Would you be prepared to talk about that?

Mr Marum: In answer to your second question, I wouldn't have a clue. I'm a fairly simple human being who earns his living down there on Bay Street in the pink building and I don't know any of that stuff. I know what it is that I pay in taxes for my own property. I took a look at some of my neighbours', because they felt I knew more about it than they did, and that's basically how I got to know about my own neighbourhood. I'm a very simple person who lives a very uncomplicated lifestyle, but --

The Chair: I'm sorry, we have reached the conclusion of our time.

Mr Stockwell: He was answering the question.

Mr Marum: There was one portion to that question I was going to address, and I felt it was the more important portion: the wealth tax aspect. What I wanted to say to Mr Mammoliti is that at the present time throughout Metropolitan Toronto, every single building is being taxed as if it were a wealth tax. There can be no argument about this. Everybody is assessed on market value. Every single building, no matter where it is in Metro, is currently on market value. Unfortunately, the years of valuation vary.

What's happening here and what is proposed is that we take one year and do them all in the same year so that nobody has an advantage. That's all. So it's a wealth tax now. It's going to be no different. We're just going to make it even. That's all.

The Chair: Thank you very much for being with us this morning both before and after the vote.

The committee stands adjourned until 3:30 this afternoon.

The committee recessed at 1224.


The committee resumed at 1600.


The Acting Chair (Mr Frank Miclash): Ladies and gentlemen, I would like to bring the committee to order and introduce you to the standing committee on social development. Our first presentation today is from the Citizens for Property Tax Reform. If you would like to come forward, please, might I have you identify yourselves once you're seated. You have 20 minutes for your presentation and I would request that you leave some time for questions at the end.

Mrs Midge Day: This is a joint deputation with Storm MacGregor. He is past president and one of the founders of Citizens for Property Tax Reform. My name is Midge Day and I am currently president of Citizens for Property Tax Reform. Storm is going to be the first presenter of our deputation.

Mr Storm MacGregor: Citizens for Property Tax Reform is a non-partisan, non-profit corporation. We are supported directly by some 2,500 households and more than 50 active ratepayer and tenant groups across Metro. Our last newsletter was distributed to 52,000 households within these groups that support our work for property tax reform and municipal funding that is not conditional upon market value reassessment.

We know that the property tax system we now have is not fair, but Metro's proposal is a prescription for disaster. It's a poison pill with some sugar coating and we're not going to swallow it. The bill that would give Metro the power to implement its MVA proposal is a very convoluted document and I don't think very many ordinary citizens know or understand what it really means. But when somebody is trying to sell you a bill of goods and the vendor has a problem giving you a warranty, then it's good business practice to check it out. The warranty we are looking for in Bill 94 and in Metro's MVA proposal is a guarantee that we are not getting full MVA and that we instead are getting real reform. We don't see that. All we see is a winding road to disaster.

I'll let Midge Day tell you about our problems with the MVA proposal and Bill 94.

Mrs Day: The rationale for market value reassessment propounded by Metro council was that the present system of property tax was out of date and basically unfair to citizens resident in Metropolitan Toronto whose homes had been built after the last reassessment, which occurred in 1953 when the regional government for Metropolitan Toronto was created.

Assessments within the individual municipalities comprising Metropolitan Toronto were based on 1940 market values. According to the 1986 report of the Metro Toronto Advisory Task Force on Assessment Reform, these values were supposed to be the same, but apparently this did not occur for houses built after 1953.

The present property tax system does, without doubt, include inequities which now need to be addressed. If in fact the objective of the province of Ontario, and more particularly Metro council, is true property tax reform, then I submit that MVA fails on all counts. Rather, it is a regressive property tax regime which will adversely impact in one way or another on all residents of Metropolitan Toronto, despite the fact that initially many residents may receive a property tax decrease.

I raise the question as to why the elected representatives of the residents of Metropolitan Toronto, together with their provincially elected representatives, would decide to impose an even more inequitable property tax system, promulgated as property tax reform, on their constituents. It simply makes no common sense and I suggest that common sense is one of the elements that is sadly lacking throughout this whole so-called property tax reform process. This is not the first step, as Metro council would have us believe, in addressing inequities that exist within the existing property tax system. This is merely the camel getting its nose in the tent out of the cold.

If the provincial government implements Metro council's current proposal, euphemistically titled "An Act to amend certain Acts to implement the interim reassessment plan of Metropolitan Toronto on a property class by property class basis" etc, only additional hardship can follow for a large number of residents of Metropolitan Toronto already impacted by the current recession, or depression if you prefer. Like any good military commander, the proponents of this interim assessment plan stress the decreases but neglect to mention the amounts involved. In some cases, the decreases are quite small, ranging from as little as $100 to $300, or about a 2% or 3% increase in the mill rate. Proponents of this current proposal will argue it is not MVA since businesses and residential properties will be paying only a percentage increase based on 1992 taxes. These increases under the proposal will range from 10% to 25% depending on the class, and the phase-in periods range from two to three years as well. On the surface, these proposed increases do not appear to be unreasonable, but of course the additional factor of the mill rate is not included in these increases; that is in addition to the increases.

This ploy reminds me of the Trojan Horse: harmless at first glance but, as the citizens of Troy learned, deadly in practice. The newspapers report that, currently, taxpayers of the city of Toronto are $624 million behind in meeting their current tax commitments. In these tough economic times where are residents to come up with the extra money required to pay increased taxes and other costs? If this proposed interim assessment plan is not MVA, then why did the provincial assessors update the assessment rolls using 1988 market values of properties in this process?

How can this government even consider approving the proposal submitted by Metro council without an economic impact study? Metro council has stated that the province turned down its request for such an impact study. Is this true?

How can a government which has always held itself out to represent the working people be so cavalier on an issue which is probably the most important issue ever to strike the middle or working class? Their homes are, for most working people, their major asset, a refuge in their working and child-rearing days, a hedge against inflation and protection in their old age from living in poverty.

Minister Dave Cooke was quoted in the newspapers as stating that "We" -- presumably the government -- "did not like the implementation of full MVA at point of sale," and that this part of the plan would have to be debated again by Metro council. Naturally, expectations were that something would be included in the legislation to ensure this did not occur without some debate and consideration by the provincial government. So what happened? Bill 94 requires Metro council to pass a bylaw and Chairman Tonks is on the public record as stating the bylaw will be prepared as soon as the legislation becomes law. Further debate may not occur since, as Chairman Tonks states, "There is no need for any public hearings because the clause governing resale homes is just what council approved after weeks of debate and public hearings."

It is evident that Chairman Tonks is determined to proceed with this iniquitous provision and that in spite of Minister Cooke's comments nothing concrete has been done in Bill 94 to protect this most vulnerable portion of the residents of Metropolitan Toronto. Should Bill 94 become law without any protection against this point-of-sale implementation of MVA, then, I submit, home owners will be deprived of their inherent right under the Canadian Constitution to be treated fairly under the law. This provision is discriminatory in the extreme for home owners, most of whom are working people and not rich and who form the backbone of Canada and its economy. This provision must be deleted from the Metro council proposal.

The reassessment that would occur under MVA contributes even further to uncertainty and instability. Consider what happened recently in Kitchener when the first reassessment under MVA occurred. We should learn from the experiences of other jurisdictions, not rush blindly to duplicate their mistakes.


As currently drafted, Bill 94 provides:

(1) Metro cannot change the protection caps on increases over the next five years without asking for provincial approval. Our recommendation: We request you delete the words "without asking for provincial approval" and guarantee that no changes will be made for that five-year period.

(2) Delete the provision regarding full implementation of market value assessment on residential properties at point of sale. This provision is not equitable and adversely impacts on home owners and no other property class under the interim assessment plan.

(3) Include a provision that Metro council must work and develop an alternative property tax plan and simply state that no intermediate changes, major or otherwise, can occur during the next five years. Delete "without provincial regulatory approval" and ensure there will be no changes.

The property tax working group is scheduled to report on its findings very shortly, within the next week or two I understand. As one of the panels of the Fair Tax Commission, their report will be included in its final report. As you know, this is the provincial body structured three years ago to look at methods of taxation, including property tax. We would ask that you not proceed with the Metro plan until this report is in and has been considered by the government.

Citizens for Property Tax Reform recommend that the government investigate alternative methods of property tax levied in other jurisdictions. This system should reduce if not eliminate appeals by making it simple and easy for the average person to understand. It should also remove the punitive and regressive element of location tax which exists under market value assessment. Kitchener has proved that on reassessment under MVA, first-time winners lose.

It's not only the economy that is causing the problems; there's a general malaise in the country that reflects a lack of consumer confidence in all levels of government. Just this week, in response to questions from the media, Premier Rae stated that in spite of inexperience and mistakes in judgement, his government could still govern responsibly.

Bill 94 and your response to the citizens of Ontario who are taking part in the public hearings provide you with a window of opportunity to narrow the credibility gap that currently exists between government and the people. Remove the inequities already outlined in Bill 94 and, in addition, change the property classification for apartment buildings to the same as that for residential property. It is monstrously unfair that tenants pay a premium for shelter through the property taxes that are levied on apartments. Why should tenants, who presumably are unable to afford a house, pay up to three months' rent and in some cases four and a half months' rent to cover property taxes on their apartments? This, I submit, is not only inequitable; it is a travesty and cries out for justice.

Mr MacGregor: As a closing comment, the bottom line, when all is said and done, is the fact that this property tax situation we have is a total mess. We keep hearing, "It's only a 10% increase and some are even getting a decrease, so what's the big deal?" The big deal is, that's not the point.

The point is that we're not getting the tax reform we've been asking for since this current MVA system was first implemented in 1953. The point is that we're totally ignoring the fact that half of Metro's population, the tenants, are being taxed two or three times higher than home owners and co-op members. The point is that we only have to look to Kitchener to see how devastating an update of MVA will be. If you don't know what happened in Kitchener earlier this year, I urge you to find out. It will make you wonder why the province is so eager to have Metro follow the smaller municipalities as a lead role.

At the same time, in the middle of this mess there is an opportunity. The Fair Tax Commission's working group on property taxes will be submitting a report in a few days. Let's take a look at that report now that we have gone to the trouble of putting it together. Who knows? Maybe it will be a good starting point for a study of alternatives to MVA. Let's look at property taxes and municipal financing in the proper context and then, a little more than a year from now, the Fair Tax Commission will have its final report ready, the overall total tax picture. It could very well be our framework for the future. Don't overlook that opportunity. Good news is hard to come by these days.

The Acting Chair: I thank you for your presentation. We'll begin our questioning with Ms Poole.

Ms Poole: Thank you very much for your presentation today. I know you've both worked very hard with Citizens for Property Tax Reform for a long time and are knowledgeable in the area.

One of the things the government has stated repeatedly is that this isn't a provincial responsibility; this is Metro's plan. In fact, a direct quote from what the minister told me when I taxed him as to why he refused to appear before our committee was, "This is Metro's legislation, not our legislation."

The impression I get from virtually everybody who's appeared before us is that they believe it is a provincial responsibility, that assessment is a provincial responsibility, and that in fact the province has not only the right but also the duty to amend a plan that doesn't conform with anything else throughout the province. Would you like to comment on that?

Mrs Day: As I understand it, the reassessment was done with provincial assessors, which would seem to indicate that it is a provincial responsibility. Otherwise, why do we have some 7,000 of them working for the Ministry of Revenue? We could save that money. The government wants to cut budgets. I'd suggest they get rid of these assessors then if this is not a provincial responsibility.

Even this bill says the minister has the right to address inequities that exist, and certainly the inequities to the tenants of apartment buildings are overwhelming, paying three and a half to four months' rent in property tax, and most of them totally unaware that it's even included.

It is Metro's legislation, but if it's strictly Metro's and the province has nothing to do with it, then why did it submit it to the province? That would be rather ridiculous.

Mr MacGregor: If it's not a provincial responsibility, what are we doing here?

Ms Poole: The other contradictory statement the minister made, and that was actually perpetuated by his parliamentary assistant, was, "This is not an MVA plan." Again, that seems to be one thing that people are agreeing on when they come before us: They believe it is a market value plan. Could you comment on that?

Mrs Day: I guess it's much like my reference to the Trojan horse, or, as Mary Poppins said, "A spoonful of sugar makes the medicine go down." It's later that you find out what's actually going to happen. Metro council cannot bind future councils, so in two years there's nothing to prevent it from taking the caps off. If there's a change in this government, there's nothing to prevent a future government from changing the law as well. So we want to know what we're getting now, not after the fact. We've had enough unpleasant surprises.

Ms Poole: And you want that protection, the protection of knowing that homes at the point of sale will not go to full market value, that in fact the government cannot amend the plan at the request of Metro. I don't think it's too much to ask for those guarantees.

I just wanted to let you know that I will be bringing forward an amendment which would provide that the protective cap stays on residential properties at the point of sale, so now it will be squarely back in the government's court whether it chooses to accept this amendment. They do have the majority.

But my understanding from Metro's interim plan is that the total cost of removing the point-of-sale provision would be $6 million, which on a $4.4-billion budget is nothing. So I don't see how the government could argue that it interferes with Metro's plan when it is such an infinitesimal amount. Would you like to comment on that particular aspect?

Mrs Day: I guess it depends on what drove the government in the first place to approach Metro about introducing market value assessment in this very volatile region. I think the Metro area is unique in Ontario. It's considered to be the engine that runs it. If they don't want to lose that $6 million, maybe it's just part of the tax grab that was built into the system anyway.

The Acting Chair: Mr Turnbull, please.

Mr Turnbull: Professor Day, could you tell us what you teach?

Mrs Day: I teach law clerks.

Mr Turnbull: But you teach economics, am I not correct?

Mrs Day: No, I don't teach economics; only in the areas of law.

Mr Turnbull: The impact study that was referred to before: In any teaching that you would give people, would you suggest that it is appropriate that such sweeping changes be brought in without an impact study? Would it be prudent?


Mrs Day: I wouldn't think so, because how can anyone who is responsible for enacting such a law assess the impact on the average person by those massive, sweeping changes unless you have some facts to base it on? It's not sufficient to accept what Metro puts in an interim assessment plan, and neither, in my opinion, is it acceptable for the provincial government to say, "This is Metro's thing; they have the authority and we can't interfere."

As I understand it, Metro regional government was created by the provincial government. In fact, one of the proponents of MVA said to me, when I asked him why he was supporting this system and insisting on it when he was busy telling everyone how unfair market value assessment is, which is the current system we're under, his response was, "Well, we're creatures of the Ontario government and they could disband us at any time." If that statement's true, then I submit to the members of the government it is your responsibility and you're the ones who are going to bear the brunt of what happens, no matter how you try to distance yourself from the problem.

Mr Turnbull: Storm?

Mr MacGregor: I was just going to say, we made a video this summer that deals with the impact MVA would have on Metro. It deals with the business community, the home owners, the tenants. We would like to make it available to the committee if it's interested. I have a couple of copies with me.

Mr Turnbull: Yes. It's an excellent video, and I would suggest that this committee should review that video.

Mrs Day: Yes, we have copies with us.

Mr Turnbull: It would seem unreasonable, given the fact that the introduction of the report of the Fair Tax Commission property tax panel is immediately pending -- and the leaked information shows it's fairly critical of Metro's MVA proposal -- that this government is pushing this through at this time without reviewing the report. Could you comment on that?

Mrs Day: It seems to me that if the government structured this body to look at taxation and to come back with a report, it's implied that the theory is it was going to listen to it. Why would you rush to implement the interim assessment plan before you've even heard what your own panel, your working group, has to say?

The Acting Chair: Mr Turnbull, in the interests of time we're going to have to move on, so maybe you could wrap up.

Mr Turnbull: Yes. You pointed to a very important point, and that is the unfair taxation of apartment units. It's something which I've spoken on quite often before. Typically, we have a system which penalizes tenants to the extent of two and a half to three times the amount residents would be taxed at. I'm hard pressed to understand why a government which claims to be supportive of tenants would not correct this historic imbalance.

Mrs Day: I think we agree with that. The suburbs, Scarborough in particular, have been complaining and saying that they've been overpaying their share of taxes for years and subsidizing the people in the city of Toronto. I submit to the government it's not the people of the city of Toronto, it's the system that's wrong. I don't think the politicians at the Metro level should be pitting one municipality against another. If in fact the suburbs really believe that they've been overpaying, then how about the tenants in the apartment buildings? If anyone's been overpaying, they have, even more than suburban dwellers.

I would remind the government that those people who live in Scarborough chose to do so, and when they moved out there they knew what the taxes were going to be. There were no hidden costs, because that would all come in at the time they purchased their property, and we all have faced increases as expenses of government rise. One presenter at Metro council was complaining because she paid $3,000 in taxes in Scarborough for a three-bedroom house. I pointed out that I pay more than that, and I have a little bungalow with 1,000 square feet that's 47 years old. I suspect that the properties in Scarborough are much more up to date and certainly larger.

The Acting Chair: Mr Mills, please.

Mr Mills: Quickly, a couple of points. I believe you mentioned about taking the caps off. They can't take the caps off without the approval of the province, for one. Then there was your concern about equity, and it's a legitimate concern, but what you're asking is for us to undo, or Metro to undo, 40 years of, what shall I say?, inequities overnight.

The reason why I think it's understandable that Metro is not doing this is that if we chose to do this, to combine all classes of residential property, it would mean an increase in taxes on single-family homes of 29% and it will result in a decrease of all residential properties with seven or more units of 65%. You can't address those equities in one fell swoop. It took 40 years to get here. That's why there's some reluctance to address it in the way that you suggest.

Mr Turnbull: Why did your members campaign against it, then?

Mr Mills: I'm not getting involved with you.

The Acting Chair: Mr Mills has the floor.

Mr Mills: I'm not going to engage in political debate here. I'm just trying to come to grips with the concerns of the presenters.

The Acting Chair: I would like to thank you for your presentation.


The Acting Chair: Our next presentation will by the CN Real Estate people. If they would come forward, please. Welcome to the committee this afternoon. Could I get you to identify yourself, please. You have 20 minutes. If you'd like to leave some time for questions towards the end, we'd appreciate it.

Mr Ron Ditchburn: Good afternoon. My name is Ron Ditchburn. I am manager of property tax with CN Real Estate and in this role I oversee property tax matters for Canadian National Railways in Ontario. I have 20 years' experience in the field of property assessment and taxation, formerly as an assessor with the provincial assessment authority in Toronto, and for the last eight years with CN. I was recently a member of the property tax working group of Ontario's Fair Tax Commission.

I am responsible for assessment and taxes on all of CN's holdings in Ontario. As you are aware, the railway rights-of-way issue was addressed in a presentation earlier today. I'm here today to raise grave concerns with respect to the proposed legislation in its present form, particularly with respect to vacant lands. I will suggest some improvements to the bill under review.

I have structured my comments into three areas: First, the proposed Metropolitan Toronto market value assessment plan generally and the inherent inequity facing owners of land in the "other" category; second, the impact of Metro's plan on CN Real Estate holdings; and, third, CN Real Estate's conclusions and recommendations.

I would like to begin with a review of the proposed Metro plan and the serious inequity facing owners of land in the "other" category. The initial goal or concept in revising the assessment base in Metro Toronto was to create a fair and equitable taxation system based on a market value which could be understood by the public. The current proposal does not succeed in achieving these goals for the following reasons.

While the plan provides capping provisions against full tax increases for residential, commercial and industrial properties, it creates an "other" category of property, including vacant land, railway rights of way and pipelines, which is left unprotected. This is discriminatory, as Metro has provided no logical basis for such an action. The category "other" arose as a compromise solution, a last-minute bargaining tool to gain majority consensus. The burden of financing the shortfall as a result of capping provisions in the order of magnitude of approximately $80 million has been placed on the property in the "other" category. This creates inequity and unfairness.

Including pipelines in the "other" category is a red herring, as they will experience little, if any, overall tax impact due to their benefiting from their own class factor. This leaves the approximately $80 million in tax burden caused by full market assessment to be borne by two remaining types of property in the "other" category: vacant land and railway rights of way.

The extension of the capping provisions to land parcels which are presently occupied for interim business purposes and subject to business taxes results in further discrimination against holders of similar property that is subject to zoning and bylaws that do not permit interim uses. The inequitable application of capping provisions undermines the basic valuation process and thereby deprives owners of vacant land of a fair review at an assessment appeals court.

This situation results in owners of similarly overassessed but tax-capped, used vacant land, such as a parking lot, having little incentive to appeal their assessments. Therefore, the court test of being assessed in accordance with similar land in the neighbourhood will become biased and prejudicial against owners of uncapped lands.

There has been no analysis or consideration of the short- or long-term effects of the impact of the full tax increases on vacant lands and resulting ability to develop these lands. The ability of land owners to pay a high carrying cost on land is highly questionable. I need not remind the committee of the present financial troubles of real estate companies such as Campeau, Olympia and York and Bramalea.


Much has been said on the use of 1988 as a base year and that it really doesn't matter. It is argued that you will always have variances no matter what year you use. However, the choice of a base year does matter. Let me illustrate; 1988 was a very good year for land owners. But what are the realities of 1992? According to statistics provided to CN Real Estate by Royal LePage, land values have dropped between 40% and 60% in value while commercial developed properties have dropped 20% to 30%. Thus the category taxed the most has also lost the most in value.

Given my experience as an assessor and property tax manager, I cannot imagine how the proposals before you will be administered or by whom. For example, if vacant land with no capping as of January 1, 1993, is subsequently leased for a business purpose, will capping then apply? Will the cap be lifted if a tenant vacates and time lapses before finding a new tenant? These questions must be addressed to determine the viability of the plan to permit corporate planning and, I think, to permit proper municipal budgeting.

There are many other questions of this type, all triggered by the apparent haste of Metro council. The most straightforward and equitable method of avoiding this potential administrative quagmire is to eliminate the discriminatory treatment of the other category and apply the same rules as for commercial industrial properties.

I would like to indicate to you how Metro's proposed plan affects the holdings of CN and its real estate division, CN Real Estate. The 1993 taxes on our vacant lands are proposed to increase from approximately $1 million to approximately $18 million, for an increase of over 1,500%. I'm sure you will agree that such an increase is unrealistic. The major impact of this increase is on the western portion of the railway lands, known as CityPlace. Yes, CityPlace, that sterile-looking piece of land stretching from the CN Tower to Bathurst Street.

In order to illustrate the counterproductive effect of inconsistent planning and taxation policies of different governments and their discriminatory effect on CN Real Estate, I would like to briefly revisit what led to the sterility. CN Real Estate had an agreement with the city, a municipal government. Based on that agreement, CN was able to attract two major potential tenants, Royal Trust and Labatt's. The city reneged on its agreement and placed an interim holding bylaw on everything, thus no buildings and no tenants. The result: vacant land. Metro Toronto now proposes a reassessment plan. Guess who the chosen target is? Vacant land. It appears to be you're damned if you do and you're damned if you don't or, more politely, a catch-22.

These CityPlace lands are in the process of being approved for future development, and due to municipal bylaws, they are restricted from interim uses that would qualify for capping under the plan. Development lands in the vicinity with full development rights and the ability to lease for parking will be capped. I think you will agree that this situation is absurd, where the taxes on land still requiring final land use approvals are 10 times higher than on land that has full development rights. When you consider further that one property is generating an income and passing taxes through to a tenant, the proposed exclusion of vacant lands from capping protection truly makes no sense at all.

CN Real Estate has already invested in excess of $100 million in infrastructure related to the CityPlace lands. This infrastructure is in place to serve land that is currently under the holding designation. More investment will be required, although you will appreciate that CN Real Estate will not invest any more money without being assured of its development rights. Again, I ask that you consider the situation of the enormous impact full tax increases will have on the ability to finance infrastructure, particularly when the returns on investment may be many years away.

CN recognizes the need for a fair and equitable system of assessment and taxation. Unfortunately, the interim plan does not meet the test of fairness and equity and will create an administrative nightmare understood by no one but its authors. The plan discriminates against certain classes of property through the inequitable capping procedures and, as a result, creates inequities and unfairness that will severely impact the financial position of CN and will quickly erode its ability to contribute to the economic growth of Metropolitan Toronto and indeed Ontario. It indicates an 1980s mentality without regard to the economic realities of the 1990s in assuming that corporations are speculating with land holdings and can absorb such severe property tax increases without suffering major setbacks.

I would suggest that the plan is so deficient that there will be no certainty as to what the municipalities, which must count on this plan to base for their revenue, will have once the dust settles. I find it a dangerous precedent to allow a regional government, whose share of taxes is approximately 27%, to decide arbitrarily the winners and losers, with little or no knowledge of the social and economic effects of the proposed plan.

The plan should be deferred to determine its short and long-term social and economic effects, in conjunction with affected parties or, at the very least, the capping provision should be extended to the class called "other," which is severely discriminated against in the current proposal.

Mr Grandmaître: If I can go back to subsection 58(3) of the Assessment Act, this section authorizes reassessment of properties with a more current valuation, a valuation that is for purposes of municipal taxation. It prevents the shifting of the tax burden from one class of property to another. Don't you think by having CN classified 4 to fit in the fourth category -- it's called the "other property" class -- by creating this class, there will be a shifting from one class to another?

Mr Ditchburn: There certainly will be a shift by the creation of "other." As I say, the number I have seen is to the tune of $80 million. CN overall will be paying an increase of some $45 million in Metro. Talking to my counterparts in a similar business, they are experiencing the same, so it must be going somewhere.

Mr Grandmaître: If subsection 58(3) of the Assessment Act prevents this, don't you think CN would have a good day in court if it were to challenge this?

Mr Ditchburn: I believe lawyers will be making a lot of money over the next five years, yes.

Mr Grandmaître: Is CN contemplating that possibility?

Mr Ditchburn: Because of the variety of holdings that we have, we certainly will be appealing every property we own within Metro Toronto.

Mr Grandmaître: I'm not talking about appealing your future taxes, I'm talking about subsection 58(3) of the Assessment Act.

Mr Ditchburn: We will likely --

Mr Grandmaître: Likely?

Mr Ditchburn: Likely.

Mr Grandmaître: Thank you.


Mr Turnbull: Could I just confirm with you, as somebody with considerable experience in this field, my understanding of the craziness of this scheme? Vacant land gets the full increase, whereas if a dilapidated building were on the land, it would be capped at 25%. Is that correct?

Mr Ditchburn: That is my understanding of the proposal as it now stands.

Mr Turnbull: You could have two identical-sized development lots next to each other, one with a dilapidated building on it and the other one with nothing on it. They will be treated completely differently in terms of the approach to taxation.

Mr Ditchburn: That is my understanding. I'm trying to draw the comparison between a piece of vacant land which is prevented by city bylaws from use as parking and a piece of land right next door which has been approved for development, but the developer, due to economic circumstances, will not develop and is allowed to have parking. Then there will be a cap of 10%. So of two lots paying, say, $50,000 an acre in land, one would go up to $55,000. In the case of CN Real Estate, the lands we hold without a tenant would go to $500,000, $600,000.

Mr Turnbull: So without even a building, two apparently vacant lots, one being used for parking and one disallowed for use as parking, will have completely different treatment.

Mr Ditchburn: That's true.

Mr Turnbull: There's another peculiarity I've seen. Some of my constituents have fairly large lots which drop down into a ravine. It has been deemed by the assessors that these are severable lots. They are not severed, they are not serviced, they don't have a street to them, yet they have deemed that a portion of the garden is severable and therefore will be treated as a development lot. Do you know of that issue?

Mr Ditchburn: I'm not aware of that issue. Certainly, it sounds like something for the courts.

Mr Turnbull: Yes, absolutely. The whole problem we have here is a plan cooked up in the last two hours of debate of Metro which violates the aspects of section 58 of the Assessment Act. I have in my possession a document developed by Metro council quite clearly indicating a shift of some $70 million of funds away from residential on to a burden on the other category. It seems to me the courts are going to be absolutely filled, as you've suggested.

Just turning to your experience when you were with the revenue department -- in what capacity?

Mr Ditchburn: As a property assessor.

Mr Turnbull: One of the complaints the Provincial Auditor has come up with -- I may have it here. No, I don't have it with me. The Provincial Auditor, just yesterday or the day before, came out with a problem that too often assessors do a windscreen assessment. It was agreed by 70% of the provincial assessors that this was a procedure they didn't think was appropriate, yet it was identified that fully 30% of the assessments done are still done in this way. Can you comment on that from your experience?

Mr Ditchburn: I've been away from the assessment authority for some eight years. The experience I had relates back to the early 1980s when we were going out and attempting to reassess some of the renovated properties in downtown Toronto and pretty well ran out --

Ms Poole: Aha, you're one of the guilty parties.

Mr Ditchburn: At that time windshielding, as you call it, was a definite no-no. You visited the property one time during the day, once at night and you left what they called a pink form for the people to get back to you. You certainly didn't just pass by and say, "It looks something like next door, so we'll just call it the same as next door."

The Acting Chair: Mr Turnbull, we'll have to move on. Mr Mills, please.

Mr Mills: The issue of railway rights of way and other concerns are being addressed at a meeting that's being arranged between the Minister of Revenue and the Minister of Transportation. That meeting is going to take place and those rights and other concerns will be fully discussed at that time, for your information.

Mr Ditchburn: Thank you very much. I'm happy to hear that.

Ms Poole: I have a question of clarification. Mr Ditchburn, you were here earlier with the CN presentation. There was one technical point I wasn't clear on. The railway right of ways are not capped. Vacant land is not capped. What about the marshalling yards and the storage yards; are they treated as commercial property or vacant lands?

Mr Ditchburn: No. The analysis I received, which is Metro's indication, certainly shows no caps. What was shown there was, if the cap applied, where would you go to? The only time we receive any caps is if we have a tenant. But for ourselves, no, there is no cap whatsoever.

Ms Poole: Basically, for all of CN's property, whether it be railway rights of way or vacant lands or your various yards, to the best of your knowledge, for Metro's plan none of that is capped.

Mr Ditchburn: The data I've seen indicates no. If it is anything to even deal with the railway, it doesn't benefit from a cap.

The Acting Chair (Mr Wiseman): Thank you very much for your presentation here today.


The Acting Chair: Our next presenter will be the Transportation-Communications Union. You have 20 minutes.

Mr Jack Boyce: My name is Jack Boyce. I am the national president of the Transportation-Communications Union, and the executive vice-president of the union also.

Mr Chairman and members of the committee, we appreciate this opportunity to make our views known on this very vital economic issue. The union represents 15,000 people across Canada who are employed in the transportation and communications industries. Included in our membership are the 500 men and women who work in Metropolitan Toronto as clerks and warehouse personnel for CP Rail.

We are very concerned about the impact of the market value assessment plan adopted by the Metropolitan Toronto Council. Our members are worried that if this plan is implemented as is, it will be another major blow to an industry that is already struggling in the face of a recession.

Let us start by examining the exact implications for the railways in Metropolitan Toronto. In the current tax year, CP pays $5.6 million and CN pays $11.5 million in municipal taxes. Upon implementation of the market value assessment plan as proposed, CP and CN would have to pay $18.72 million and $39.1 million respectively. In the case of CP, that would mean an increase of $12.86 million. CN would have to pay an additional $27.6 million. These are staggering numbers.

The railways are being threatened with these huge increases because their properties are being assessed on the basis of value of adjacent lands. If a right of way passes through an industrial area it is assessed as such. If it passes through an expensive residential area, it is also assessed accordingly.

The unfairness and the illogic of this is obvious. Railway rights of way, which represent the vast majority of CP and CN holdings in Metropolitan Toronto, are generally 110 feet wide. There is little future development potential in this kind of parcel of land. We find it grossly unjust that these lands would be taxed on the same basis as adjacent lands that have been assembled and developed in the normal manner.

We also believe that the railways have been treated unfairly in the implementation recommendations of the market value plan.

Metropolitan Toronto Council has decided that, in order to protect businesses that would otherwise be hit with tax increases that they simply could not afford and still survive, there will be a 25% cap on any increases in assessment. Further, any increase would be phased in over the three years -- at 10%, 10% and 5%.


But railways and Hydro facilities are exempt from this protection. We see no good reason why the cap on increases should not apply to all businesses. The railways are under severe financial strain, just like any other business. CP, for example, is facing the same, if not worse, economic difficulties as are other companies operating in Metropolitan Toronto. If this market value assessment plan is to go ahead, then the railways should be treated the same as every other business and should be entitled to the same protection from financial ruin. We would like the committee to seriously consider the consequences of market value assessment as proposed by Metropolitan Toronto.

CP employs 6,000 people in Ontario and CN provides jobs for another 9,000. If the railways are hit with the tax increases this plan proposes, all these jobs are at risk. This is not a bluff by the company or our union. In the case of CP, you are no doubt aware that the company recently decided to shut down its maritime operations. This was a case of economic reality simply overwhelming the company's ability to conduct business profitably. CP could no longer continue with an operating loss which in the final year was $13 million. If market value goes ahead as is, CP's taxes will increase by $12.86 million. We plead with you to understand the relevance of this comparison.

As a union, we are also concerned about the environment. If the role that the railways play in the transportation infrastructure is further undermined, the negative impact on the road network will be severe. The movement of people and goods will be shifted from a relatively clean, private right-of-way system to public highways that are already overloaded and increasingly in need of maintenance and upgrading. This does not make physical sense, nor does it make sense for the environment.

Continuing on the subject of rail versus roads, we see a further injustice in terms of local taxation. Railways must pay a direct tax on properties utilized for their particular mode of transportation, whereas users of highways are not required to pay a direct tax accordingly. It is important to note that rail is the only transportation mode to be discriminated against in this fashion. This is a long-standing inequity that, rather than being addressed for the purpose of righting a wrong, would be made worse if Metropolitan Toronto's plan is implemented.

Our union supports the concept of affordable public transit. Metropolitan Toronto's market value assessment plan attacks this concept. In the case of GO Transit, which serves the Metropolitan Toronto area and beyond, existing agreements with the railways will mean that $13 million of the railway's tax increase will automatically be passed on to the commuter system. This will mean fare increases for passengers, which will lead to declining ridership.

Simply put, we find the proposal before you to be fundamentally flawed. Our recommendations to your committee is that consideration of Metropolitan Toronto's market value assessment plan be deferred until (1) Metropolitan Toronto conducts an economic impact study of the effects of its plan and (2) the Fair Tax Commission reports its findings with respect to this issue.

We believe we have presented you with such information that the committee will recommend rejection of Metropolitan Toronto's current proposal. Thank you very much.

Mr Mammoliti: I don't want you to take what I'm about to say out of context and think I haven't listened, because I'm very sympathetic to the railway and to the union and the workers. But over the last two years, I've experienced something personal here that was really frustrating. In this particular case we have Metro, which has made a decision; in some eyes a bad decision and in others a good decision. Those who are saying it's a bad decision are saying it's a bad decision because either their taxes are going up or jobs are going to be lost through this.

That's a decision that was made at Metro, and over the last two years I've witnessed the federal government making all kinds of terrible decisions that are costing jobs and increasing taxes. People continually come to the provincial government and say, "Bob Rae, what are you going to do about this?" It's very frustrating. When Bob says it's Metro council that made this decision or the federal government that made a decision, people have a hard time understanding that Bob Rae can't get them out of every mess.

That's not to say we don't want to, and it's not to say we've got our ears closed. It's to say that there are three different levels of government, and when those different levels of government make mistakes, we're asking people to channel their frustration and their dissatisfaction to those levels of government.

I understand why you're here today. I understand that you're looking to save jobs. But I had to make this comment, because it's very frustrating to me, sitting as part of this government and seeing a lot of the people in Ontario taking shots at the provincial government and expecting the provincial government to get them out of every kind of bind. It's very frustrating.

Now, in terms of caps and the class in which the railways are defined, Metro has the capability of changing that class. We've got that provision within this piece of legislation to allow it to do that. What I'm asking you to do is to go back to them and say: "They've done it. They've listened. The provision is there; it's open. You can change it. Why don't you change it?" Are you prepared to go back to Metro and do that?

Mr Boyce: We'll do that if we have to.

Mr Mammoliti: The legislation is open that way. You can do that.

Mr Boyce: One thing I want to make clear to you is that we didn't come here today asking for any money. We're asking you here to save some jobs. Jobs are not going to cost you anything. Don't get the idea that we came in here asking Bob Rae for dough. We're not asking for any dough. We're here to ask you not to pass legislation that would lose a lot of jobs. That's what we're asking you.

Ms Poole: Thank you for your presentation today. I just wanted to get a little background on your particular union. It says transportation-communications. Would you, for instance, represent truckers?

Mr Boyce: Yes.

Ms Poole: So you not only represent the railway workers; it's all aspects of transportation?

Mr Boyce: That's correct.

Ms Poole: Because one of the things we've been told by a number of the presenters on behalf of the railways is that the railways are becoming increasingly uncompetitive, and this basically would be the straw that breaks the camel's back.

Mr Boyce: That's right. Today I'm representing the railway people.

Ms Poole: But tomorrow --

Mr Boyce: I could be representing the truckers tomorrow; you're right.

Ms Poole: You've talked about the loss of jobs, and certainly that's a theme we've heard from a number of the presenters. Do you have any estimates of how many jobs you think or fear might be lost if some relief is not given to the railways?

Mr Boyce: I really can't tell you just how many jobs, but you can rest assured there will be some, quite a few. I really can't give you an estimate on that, no.

Ms Poole: That's definitely the message we got from the union people who came with CN.

Mr Boyce: Definitely. You know, CP is not a company to lose money. They're in there to make a dollar, and if they don't make a dollar, they're going to find ways to get the dollar back.

Ms Poole: One last question. The provincial government is recommending that you go back to Metro once they pass this legislation. They're basically washing their hands of this and saying: "It's Metro's plan, Metro's responsibility, Metro's problem. Go back to Metro. What we're going to do is allow you to go back to Metro." Do you place any faith in Metro council changing its mind on this?

Mr Boyce: I'm a little concerned. I don't know what I'm doing here. Are we wasting time here? We come in here just for people to hear us, and it's already a fait accompli? Is that what we're saying?

Ms Poole: I sincerely hope that is not true. We have had a number of presenters, as I mentioned, from the various aspects of the railway industry, and the message we've gotten has been very strong from each one of them. When I've asked that question of each one of them, they've said no, that they don't place any credence in that, because basically Metro needs the money from the railway rights of way and the vacant lands in order to make its plan work.

So I guess the message I can give to you as to whether your presentation is effective is I can you tell that you can't give up and, secondly, this government has said that it is very concerned not only about job creation but about saving job losses. I think it's becoming increasingly clear that if this proceeds, there will be job losses.

Mr Boyce: No question.

Ms Poole: So your message is getting across to them. Whether they act on it is up to them.

Mr Boyce: We sure hope so, because we can't stand to lose very many more.

Mr Turnbull: Thank you for your presentation. It's very clear under the British North America Act that municipalities are creatures of the province. As well as that, the assessment legislation clearly prohibits shift of burden from one class of property to the other. It's quite evident that is what we're seeing here. Since the municipalities are creatures of the province, it would be reasonable that at a time when we have before us enabling legislation, the province, if it sees problems with it and has clearly identified them, should be acting upon them. We pushed very hard to get these public hearings in the hope that the presentations would change the government's mind.

There are several cabinet ministers who campaigned in the last election as being against market value assessment. The whole point is that if they campaigned on that platform, why are they not delivering now? If now they're saying, "Oh, well, we have to give a municipality what it asks for," why did they campaign on that platform? I very much hope you can make sure that the government understands, be it members of this committee or the Premier or the Minister of Municipal Affairs, who has refused to come and answer questions at this committee, as you may be aware. I don't know. We've asked on several occasions that he attend to answer questions. He has attended but refused to answer questions. It is vital that you get to him at the moment and explain just what is going to happen.

We hear that they're going to look at this particular class, but there are many faults with this plan and it is up to the government to take the requisite action. They have the power. Above all, the NDP has always been a very interventionist group of people. They have always screamed for prior governments, both Liberal and Conservative, to interfere in municipal matters. Now it's their turn. We're saying this is going to harm jobs, this is going to lose jobs. They have to take action, and you must hold them accountable for this.

Mr Boyce: Just as an aside, I've written a personal letter to Bob Rae advising him of our problems. I hope he's going to answer me. I'm pretty sure he will.

Mr Turnbull: You must have action now, before this committee stops hearing.

Mr Boyce: Yes, I know. We don't have much time.

Mr Turnbull: Otherwise, it's going to go to third reading.

Mr Boyce: When is the third reading, anyway? It could be any time?

Mr Turnbull: Next week is the last week we sit and the government is determined to push this through next week, even before the Fair Tax Commission report comes out, which -- we've seen the drafts of it -- is quite damning of Metro's MVA proposals.

The Acting Chair: Mr Mills, please.

Mr Mills: I'd just like to recommend, gentlemen, that both those people there who are telling the NDP to listen have members in their parties who also supported this bill at second reading, so perhaps they should be talking to their own members as well.

Mr Turnbull: All of your people supported it.

Mr Mills: I have the floor. The railway right of way is a problem across the province; it's not only in Metro. That is why the Minister of Transportation and the Minister of Revenue are going to sit down with railway officials to discuss the whole scope of this.

Mr Turnbull: Just for your information, every single one of the NDP voted for this.

Mr Mammoliti: On a point of clarification, Mr Chair: Mr Turnbull had said that it's the NDP that is pushing this through. It's important to note that Metro's proposal is very clear in terms of this passing before the new year, before January 1. If the member across here, Mr Turnbull, would do his homework, he'll know that we only have another week left in this session before the new year. It's not so much the NDP that is pushing it through.

Mr Turnbull: You don't need homework --

The Acting Chair: Excuse me, Mr Turnbull. Mr Mammoliti has the floor.

Mr Mammoliti: It's very misleading, Mr Chair, and I think it's a little bit unfair.

Mr Turnbull: I do, and --

Mr Mammoliti: Can somebody put a sock in his mouth, maybe? Would that help? I don't know.

The Acting Chair: Go ahead, Mr Mammoliti.

Mr Mammoliti: I've said my bit, Mr Chair.

The Acting Chair: Thank you very much, Mr Mammoliti. Gentlemen, thank you very much for your contribution to the committee.

Ladies and gentlemen, we'll have to break. As you know, we're being called to the House for a vote. I'm going to recess the committee for 10 minutes.

The committee recessed at 1705 and resumed at 1722.


The Acting Chair: Ladies and gentlemen, I'd like to reconvene the standing committee on social development. At this time we have the Taxpayers Coalition Ontario in front of us. Sir, if you would identify yourself, please.

Mr Paul Pagnuelo: I'm Paul Pagnuelo. I'm vice-president and director, eastern region, for the Taxpayers Coalition Ontario.

The Acting Chair: Sir, you have 20 minutes for your presentation. If you would like to leave some time for questioning towards the end.

Mr Pagnuelo: Mr Chairman, committee members, I want to believe that my remarks and those of other delegations appearing before you will truly be considered and reflected in the report your committee will be presenting to the Legislature. I also want to believe that all members of the Legislature will approach third reading of Bill 94 with an open mind and no preconceived positions and that the recommendations of your report will have a real bearing on their final decision.

The reason for my scepticism is due to recent media reports which quote Municipal Affairs Minister Dave Cooke as saying the government wants Metro's market value assessment plan approved by December 10 so tax increases and decreases can be implemented by Metro next year. If the minister's remarks have been reported accurately, then I fear that the government's mind has already been made up on this issue. If that's the case, then my time, your time and taxpayers' dollars are all being wasted by these public hearings. That would be a travesty of democracy. I trust that the minister has somehow been misquoted and that "public consultation" means the government of Ontario is prepared to truly hear what people have to say, without their fingers once again being stuck in their ears.

As we all know, property taxes pay for municipal, regional and school board services. The assessment system now in place dates back to 1740. If it were to be invented today, some 250 years later, market value surely would not be chosen as the standard for assessment. It's important to realize that the real issue facing Metro Toronto is not market value assessment as such but one of reform.

The upcoming decision by the Ontario Legislature will determine a landmark issue, with significant consequences affecting every aspect of life in Metro. The debate now going on about Metro's market value assessment plan has occurred numerous times before in other parts of this province, but the common arguments used either in support of or in opposition to it are always based on emotion of the pocketbook and not on logic.

Businesses in some parts of the province have claimed it would be their economic salvation because it would lower their taxes. Others elsewhere argue that MVA will ruin them financially because of skyrocketing tax hikes. The same pattern holds true with residential property owners. In all cases, the arguments are based on the winner-loser syndrome: those who will pay less arguing in favour, and those who will pay more arguing solidly against. So who's right?

Close examination will show there's nothing basic about market value assessment. In fact, it is a complex method and a terribly inequitable one. Its theory of fairness is fundamentally flawed in several respects. In deciding whether MVA should be adopted by Metro or, for that matter, anywhere else in the province of Ontario, it should be tested against some of the basic principles on which a fair and equitable assessment system should be based.

How many taxpayers or, for that matter, elected officials, including those of you here today, understand the mechanics of how market value assessment is calculated? How many understand the two options available under the Assessment Act?

The way in which provincial assessors determine market values means that even if you bought your home in the year of assessment, it is unlikely that the price paid would be considered to be your market value for assessment purposes. Because there are several numbers which can be manipulated, some of which are highly subjective on the part of the assessor, many opportunities exist for significant error. Property values are established using location, cost of replacement, rental value, sale value and any other circumstances affecting value. The long delays which occur between the base year and the time when the assessment is actually applied make errors all the more likely and more difficult to prove or to refute.

Appeal boards are really nothing more than reaffirmation boards, as they rarely adjust assessed market value because of the inability of property owners to really understand or deal with the MVA process in their own defence. The MVA process involves complex formulae and subjective judgement, so it fails the first test.

Stability exists under the present system to the extent that the assessment of the property is fixed unless the owner chooses to make assessable capital improvements. This is the only element of the property tax bill which is entirely under the control of the individual taxpayer.

Although taxpayers can't control the mill rates -- at least not yet -- generally they increase in line with other costs or at a predictable, fixed rate, and they can plan their finances accordingly. Under MVA, the property owner does not have any control over external forces which may influence the assessed value of the property. Rapid growth, a speculative market, changing demographics, rezoning, inflation, low interest rates and government incentives are just some of the factors which can dramatically increase the market values of properties in a particular area. All are beyond the control of the property owner. Unable to plan for or predict changes to their assessment, property owners face significant uncertainty in anticipating whether they would be able to afford to keep a particular property or stay in business.

MVA is highly volatile. It's a moving target leading to large and abrupt tax changes every four to five years, so it fails the second test.

The system must be reasonable to the taxpayer, but because MVA holds no relationship between the property owner's tax burden and his or her demands for municipal, regional or school board services, it also fails the third test.

To suggest that ability should not be a consideration and that social rebate programs available to seniors and low-income earners or a phased-in approach or a cap would alleviate the problem of affordability is not only naïve, it's irresponsible. Many social programs are limited in scope and it would be wrong to take them as sacred trusts, as evidenced by the reduction in seniors' grants in the last provincial budget. Phasing in or capping increases doesn't make them any more affordable, it just delays their unfairness. Market values have no relationship to income or ability to pay. The fourth test is failed.


The premise that properties which have similar market values should be assessed at equal or comparable values regardless of where the properties are located sounds fair, but is it? Is it fair that a particular house in one part of Metro should be taxed at, say, two or three times the rate of an identical house in another part of Metro? Clearly not. But with MVA, the exact same house in two different parts of Metro and receiving identical services would have two different market values and two different tax rates. Conversely, vastly different homes on different-sized lots and using significantly different services could end up paying the same tax. MVA discriminates on the basis of location, so it fails the fifth test.

The system should be simple, easy and efficient to administer, but because the condition of the structures is used in determining market value, routine internal inspections are essential to its administration. The search for the finished basement, new plumbing or the fixed-up back deck or storefront; the practice of peering into windows during the day; the costs involved in employing people to do this; the computer systems to keep track of it all; the whole appeal system. All represent the use of resources which are nothing more than a dead-weight loss to the productive end of our society. It fails the sixth test.

The system must not be a disincentive to improvements and maintenance, but as part of the four- or five-year assessment update cycle, assessors will make sweeping internal inspections to catch improvements or maintenance work deemed to improve property values.

Under MVA, improvements to one's home, business or neighbourhood will drive up market values and, as a consequence, taxes. It's truly bizarre when improvement results in a penalty. And so, because MVA discourages improvements and promotes slum-like appearances, it also fails the seventh test.

Many property owners who moved into modest homes or started businesses in unfashionable neighbourhoods 20 or 30 years ago now find that their neighbourhoods have become popular. Consider that many of these people are retired, on fixed incomes, or are struggling to keep their modest businesses alive. Now, because market values have risen dramatically, their taxes increase dramatically. What are they supposed to do, sell in a depressed market and move because of MVA?

What about those families who purchased their homes or businesses on a certain principal, interest and tax structure? Reassessment, sooner or later, also will force them to sell and move from the neighbourhoods where they've put down their roots and were contributing to the community. If this is the outcome the Ontario government wants to achieve, it has to fail the eighth test.

Basing property taxes on reassessed market values is tantamount to taxing property owners on future unrealized capital gains, capital gains which they may never realize in their lifetime. Totally inappropriate and unfair, it fails the ninth test.

MVA calls for the market value of one's property to be adjusted every four or five years. To the extent that a property has appreciated at a greater rate than property values in general, its owner will pay a greater proportion of the total municipal tax bill, thus subsidizing those whose properties have not appreciated as much. Neither his or her services nor income may have changed, but the result is that these property owners will pay more than their fair share of municipal taxes.

How can anyone seriously suggest that municipal taxes in one part of Metro should go to subsidize those in other parts simply because their market values are higher? They can't, so it fails the final test.

Is the Ontario government ready to take responsibility for giving Metro council the green light for a system with 100% failure rate tested against the principles of fairness and equity, a system where the immediate impact and ongoing process will be both intolerable and unacceptable, one which will result in tremendous social and economic turmoil and voter discontent?

Is the Ontario government willing to take responsibility for driving people and businesses into further financial hardship? Is it ready to force them to give up their homes, to close their stores and to close their factories?

Is the Ontario government prepared to face the consequences of bankrupting many of Metro's municipalities, in particular the city of Toronto, the economic heartland of not only our great province but all of Canada? Because most certainly this will be the result, when taxpayers, either through inability or through choice, fail to pay their taxes. Neither the solution proposed nor the timing could be worse.

Yes, the people in Metro Toronto and, for that matter, in every municipality throughout this province desperately need a new system of property taxes, but we want one of success, not of failure, one which doesn't continue to hold us prisoners of history. Our choices don't have to be restricted to those which currently exist in legislation. The provincial Assessment Act is by no means one of the 10 untouchable commandments brought to us from the mountain by Moses.

The eventual decision of the Legislature on this issue must be based only on common sense and reason, not emotion. But emotion, I'll tell you, will prevail on the part of the taxpayers, both at the ballot box and with their chequebooks, if it is seen or perceived that common sense and reason did not guide the final decision of this Legislature.

The issue of property tax reform and fairness requires real leadership. This committee and the Ontario Legislature can provide it by treating MVA like the dinosaur it is. It's time to drive a permanent stake through its heart, and that means defeating Bill 94 on its third reading.

Mr Tony Rizzo (Oakwood): Mr Pagnuelo, I think you proved, after many others before you and maybe in a better way, that MVA doesn't work, it's not fair and it's not the proper tax reform we need in Metro. I agree with you and I can assure you that many in my caucus also agree with you.

Unfortunately, it's a solution that's a little better than the one we have now, and we cannot ask our taxpayers to wait another 10 years to have the reform we want to implement some time in the future. As you very well know, there have been many thousands and thousands of citizens in Metro Toronto who have been paying very high taxes and subsidizing other Metro Toronto people who have been paying very low taxes for the last 40 years.

So I'll tell you the way I'm going to vote: I voted for it at second reading and I will be voting for it at third reading in spite of the fact that I agree with you that it's not perfect and it's very unfair. But it's a little better than what we have now, and I think some fairness is going to be achieved by letting people who paid less before pay a little bit more and give some credit to those who have been paying more for a lot of years.

Mr Pagnuelo: The assumption in terms of one sector subsidizing another or one community subsidizing another is that it's all based on market values, and who's to say there have been inequities or that today's system is more unjust than what is being proposed? Because we're dealing with market value, which is an intangible.

We've had heated debates in many communities throughout the province where neighbour has been pitted against neighbour. The sole reason people take sides on this issue is that when it comes into their communities they look at the ledger and they say: "Where do I stand? Do I stand to have lower taxes or do I stand to have higher taxes because of market value assessment?"

What we as a group of concerned taxpayers are saying is: "Don't look at the bottom line, because if you end up being the winner today under market value assessment, I can guarantee you that in four or five years down the road, when the next period comes through for reassessment, you could be on the other side of the coin." There's a big danger in jumping into something because you see an immediate financial gain or benefit for yourself today.

Let's look at the logic. Everybody we talk to says they want a system that's fair. People don't object to paying taxes for services which they feel are essential and needed. People don't object to paying their fair share. It's how do we determine that fair share? Where you get taxpayers irate and where you get taxpayers upset is when they perceive that the system is not fair.

You have a Fair Tax Commission which is due to report soon. It's been studying the issue of property taxes. Whether or not it's been able to come up with an alternative solution, time will tell.


Mr Rizzo: We have also to consider the fact that we have an authority, Metro Toronto, that has some power. If we deny them to implement some type of taxation now, they can come back and say, "Fine, you can take over and run Metro by yourself." Either we go along with that, and maybe do a little bit of tinkering -- for example, what I think the legislation is saying is, "At least don't impose full market value on properties that are going to be sold, because it would be a killer."

Mr Pagnuelo: But when you realistically look at what's being proposed, yes, it's supposed to be market value as the original proposal, but it's been so tampered with, it doesn't resemble anything. How anybody can say that what people have ended up with is fair and equitable is beyond my imagination, because it's been tinkered with to death. It doesn't represent anything in terms of a fair basis of assessment.

Metro's gone like this for some 40 years, I think, or whatever the case is. The Ontario Fair Tax Commission is reporting next year, 1993?

Mr Rizzo: Yes.

The Acting Chair: Thank you, Mr Rizzo. We're going to have to move on. Mr Turnbull, please.

Mr Turnbull: Thank you very much for a good presentation. Just to get you quickly on the record and then I'll come to my question, do you live in Metro Toronto?

Mr Pagnuelo: No, I don't.

Mr Turnbull: So you have nothing to gain either way.

Mr Pagnuelo: I have absolutely nothing to gain in this. I'm here representing the Taxpayers Coalition Ontario and we talk for taxpayers province-wide.

Mr Turnbull: Okay. You make some statements here about how the provincial Assessment Act is by no means one of the 10 untouchable commandments brought from the mount. Is this provincial responsibility? The government is trying to duck out of it. You've heard the statement now that this is an interim measure and it's fairer than the present system. All those assumptions are based upon the assumption that market value is fair as a basis --

Mr Rizzo: Absolutely not.

Mr Turnbull: Perhaps you could comment on whether it's provincial responsibility and the question of the fact that the government is limply saying it doesn't like the capping coming off at point of sale, it's not going to do anything about fixing the imbalance of the amount tenants pay and it's washing its hands of it and saying, "Oh, this is Metro's responsibility." Can you comment on that as you see it from the taxpayers' perspective?

Mr Pagnuelo: Let me comment on it from the perspective of how property assessment takes place. The basis of it is found in the provincial Assessment Act, and the only method available to any municipality in terms of the basis of assessment today is market value. To look at an alternative method of assessing for taxation, whether it be on square footage of land, square footage of property, a combination of square footage of both, perhaps another combination including use of property, requires an amendment to the provincial Assessment Act, which is their responsibility, and the only people who can change that is this House.

So to argue that the issue of market value assessment has nothing to do with the provincial government is erroneous, because it is the provincial government that has established that the way municipalities will assess for property taxes is on the basis of market value. It's this House that eventually will receive the report of the Fair Tax Commission, and hopefully there will be alternatives there. It is this House that is going to decide. If Metro wanted to move, for example, to a unit value method of assessment, it would require a change to the provincial Assessment Act. The province has to say, "Yes, we agree with it."

The difficulty is, I don't see how you can do it in one area of the province without changing it and making it universal. You can't have some parts of the province working off market value, other parts of the province working off unit value and other parts working off some other basis altogether.

The Acting Chair: Thank you, Mr Pagnuelo, for your presentation here today. I'm sorry that your time has expired.


The Acting Chair: Our next presentation will be from the Canadian Shoe Retailers' Association. Come forward and introduce yourself, please.

Ms Sharon Maloney: My name is Sharon Maloney. On behalf of the Canadian Shoe Retailers' Association, I'd like to thank you for giving me this opportunity to address your committee on Bill 94. I'm currently president of the Canadian Shoe Retailers' Association. Effective January 1, our organization is merging with the Retail Council of Canada, at which time I will be the vice-president of footwear division for the Retail Council of Canada.

The Canadian Shoe Retailers' Association is a national trade organization which represents in excess of 2,200 footwear outlets nationally. Our membership is composed of national footwear chains and independent operators. Our largest group of members is located in the province of Ontario, with significant membership in Metropolitan Toronto.

CSRA does not typically become involved in municipal issues. This is because the scope of municipal issues goes beyond the limited resources of our association. On the issue of market value assessment, however, CSRA has determined that the breadth of this legislation and the questionable process applied for its implementation demanded our immediate attention.

I do not need to state the obvious about the current condition of the footwear retail trade, particularly in the city of Toronto. Recent Statistics Canada figures show that footwear sales were down by 1.7% this year over last. Figures prepared by FMI Canada, January to June 1992 versus January to June 1991, indicate an overall drop of 5.5%.

The footwear trade, like all other sectors of the retail trade, has suffered from the onslaught of interventionist legislation which has been introduced by all levels of government without regard or consideration of the long-term impact on the trade. Market value assessment and its introduction is no different in that regard and, in my view, represents the straw which will break the camel's back.

Throughout this debate, I have heard reference to the need for fairness in taxation and that market value assessment represents the fairest method of taxation. I am unable to understand such rhetoric when the substance and the process of the introduction of this bill are put under scrutiny. The following are just a few of the examples of fairness which I presume the proponents of this legislation rely upon.

No economic impact study has been conducted to determine the implications to the retail business sector of a major shift in tax apportionment intra and inter the various tax classes. Members of this Legislature and Metropolitan Toronto council are prepared to exercise their option, which is actually their constituents' option, without even informing themselves, and thereby their constituents, of the implications of MVA on the business sector.

Tax burdens are being shifted to the small commercial sector without any debate as to whether this is appropriate, especially in light of the current economic conditions.

Tax burdens are being shifted within the commercial class itself, from large tenants and landlords to smaller operators, as part of a legislative adoption of commercial arrangements. In so doing, the plan removes the freedom of competitive bargaining from within the retail class and elevates it to a government-mandated status quo and thereby condones a competitive advantage which heretofore was available only through private negotiation.

Properties which are not exempt under this proposed legislation represent the lifeline of retail. Transportation of goods and people are crucial to the maintenance of a healthy retail environment. The city of Toronto is already losing market share to suburban locales because of the increasingly exorbitant costs to individuals who want to shop in the city.

The proposed legislation does not mandate the removal of the resale provision. The Minister of Municipal Affairs has not therefore kept his public undertaking that he would remove the resale provision contained in the Metro plan and thereby restore equity to Toronto home owners.

This legislation, by condoning the severance of the nexus between assessment and taxation, may be denying individuals the right to challenge their taxes.


There is no provision in this legislation to address the implications for new retail entrants into the marketplace. It would therefore appear that new retail operations will be subject to market value assessment, which in and of itself will discourage any new retail entrants and thereby the generation of new retail sales dollars in the city of Toronto.

I would submit that none of the above is fair. The Metro and provincial governments are sacrificing and ignoring yet again the very real needs of the business community for the sake of political niceties. Metro will obtain market value assessment and the government of Ontario can maintain its position of non-interference at the local level. In the meantime, the very real people whom you represent, who live and die by real dollars spent in real stores by real people, will once again have to pay the costs of your non-realistic governance.

The Acting Chair: Thank you. We have time for one question per caucus, and brief preambles, please.

Mr Turnbull: The two things which jump out at me which I recognize are the lack of impact studies and this shift of burden away from large tenants to smaller tenants -- and you actually say to landlords. I would suggest that it's actually from large landlords to small landlords.

The best evidence of this is what has happened in Yorkdale, for example. Traditionally, the anchor tenant has received a benefit from the landlord as an inducement to go there, but it seems ridiculous that in fact the municipalities are going to further that inducement to the large tenant. Could you comment on that, please?

Ms Maloney: That's my point precisely. It's one thing for the marketplace to dictate what the relationships are going to be in so far as retail relationships are concerned. In point of fact, what this legislation has done is to recognize that and to put legislation into place which is now going to guarantee that this situation is carried on into the future. It has taken the ability right out of the private sector and the people who are competing in the marketplace to come to their own arrangements. With what's going on in the retail market right now, that's crucial. The retail market is changing. It is not the way it used to be.

Mr Turnbull: Bottom line: Will there be job losses as a result of this?

Ms Maloney: I would suggest that, yes, there will be job losses. I would refer the members of the committee to an article that's in the Toronto Star this morning, in the business section. It's an article dealing with what is happening in the city of Toronto in terms of the real estate market. It specifically quotes Joseph Reddington, who is the head of Sears. He makes the comment that retailers will not be looking to locate in the downtown area. Part of the reasoning for this is that they don't necessarily need the kind of space that they've had traditionally.

If that starts happening, who are you going to attract into your downtown core? Who are you going to attract into your strip malls? You have to attract smaller business. You have to attract independent operators. If you bring in provisions that make it non-competitive for them to do that, you're not going to attract them.

Mr Mills: I'd just like to refer to your brief, paragraph 6. I have here a letter that the Minister of Municipal Affairs handed to the then Chair, Mr Beer, yesterday. He says:

"At the outset, I would like to emphasize that all existing rights to appeal the assessment of a property are unaffected by Bill 94. Further, Bill 94 provides for a right to appeal the incorrect calculation of taxes to the council of an area municipality, by a person with an interest in a property."

Further to that, I would like to address your paragraph 7 in so far as new retail entrants into the marketplace are concerned. I have some notes here that say: "Although Metro council has not dealt with the specific details of its protection plan, a working group with staff representatives of all the area municipalities as well as Metro has been established to work out the details. The directions to the working group have been to develop a generous plan." Those two points I'd just like to cover.

Ms Poole: Thank you very much for your presentation. You obviously have concerns about this plan and its impact on small business. One of the things that appears to be in dispute right now is the impact on business taxes. The business tax, as members of the committee are aware, is in effect the occupancy tax paid by the tenant.

The information I've had from several senior people in the Ministry of Revenue is that they are familiar with the legislation, and they are certainly familiar with assessment practice. Because there is no 1992 base year, if new tenants, for instance, moved into a building January 1, 1993, and had no 1992 base year for taxation, they would actually have full market value. If this is true, and we are right now trying to get that ascertained, it will have an even greater dramatic impact than when you wrote this brief.

Ms Maloney: Absolutely; no doubt. Anything that further acts as a disincentive for people to come into the retail market is, in our view, a mistake. The retail market, especially the small retailer -- it's always been my understanding that small business was one of the constituent groups for this government -- is going to be disadvantaged by it.

Ms Poole: Councillor Anne Johnston has said it's the wrong tax for the wrong time in the wrong place. I guess you'll add one more thing: to the wrong group.

Ms Maloney: To the wrong group, absolutely.

The Acting Chair: Thank you very much for your presentation.


The Acting Chair: I would now call upon the Toronto Arts Council, Anne Bermonte, associate director, please.

Ms Anne Bermonte: Good afternoon. My name is Anne Bermonte and I'm the associate director of the Toronto Arts Council. I wish to thank you for the opportunity to address this committee. Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992, poses a serious threat to Toronto's artists and non-profit arts organizations. Implementation of MVA, as proposed in Bill 94, will mean the end of Toronto's arts and culture community. I will elaborate. However, before I start, I would like to raise a concern -- and I've actually heard it raised a number of times this afternoon -- with respect to this process of public hearings in which we're currently engaged.

I've read in the papers of other deputants before you today that the Minister of Municipal Affairs has recently been quoted as saying, "The government wants the plan approved by December 10 so tax increases and decreases can be implemented by Metro next year." My question to you is, if this is the case, then why are we here today? Is this a process that is similar to the debacle the federal government called "citizens forums"? Is this a way of placating Ontario's citizenry?

I hope that you, unlike the federal government, will not ignore or pay lipservice to me and the hundreds of other individuals who have sat or will sit before you addressing this very important issue. I hope you will ensure that the concerns we voice are appropriately considered and reflected in the government's decision.

Having raised this concern about the process, I want to focus on the disastrous impact that Bill 94, MVA, will have on Toronto's arts organizations and artists.

Essentially, Bill 94 will undermine the economic, social and cultural fabric of the city of Toronto. The arts community is typically operating at the edge of survival, dependent on government grants, donations and local community support, which are currently under recessionary pressures.

Bill 94 means a minimum guaranteed increase to commercial and industrial property taxes of 25% over the next three years. Metropolitan Toronto is considering a 5% property tax increase in 1993. Consequently, arts organizations in the city will be faced with a minimum 1993 tax increase of 15%.

In addition, for the next five years, appealing one's assessment will become an academic exercise for the vast majority of property taxpayers in all classes. I understand that under Bill 94, starting in January 1993, the only assessment will be the roll showing 1988 market values. A taxpayer may well win his or her appeal and achieve an adjustment to the 1988 assessment, but this may have a zero effect on his or her current tax payment, since the property tax will not be based on this assessment for the next five years. It's an increase that's being proposed on what is currently the property tax being paid.


Under the 25% proposal as of January 1, 1993, I want to give you some examples of how specific arts organizations will be affected. The Desrosier Dance Theatre's taxes, under this current proposal, will increase by $5,500; increase under full MVA is $14,000. The National Ballet of Canada's taxes are proposed to increase by about $18,000; under full MVA, the increase is $128,000. Young People's Theatre's taxes will be increased by $16,000; increase under the full MVA is $28,000. The Academy of Canadian Cinema's taxes will increase by $5,000; increase under full MVA is $87,000. Factory Theatre's taxes will increase by $3,400; however, under full MVA the increase is $60,000; the Artists and Artist Run Centres at 183 Bathurst St face a total tax increase of $6,300; under full MVA, it's $9,800.

The original plan -- full MVA -- had it been before you as Metro had initially proposed, would have basically accomplished the strangulation or the demise of the arts community much, much sooner than what this patchwork proposal is doing, but I think this proposal currently before you is much more insidious, because it will make strangulation a longer and more painful death for the community.

Implementation of MVA as proposed in Bill 94 will erode the revenue base of the city of Toronto to the point where, among other things, there is a fear that city support for the arts and culture could diminish or disappear.

Small businesses, which are also hard hit by the recession, will find it very difficult, perhaps even impossible, as with artists and arts organizations, to absorb a 25% increase in property taxes over the next three years. To date, the city of Toronto has calculated approximately $250 million in tax arrears. The loss of another element of the city's commercial tax base will undoubtedly increase the amount of tax arrears.

A $32-million shortfall in the city's 1993 operating budget is projected as a result of the loss of revenue from payments in lieu.

A $2-million revenue shortfall is projected from the city's parking authority. Under the current MVA proposal, properties owned by the parking authority are classed as "other," and like the vacant lands, the railway corridors and the utility rights of way, are not protected by caps on tax increases.

The cost to the city to implement MVA as proposed in Bill 94 has been estimated to be as high as $1 million.

The Toronto Arts Council is the city of Toronto's cultural adviser. It recommends to the city of Toronto, through peer assessment, on the distribution of the city's grants budget to arts and arts organizations. In 1992, the Toronto Arts Council received approximately $6 million from the city of Toronto as the cultural budget to be used to support the work of artists and arts groups. This amount of money may seem rather small to you. However, the amount of work, the economic activity and the jobs it creates is significant, and becomes increasingly more significant in light of deteriorating support from other levels of government.

For example, the federal funding of the arts through the Canada Council has been frozen for the past six years, with Ottawa adopting an anywhere-but-Toronto attitude on ministerial spending. Yesterday, the Minister of Finance announced as part of the federal government's economic plan, a $20-million cut to the Canada Council over the next two years as part of an overall $80-million cut to culture.

Provincial support of the arts through dedicated lottery income has disappeared. The purpose of dedicated lottery funds, which was the support of culture, recreation, sports and fitness, has been severely altered through Bill 119 and Bill 114, amendments to the lottery corporation act, in order to cover hospital deficits and hospital administration costs.

The province, like the federal government, is considering 10% to 20% cuts to agencies like the Ontario Arts Council and to its ministries, particularly the Ministry of Culture and Communications.

Of course, GST has had a negative impact on many performing arts groups, as it has on businesses all across Canada.

A report prepared earlier this year by the Toronto Arts Council, entitled The Arts and Economic Development, outlines the non-profit sector's economic contribution.

For example, $1 invested by the city of Toronto comes back multiplied up to 24 times within one to two years. Conversely, the loss of $1 would result in a negative growth, ie, contraction, of $24 within two to four years. The overall non-profit arts and culture revenues in Toronto remain close to $200 million with an economic impact of almost $900 million. Arts and arts-related jobs in industry centred in Metro Toronto remains at approximately 150,000.

In addition to their economic and cultural value, the arts help keep our streets safe. Streets with people walking to theatres, galleries and nearby restaurants are lively, attractive, safe environments.

The arts attract tourist dollars. The non-profit and commercial arts annually draw two million visitors to Toronto. These cultural tourists spend at least $1 billion during their visit.

Despite the economic and social benefits that the arts community provides, the community is in a financially precarious position. Survival techniques for a great many arts groups include reduced programming, temporary closures and staff layoffs, resource and job sharing and reduced fees to artists.

It should be noted that artists, who contribute enormously to our society, are next to pensioners the lowest wage earners in the city. According to data collected by the city of Toronto's housing department, visual artists' net earnings were $5,700, while theatre artists, who had the highest net earnings, made close to $8,000.

These are the people who revitalized places like Yorkville and Queen Street West and then were forced to move out. Well, MVA will basically force them to move out of the city completely. How can these individuals, who are among the lowest wage earners in our society, absorb additional tax burdens? As I've said, one real solution is that they'll just have to leave.

But they won't just leave the city and Metro; they may in fact leave the province. There has been a major exodus of artists from Toronto to Vancouver, and one of the reasons is because they find it very expensive and find it very difficult to continue living in the city and in the province.

Implementation of Bill 94 with its added tax burden will ensure that this exodus not only continues but escalates. This exodus, combined with the erosion of the city's revenue base, will ensure that the city of Toronto loses its critical mass of artists and arts organizations.

This is a critical mass which employs, as I mentioned, 150,000 individuals in the arts and arts-related industries who form the talent pool for the non-profit arts community and the cultural industries, a critical mass which in 1992 attracted $1 billion in film and video production, a critical mass which makes Toronto Canada's most desirable tourist destination, a critical mass which prompted UNESCO to designate Toronto the world's most multicultural city, and a critical mass which has a Metro-wide economic impact of $9 billion.

The arts and culture are the heartbeat of a successful downtown. Approval of Bill 94 on December 10 will mean the slow, insidious, painful end of this heartbeat, of the arts community in Toronto.

I recommend that your committee reject this piece of legislation and urge an examination of real property reform following a complete analysis and study.

Thank you for your time and I'm pleased to respond to any questions.

The Acting Chair: I'll begin with the parliamentary assistant, Mr Mills.

Mr Mills: I'd just like to point out, since we're talking about the arts, that the O'Keefe Centre, Roy Thomson Hall, the Art Gallery of Ontario, the Royal Ontario Museum, the Ontario Science Centre, the Irish Canadian Centre, the Japanese Canadian Cultural Centre, Ukrainian Cultural Centre all pay no taxes; they are tax exempt.

Ms Bermonte: That's right.

Mr Mills: The others you spoke of are normal, privately held property subject to taxes, and they will be capped, as you say, at 25%.


Ms Bermonte: That's right, except my point is that 25% is still a very hard burden on them. It's very difficult. They have to carve it out of someplace and in the face of declining revenues from the provincial government. As I pointed out, if the city's revenues continue to dwindle, the city may not be able to continue to support the arts in the way it has. Therefore, there is another deterioration of the revenue base. To carve out another 25% is an incredible burden on these organizations.

Mr Mills: I appreciate your position. I just thought I had to tell you that. Thank you.

Ms Poole: Anne, thank you very much for your presentation. You certainly are a very articulate spokesperson for the arts community. Yours is the first presentation from the arts community. Quite frankly, it's obvious it's going to be absolutely devastating. The arts community is floundering right now and you've said that it will still be strangulation, it will just be slower and more painful. I don't understand how organizations like Young People's Theatre -- there are hundreds and hundreds of them throughout the city -- can survive with a 15% tax hike, even that so-called protection. I don't see it. I know right now that they're starving for funds.

Ms Bermonte: The greatest subsidizers of the arts are the artists themselves. Governments like to pat themselves on the back. Governments do support the arts and government support is very essential, there's no question about it, but the greatest burden is still on the artists who subsidize the creation of art. What happens is that you have companies like Young People's Theatre which have to bear this extra burden.

What they do is they perhaps start laying off staff, they start producing fewer shows, which means of course that they bring in a smaller audience and perhaps the corporate support really isn't as high as it would have been if they were doing a regular season of shows. They do fewer shows. They may also do fewer shows using fewer actors.

What you have here is a ripple effect that results in greater unemployment within the arts community, and basically what that means is that if they can't find a job in Toronto as an artist, they may have to look elsewhere, and they will probably move, as I pointed out, outside of Toronto and more specifically outside of the Metro area. It's just too expensive for them to stay here. Or they may move down south to the United States or to Vancouver, where the arts community is really starting to thrive because Vancouver is starting to build what I've described as a critical mass of artists.

What in effect the ripple effect of unemployment and then people moving out does is that there will be no rent being paid and people will have to sell their homes. That will make it difficult for them even to sell their homes, because of market value assessment. What I've heard is that it is a deterrent in terms of being able to sell one's home. It acts as a deterrent in that way.

But essentially what happens is that it just causes unemployment. It causes people to move out, and it puts a lot more burden on the social infrastructures that Metro has, welfare and unemployment insurance, and puts a lot more burden on the province, on governments, without having the kind of payback that it has if it is supported in a proactive way.

Mr Turnbull: Thank you for an excellent presentation. You unfortunately paint a very depressing picture as to the future of Toronto, because one of things that sets Toronto apart from all North American cities is that the very vibrant arts community, the very cosmopolitan aspect of Toronto, is certainly something which attracted me when I came to Toronto many years ago.

One of the problems with MVA is that it is essentially a location tax, and properties, as they get into the centre of the town where the arts community tends to be centred, are in buildings which assume, during inflationary times, very high values.

The ability of the arts community, or in fact any community, to be able to pay those taxes relative to the value that the building may have for the short period of time is not there. You correctly point out that even the ability of these people to sell homes, to move away, is impaired by the fact that there will be a discounting of the value of those homes.

Ms Bermonte: That's right.

Mr Turnbull: And to the extent that artists very often don't have a lot of equity in their homes, they may be wiped out by this, because they would lose their equity if they have to sell.

Ms Bermonte: Absolutely. That's right.

Mr Turnbull: The problem we're having, Anne -- here's the question -- is that clearly the people who are getting a reduction under this plan are very keen to see it. One cannot help but have sympathy for the people who feel that they have been paying too much, and so they see there's an opportunity. How can we persuade the government, which is voting for this bill, that this is inappropriate and that it should look at other tax methods?

Ms Bermonte: I think, as the speaker pointed out before I did, the saving is immediate. In fact, there will probably not be a saving because of the clawback provision. I think you will find that there will be quite a few irate taxpayers who are expecting a decrease and in fact will not receive a decrease because Metro will have to impose a property tax increase.

I think the biggest fault with this is that it doesn't look towards the long term; it is looking at an immediate gain, an immediate payback. I think what we have to look at is the long term: What is the social and the economic impact of MVA on the city of Toronto? My bottom line is: What is the point of paying lower residential taxes if you don't have a job? If you don't have a job --

Mr Stephen Owens (Scarborough Centre): You can't pay anything.

Ms Bermonte: You can't pay anything. That's exactly right.

What is the impact on people's abilities down the road in terms of their jobs, their employment, and in terms of the kind of amenities such as the arts and culture? We don't know what those are because there has not been any kind of a study or an investigation of that kind of impact, and those very important questions have not been asked. That's why I think that before Bill 94 receives third reading, this kind of investigation and study be conducted. It's very important.

The Acting Chair: A very brief question, Mr Mammoliti, with a very short introduction.

Mr Mammoliti: I just want to respond to a question that the presenter had asked early in the submission, and that was, "What are we doing here?" In my opinion, we shouldn't be here. In my opinion, this isn't the province's responsibility. This is a Metro decision.

The reason we're here is because the opposition felt this was a good opportunity to bash the government. They demanded that the House leader hold hearings so that they can bash us. In my opinion, we don't belong here. The precedents we would set if we touched this would be dangerous. No other provincial government has put its hand in a similar situation. For us to do that would set a precedent. It doesn't mean we don't understand and it doesn't mean we don't agree with you in terms of a problem with the tax structure. It simply means that we shouldn't be here. The opposition demanded us to be here, and that's why we're doing it.

Ms Bermonte: But if you believe that something is wrong, wouldn't you say, "No, I'm not going to do it"? If someone had asked you to press a button that would result in an electric shock being transferred to somebody else, would you not think: "No, I'm sorry, I can't do it. That is a wrongful act"?


The Acting Chair: I'm sorry to interrupt, Mr Mammoliti.

Thank you for your presentation and your perspective.



The Acting Chair: Our next presenter is Michael Baillargeon. You have 10 minutes.

Mr Michael Baillargeon: My name is Michael Baillargeon. I'm a resident of the city of Toronto. I live in ward 12, in the west end of the city, and have been active in the city of Toronto's fight against market value assessment.

Is anybody out there? Is anybody listening? Are you listening? No, this is not a search for extraterrestrials, although from the debate we've seen over the last days, months and years the result is just as frustrating and just as futile. I ask again, is anybody listening?

In a commonsense way, let's calmly review a number of the most important questions we've had in the last few days. Witness after witness, elected officials, business leaders, representatives of residents' and tenants' associations, small business men and women, hotel owners, parking lot owners, land owners, associations too many to name and others, have all come forward to present case after case where market value assessment, as proposed, will have a disastrous effect on the city of Toronto. What the residents want to know is, is anybody listening?

The process, as carried out by Metro council, at no time allowed for debate on the final plan, particularly the area dealing with the residential rate increases.

There is no economic impact study showing the effects this legislation will have on the city of Toronto or, for that matter, Metropolitan Toronto.

While Toronto provides Canada with 12% of its GNP and Metro with 42% of its tax base, and while this city has 33% of Metro's population, our representation on council is less than 27% of the council's votes.

MVA in a small community where property values remain relatively stable might be workable. But "stable" is not an adjective one would use to describe Toronto or the rest of Metro. The housing market throughout Metro, and in particular Toronto, is extremely volatile. No worse year for assessment could have been chosen than 1988, when speculation was at its peak in the real estate home market.

While promised no tax increase, many home owners now face 10% over two years. When sold, market value assessment comes into full force to the new owners.

Thousands of tenants face potentially maximum rent increases. Market value assessment fails miserably to take into consideration one's ability to pay.

Neighbourhood shopping strips like those on Dundas West, College Street, St Clair West and others throughout the city cannot tolerate the projected property tax increases, and economists predict massive numbers of closings.

The railway lands and other vacant land face full market value increases under the present legislation.

Hotels, some already facing over 50% vacancy, require a new, fairer tax system, not increased taxes.

In parking facilities operated throughout Toronto, North York and the city of Toronto, some 25,000 spaces face major increases. Toronto's alone will rise to $19.4 million, a 290% increase.

There will be business closings, slow economic growth, less development, increased costs, loss of tourism and convention dollars, decay of the downtown core and the loss of jobs.

Market value assessment will be passed prior to anyone having the opportunity to review the Fair Tax Commission's long-awaited report on property tax reform. Why?

Is anybody listening? The citizens of this city are scared. We are outraged. With mountains of evidence saying no, this rush to market value assessment is premeditated murder of one of the world's great cities in Canada's major economic centre.

I do not endorse the present property tax system, nor do others. The answer is not to replace one bad system with another; it's to implement real property tax reform. It does not take a rocket scientist or a brain surgeon to see that MVA is anything but real reform.

The entire issue is a mess. Metro Toronto and, yes, the city of Toronto must take responsibility for having polarized their communities. In the suburbs short-term gains and benefits are blinding many to the catastrophe of MVA. Political considerations are calling the shots. Politics whatever the cost, not leadership, rule the day. No one wants or seems willing to accept or effect responsibility. Political courage is an orphan, and much lacking by all but a very few.

Our provincial government has a chance with market value assessment to show true leadership, to change the course and to provide all concerned parties with a much-needed alternative. And, yes, it is the provincial government's responsibility.

The true effects of market value assessment on the city of Toronto and their eventual domino effect on the rest of Metro are not getting a fair trial. As in our justice system, this would call for a change of venue.

I don't want to sound naïve, but I'm making a recommendation to take this out of the political sphere, because we're in a situation where the NDP in downtown Toronto don't want to mess with the situation in Scarborough. The Liberals, going back to the Peterson situation, don't want to mess with it. All this banters back and forth between Metro council and the city of Toronto's council. So I'd like to make some recommendations:

-- That the provincial government delay passage of MVA legislation for one year or, at the least, if they want to take a look at it, impose it for one year.

-- That the city of Toronto and Metro agree to binding arbitration.

-- That a provincial royal commission be formed to arbitrate tax reform and provide an alternative solution, because everybody agrees it's not full market value assessment; it may be unit assessment or it may be something else.

-- That the committee consist of five members: one from the government, one from the city of Toronto and one from Metropolitan Toronto, with the two remaining members being appointed, one by the above three and another by the Fair Tax Commission. They would be reliable third-party tax experts and consultants.

-- That the Fair Tax Commission's report, upon release, be received for study by the committee.

-- That an economic impact study be ordered. Thirty-six hours before market value assessment was passed by Metro Toronto, the deal before the Legislature was cooked up over lunch; I sat two tables away from it. There is no time for any market value assessment impact study to be presented with the legislation to say how bad the effects are going to be.

-- They would have eight months to render their decision. The decision would be binding and effective for January 1, 1994, and funding would come from Metropolitan Toronto, with the share by members to be based on representation and supplemented by a 30% of total share grant from the province.

I thank you for this opportunity and for bearing with me during the discussions today. In closing, I would like to quote from a speech made February 28, 1990, at the Toronto Kiwanis Club luncheon by former Toronto mayor Art Eggleton:

"As you know, this debate is about more than taxes. It's about whether or not we are committed to maintaining Toronto, indeed all of Metro, as an affordable place to live, with the quality of life and the level of services that have made us the envy of so many cities the world over. It's about whether we want to price our community out of the reach of all but the very wealthy, whether we want to drive away the investment and economic activity so vital to our continued prosperity. It's about whether or not we as citizens and as a community can stand one crippling tax blow after another."

Those words were true then and they are true now. Is anybody listening? The actions of this committee and of this government can only answer.

I find it difficult to believe, with the number of people who have stood before this committee this week preaching doom and gloom and experts telling what problems would happen if this process goes in, that somebody hasn't said, "We need to stop and take a look."

I'm available for questions, and thank you very much.

The Acting Chair: I'm sorry, sir, but there will be no questions. Your time has expired. I'd like to thank you for your presentation and for coming.



The Acting Chair: Our next presentation is Ralph Gaudio or Mrs Gaudio, if you could come forward, please. Thank you for coming to the committee.

Mrs Anna Gaudio: My husband was supposed to come to this meeting but he got sick; he couldn't come, so I came. My name is Anna Gaudio. My husband and I own a small business, a small two-storey building at 1244 Bloor Street West.

I hear you say that the taxes around that area were very small, so that's why you were forced to bring them up. That's not true, because our taxes have been increasing over the years. For a very small building like ours, last year we paid $4,311, which I think for the area and the business is very fair.

From this place, my husband and I run a small business: a travel agency and a foreign exchange. Since our income has been increased by 50% in the last year, our taxes keep on going up. You have to come to the area and see the place, the way it looks. I mean, it's like a ghost town, that area of Bloor and Lansdowne. Most other stores are closing down; business is very poor. We have drug dealers around the area. It's newcomers from Asia, Africa or South America with a very small income; therefore, they cannot spend or travel or whatever.

What I want to tell you is that people are really getting fed up in that area and they can only pay so much tax. If you keep on putting them up and up, where are they going to get the money to pay for this tax?

The only reason my husband and I are still open is because we lowered our salary. We are making more than the minimum average wage, and we don't have to pay rent because the building is ours, but somehow we have to find the money to pay for our living, to pay for this tax that keeps on going up.

That's all I have to say. I thank you for this opportunity, and I'd like you to reconsider before you approve this law.

The Acting Chair: One question each from each caucus.

Mr Rizzo: Mrs Gaudio, have you checked the increase or decrease in tax on your property?

Mrs Gaudio: Yes, I did. It's not very much. We can even go with that. It went up to $5,097.

Mr Rizzo: How much were you paying before?

Mrs Gaudio: It was $4,311, but the only thing is that if we sell the property, it's going to go up to $7,005.

Mr Rizzo: Forget about that; this may be changed. If full market value were implemented, how much would your property taxes be?

Mrs Gaudio: It would be $5,097.

Mr Rizzo: Because they are going to allow only up to a maximum of 10% and 5% the first year, you would be paying $200 more the first year and $200 more the second year. That's all you would be paying, you understand that.

Mrs Gaudio: That's not the way we understand it.

Mr Rizzo: That's the problem with many people appearing in front of this committee and many other committees. Your increase would only be up to 10% of the taxes you are paying now. You have been paying $4,300. If the full 10% were implemented, you would pay an extra $431; now, because you are only going to be paying 5% more, it would be half of that in 1993 and the same amount for 1994, and that's all. That's all it's going to be.

In view of what I just said, how can I justify voting against this if I personally have been paying, for as long I've been in my house, $2,000 a year more than I should have been, and next year I'm going to pay $1,000 more, and I'll be paying $1,000 more for many years to come --

Mrs Gaudio: But you see, the building is very old and it's according to the area.

Mr Rizzo: Forget about whether the building is old or new. You're only going to pay $200 more, and there are people like me who for years have been paying thousands and thousands of dollars more. I just want to explain --

Mrs Gaudio: If it's only $200 more, I'm sure we can afford it, but that's not the case here.

The Acting Chair: I'm not sure we have a resolvable discussion here, so perhaps I could --

Mrs Gaudio: Also, if we do sell the property -- my husband is 65 almost, and he has to sell one day or another -- nobody's going to buy in that area the way it is, and if this tax goes this high, it's going to become even worse. What are we going to do with the building? We can't eat the building. That's all I have to say.

Ms Poole: Mrs Gaudio, thank you very much for coming before our committee. You said you're a business person. Is the property you're talking about a business or a residence?

Mrs Gaudio: Right now, I'm complaining about the business on the property, which is ours, but we are also the owners of the building.

Ms Poole: So the $4,300 is on a business property?

Mrs Gaudio: Yes.

Ms Poole: In that case, what Mr Rizzo said is actually not right, because in the first year you would have a $430 increase due to market value assessment and then on top of that --

Mr Rizzo: Find out first what type of property it is, because you may be right or I may be right. It may be a residential-commercial property.

Ms Poole: It's a business property. Then on top of that there will be whatever normal increases Metro council imposes. It was what last year, 8%? Even if we're very lucky and school boards hold the line, you're probably talking another 6% or 7%. So it's not $200 but in the neighbourhood of $700 to $800, which starts to add up for a small business barely making --


The Acting Chair: Please, Ms Poole has the floor.

Mr Turnbull: She said it's commercial.

Mrs Gaudio: It is commercial. I've got the bill right here.

Mr Rizzo: You don't live in the building?

Mrs Gaudio: No, I don't.

Mr Turnbull: The basic problem is that this is a location tax, plain and simple. Because of the fact that you're on Bloor Street, it becomes a hot property. And because other people may have traded their buildings for high prices in 1988, you're being hit with that value and it bears no relationship to your ability to bear that burden. That is forgotten by people who are getting reductions. They're saying, "Okay, we've been unfairly treated." That's based upon the fact that they're saying, "Your property is worth more."

Mrs Gaudio: But it's not worth more.

Mr Turnbull: Yes. If you accept that premise, you have to say, how do you measure that? Based upon 1988, which was the high-water mark.

Mrs Gaudio: Which is very wrong, because at the time the buildings in our area were sold around $800,000, $750,000. A lot of people came in and asked us to sell the property at that time, but we didn't want to sell it. Now it's worth half of it, maybe.

The Acting Chair: The parliamentary assistant has 15 seconds to make a point.

Mr Mills: Just before you go, I'd just like to make a point. If your property is commercial, and you said it is, it's not going to full market value when you sell it. It's capped.

Mrs Gaudio: It's not? They told us that if we sell it, the new owner has to pay $7,000.

Mr Mills: No, if it's commercial property, it doesn't work that way.

The Acting Chair: If this conversation could be carried on outside the confines of the committee, I'd like to adjourn this committee until 10 minutes after 7 precisely, so that we have half an hour for dinner. This committee is adjourned.

The committee recessed at 1838.


The committee resumed at 1916.


The Acting Chair: I'd like to begin with our 7 o'clock presenter, the York Mills Ratepayers Association, with Yarmila Filey. Could you please just restate your name and your organization, and you have 10 minutes for your presentation.

Ms Yarmila Filey: My name is Yarmila Filey and I'm secretary of the York Mills Ratepayers Association Inc.

Market Value Assessment: A Misuse of Your Money is the title of our presentation today.

On behalf of the York Mills Ratepayers Association I would like to outline three ways in which market value assessment is a misuse of your money:

(1) It exacts a toll on those who need help in our community.

(2) It does not really meet the standards of fairness.

(3) It wastes the scarce resources of the government of Ontario.

I'd like to describe these three ways.

First, it exacts a toll on those who need help in our community. On York Road in our community is a man I'll call Bert. That's not his real name. Bert is 81 years old. His wife passed away two years ago. Bert, however, is in reasonably good health. He still drives his 10-year-old Dodge. He can still get his own meals and he still fulfils his passion for a beautiful garden by planting a great many flowers every spring.

Bert lives in the same house in which he brought up his family: a modest three-bedroom bungalow of about 1,600 square feet. Like most seniors in our community, he likes the bungalow because it does not require him to go up and down stairs frequently. He purchased his house on York Road in the mid-1950s when that part of Willowdale was just being developed on what was then the outskirts of Toronto. He paid an amount of money that would be considered modest. This is definitely not the Bridle Path.

Bert worked for a reputable and well-known firm in the investment business until his retirement 16 years ago. He has a small pension which has not kept pace with inflation. His investments and savings have been largely used up over the years. His only other sources of income are the old age security and Canada pension plans. Every year he spends more than he makes. His major expenditure is his property tax bill: $4,500 per year, or almost $400 a month. That's a massive chunk of his net income. Bert is losing ground in the battle to keep his home.

Bert is concerned that he may not be able to keep making these payments. After being reassessed under this proposed market value assessment, his taxes would go up 20%, to $5,400 per year. Under the capping proposal, the increase would be limited to about $450 a year, taking his taxes to $4,950 per year. However, with the expected municipal mill rate increases, it could easily go to about $5,500 within two years.

Bert is being forced out of his home, not for health reasons, but by the provincial government fostering an expensive municipal taxation system.

How many other citizens like Bert are out there? Quite a lot. Our community, by the 1986 census, has twice the proportion of senior citizens as the average in Metro Toronto. It is quite understandable why this is so. A great many moved in as young married couples in the 1950s and created a very desirable community. Many are now experiencing the prospect of increased taxes under market value assessment.

They want to live in their homes as long as their health permits. They know that being forced into a new and strange environment often results in quickly deteriorating health. They don't want to be forced out by an insensitive government. What is happening is that this reassessment is exacting a toll on people who need help.

My second point is that market value assessment does not really meet the standards of fairness. You've heard from the proponents of market value assessment that they are going to "get even" and make it "fair" after years of paying too much. Is that true?

Let's return to Bert. How has market value assessment increased Bert's tax bill unfairly? In our community there is the phenomenon of in-fill housing. You may applaud the intensification of use of land in the inner suburbs of Metro Toronto. Large lots with bungalows have been acquired by developers beginning extensively in the mid-1980s. They tore down senior-friendly housing to build monster homes.

In 1988, developers were bidding wildly for properties in and around Bert. Some of the original owners took the large offers and sold out. Bert, like many others, did not. While some of the sellers might now have the money socked tidily away, they have left Bert and others with a very sad legacy: the grossly inflated 1988 property values which are now used by assessors to establish the value of Bert's properties. After building the monster homes, the developers sold them to people of means who went in with their eyes open, not only to the selling price, but also to their substantial tax burden. Bert, on the other hand, had no say in his new level of taxation caused by the events happening around him.

In what other way his market value assessment increased Bert's tax bill unfairly? Bert's home can be matched by an identical 1,600-square-foot bungalow in Scarborough or Agincourt. That home could be on a similar lot of approximately 7,500 square feet. Let's say that home is occupied by another senior, in similar circumstances to Bert. It is reasonable to assume that both of them use about the same amount of municipal services -- education, policing, garbage, fire protection etc -- but there is a great difference. Market value assessment will decrease the Scarborough or Agincourt tax bill to about $3,200. At the same time, Bert's tax bill is rising to $4,950.

Is that fair? Should Bert in North York pay about 60% more than in Scarborough because he lives in a area that was decimated by developers in 1988? This is the root of the fairness problem. People in identical houses on identical lots, consuming identical municipal services and perhaps having identical means, will pay wildly different taxes.

Residents of Scarborough and Etobicoke are going to do much more than get even. They're going to have a ride at the expense of people like Bert who can't afford to give anyone a free ride. That is why market value assessment does not meet the simplest standards of fairness.

My third and last point is that market value assessment wastes the scarce resources of the government of Ontario. You, our legislators, plan to spend about $55 billion a year delivering valuable programs to the people of Ontario. Your receipts are considerably less, perhaps in the area of $45 billion. With a deficit of about $10 billion, you have the obligation to examine very carefully your expenditures to determine their value. It seems reasonable to examine the assessment program to determine its value. In other words, does it cost more than it is worth? Is it cost-effective?

First, there are 1,500 employees in the assessment program, close to 2% of the entire provincial civil service. What do they do? There are front-line assessors who make site visits to establish the value of properties. They examine each home to determine how many fireplaces it has, how many bathrooms it has, whether it has a garage, whether it has any other outbuildings, what kind of flooring it has, what quality of construction, what size is it, what size lot etc. They examine property sales information to establish a lot value in the area and then they estimate the replacement cost of the dwelling. After this massive effort, they use all the information they've collected to estimate the 1988 market value. This is not a trivial process.

What else do the assessors do? We believe they have large travel expense accounts. Their travel is probably the greatest in the provincial government. They defend assessment appeals by property owners, appeals which come in the thousands every year.

Who else is in the property assessment program? Clerks, secretaries, management, all supported by desks, chairs, light, heat, computers, real estate and government benefits. What does it all cost? Salary, benefits and travel exceed $150 million a year. Computers, real estate and associated costs at head office and regional offices could amount to $30 million a year.

What do property assessment appeals cost? The Ministry of the Attorney General generously provides assessment review boards staffed with review officers and supported by clerical and management infrastructure. The cost again is millions and millions of dollars.

What are the costs to the province's municipalities of the assessment program? Municipalities must allow for erosion of the assessment base through appeals. They must also retain qualified staff to interface with the province's assessors.

The whole program is far too complicated and too costly for you, the provincial government. You need to simplify it. The proposal made by the city of Toronto and others for a unit assessment system would do that. It is simple and understandable. It is stable. No heart-wrenching reassessments every four years. It could be made progressive, to allow for the ability to pay and to account for potential uses of municipal services.

I would like to read a letter, if I have time, from the York Mills Ratepayers Association to Premier Rae, dated April 30, 1992, re $100 million annual savings to Ontario:

"You have an opportunity to reduce expenditures by approximately $100 million per year. Savings of this order may be achievable in the property assessment program of the Ministry of Revenue.

"The opportunity is simple: evolve the complex, high-workload property evaluation system based on 30 or more factors, such as fireplaces, bathrooms, hardwood flooring etc, to a simplified system based on two objective factors -- lot size and building size.

"Your recent public statements indicate that you are open to suggestions on cost savings which include reductions in the size of the provincial civil service. By reducing the complexity of the current property assessment methodologies, you could perform the assessment function with many fewer people and achieve large annual savings.

"The benefits extend far beyond the reduction of personnel.

"(1) The four-year cycle of re-evaluation would be eliminated, removing instability from the system.

"(2) The system would be clearer to the public, easier to understand.

"(3) Appeals would drop from their current expensive, time-consuming level to near zero.

"(4) Property owners would not be penalized for improvements which do not affect lot size or building size.

"(5) Assessments would more closely relate to usage of municipal services or, at a minimum, potential usage. After all, larger homes can accommodate more people.

"Most important, after a suitable transition period, you would be able to maintain a fair and stable property assessment system with a small fraction of your current assessment employee population.


"If you choose to implement it, I recommend that you not actually lay off any provincial assessment staff. Instead, I believe that the resultant workload reduction could be matched by normal attrition and retraining of staff for other valuable public service positions, over the course of two or three years.

"In addition, you could easily make it progressive -- beyond a certain `family basic living space,' you could apply accelerators, if that would increase fairness." Why not? "Commercial and industrial properties could have similar progressive features.

"I realize that you will never see this letter and that I may get a reply from one of your staff. Consequently, I ask that the response not be from someone with a vested interest in the status quo -- the current property value assessment system. Otherwise these potential savings to the public purse might never get proper consideration.

"As an added incentive for proper debate, I am copying the leaders of the opposition parties," as doubtless "everyone is interested in leaner, fairer and more effective government. While the savings may differ from the estimate of $100 million annually, I believe you can't afford to pass up this opportunity."

That was signed by the chairman of our taxation committee from the York Mills Ratepayers Association, and it was copied to Lyn McLeod, opposition leader, and Mike Harris, leader of the Progressive Conservative Party.

The Acting Chair: We have time for very brief questions, one each. Mr Turnbull.

Mr Turnbull: Yarmila, thank you very much for your presentation. Could you tell me if there is any apparent pattern to the increases or decreases -- for example, newer homes getting decreases and older homes getting increases -- and, if so, can you explain why?

Ms Filey: There may be a pattern. It appears to have nothing to do with the age of the house. New houses in our community were just about as likely to receive increases or decreases as the older houses. The only pattern that we could discern was really quite surprising. The decreases were concentrated on two of our 16 streets, York Road and Valley Road. I'm sorry, but I don't know why the two streets. There doesn't appear to be a sensible reason, except perhaps property sales in 1988.

Mr Turnbull: So it was fairly arbitrary.

The Acting Chair: Ms Poole.

Ms Poole: I just wanted to say thank you very much for your presentation. Since you're Mr Turnbull's constituent, I'd be happy to let him have my question.

Mr Turnbull: Thank you very much, Ms Poole.

The one thing I would like to bring out is that you said in your testimony that you're not the Bridle Path. In fact, this lady comes from the ratepayers' association that I started out in. The story of Bert -- and I know who the gentleman is -- is typical of our neighbourhood. I wonder if you could just, for the people who seem to think that the people of York Mills are fat cats, explain that this is fairly typical, the story that you've got there.

Ms Filey: Well, I don't know. I'm sure many of you have driven around York Mills. It's a very modest street and the surrounding neighbourhood is identically modest. There are some very lovely homes in the nearby area too, but overall we are a modest community. As I've said, we have a great number of senior citizens. Directly across from me are two individual ladies living in their homes. They've been there since 1950. They're both retired. I'm sure they're facing a crunch. But I assure you that it's not just these people and the seniors. There are people like myself. I do not expect a salary increase this year. I'm not getting any further ahead. This is typical in our community.

The Acting Chair: Mr Frankford.

Mr Robert Frankford (Scarborough East): Well, as a comment, I come from the further part of Scarborough. It seems to me that the home owners there have been discriminated against. They have paid higher taxes for decades now, which seems to be generally acknowledged. My impression is that your proposal would continue this, if it's on size of lots. The more densely packed, in many cases, more prosperous downtown or midtown areas often have relatively smaller lots and have been undertaxed in the past. Your suggestion seems to perpetuate this.

Ms Filey: I disagree, I'm sorry. But our taxes in North York are based on market value assessment of 1988, and what I pay at present and what someone is Scarborough is paying are two entirely different things, for the same house and the same lot size and the same services. The fact --

The Acting Chair: You may finish your thought and then, I'm sorry, we have to wrap up.

Ms Filey: I understand Scarborough's problem, but I don't think market value assessment will solve it.

Mr Frankford: Do you think that --

The Acting Chair: Sorry, Mr Frankford. Thank you very much for your presentation this evening.


The Acting Chair: Our next presenter is Tim McDonald. Come forward, please. You have 10 minutes for your presentation. Would you begin by reading your name into the Hansard, please.

Mr Tim McDonald: My name is Tim McDonald. I apologize if the ink on this handout is still wet. I was informed only yesterday afternoon, rather than Monday as I expected, that I was making this presentation.

I have been an East York resident for 23 years. I live in Leaside, just east of Bayview and just south of Eglinton, and I work at a publishing company in Scarborough. Under full MVA, my house taxes go down significantly, by $500, or about 17%. But I have to say that I really don't like MVA. I can see no redeeming features whatsoever to this scheme. It's simply taking your neighbour's money under false pretences.

I have to say that six weeks ago my life was much simpler. I knew almost nothing about MVA and was not involved in politics at any level, other than as an interested spectator. Now I find myself meeting with MPPs and Metro councillors and speaking before this committee.

I am speaking before you as an individual, but at the same time I want you to appreciate that as well as meeting with York East MPP Gary Malkowski and East York Metro Councillor Peter Oyler, both of whom have spoken out publicly against MVA, I have been working against MVA with most of the ratepayer, tenant and business groups in East York and on Danforth Avenue. So in the short space of six weeks I have become an organizer, with the objective to raise the awareness of the people of East York to the unpleasant realities of MVA and to encourage them to communicate their thoughts on this matter to their representatives at the Metro and provincial levels.

In this process, in the space of about one week, between my efforts and the efforts of the business and resident communities, approximately 400 signed letters against MVA have been sent to York East MPP Gary Malkowski and other MPPs. This was without any kind of general mailing by any of these associations. I feel that with more time and general mailings, it is reasonable to think that rather than 400 letters, we probably would have obtained 4,000, or even as many as 14,000 or more.

I would point out to this committee that the population of East York is about 100,000 and that most of the groups on the attached list, which include the Bayview Business Association, Danforth Business Association, Pape Business Association and representatives from Laird and Eglinton, other areas, ratepayers' associations for Bayview, for ward 3, and also the tenants' association for East York, are all strongly opposed to MVA, even though in some cases many of their members, like myself, get reductions under MVA.

This list includes essentially all of the business areas of East York and the Danforth and most of the ratepayer and tenant associations. While East York is not part of the city of Toronto, it's an adjoining area which, apart from one ward out of its four, is geographically and culturally part of the older city, part of the inner city within Metro.


The point I wish to make here is that the majority of the businesses and residents of East York are indeed against MVA, particularly in this form of MVA, and join with other inner city areas against MVA. In fairness, I have to note that home owners in ward 1, the ward I just mentioned, and tenants in the newer multi-unit apartment blocks all over East York would get reductions under MVA. In spite of this, the president of the East York Tenants' Association, whom I spoke with just a couple of nights ago, is strongly against MVA because of the continuation under MVA of the inequitable tax rate for multi-unit tenants, which I'm sure all members of this committee know by now is three and a half times that for home owners. This president will be sending a written deputation to this committee, as will several others of the leaders of the groups on the list. Some have also applied already to speak to this committee. Even the president of the ratepayer association of ward 1 of East York -- that's the ward where there are reductions -- admitted he would like to know more about the issue and asked me to send him information.

My presentation, then, is within the context of the struggle of the majority of East Yorkers against the implementation of MVA. I am going to share -- and I'll make this part as fast as possible -- what I witnessed as I followed the MVA issue through several layers of government to this committee and my reactions to what I witnessed as an East Yorker.

The Acting Chair: If I could just interject, sir, you have about four minutes left. Your brief seems rather lengthy and I would encourage you to paraphrase and to make the salient points.

Mr McDonald: All right. My experience and awareness of MVA started on my street, where my standard Leaside three-and-a-half-bedroom house has a drop of $500, but I find that my neighbour in a bungalow, also built in 1934, has an increase of the same amount under MVA. I have to point out that this becomes a beggar-thy-neighbour impact from MVA, and apart from that, I still have many more reasons to support my initial negative reaction.

To quickly go through the reasons you already have heard many times, MVA is regressive, it's not related to ability to pay, services provided, the size of the house or the lot and doesn't allow for efficiency of land use. It continues the assessment bureaucracy, which currently has 270 assessors, more or less. My feeling is that 1988 assessments are just as subjective as those for 1940, and indeed they won't change for 10 years from 1988. MVA hides the major decreases due tenants, so it's still unfair to tenants.

I don't think it has a single supportable argument going for it. It's like suggesting that an old car that is worth more simply because of supply and demand should pay more road tax than a newer gas guzzler. Newer houses tend to be on larger lots and to be in areas that are more expensive to service. That is the reason for that.

I suggest better the devil we know and that market prices have adjusted for, rather than a new government-inflicted one that makes no sense for Toronto's volatile market. Please let's maintain a level playing field. This is, after all, the main purpose of government: to provide a stable socioeconomic environment.

Part of the brief runs through my experience in East York municipality. I'll run over that, other than to say that the pleas of councillors both in East York and North York requesting more information on impact studies were essentially ignored by their mayors before the mayors voted at Metro. What I witnessed at Metro -- I have to use the analogy that it was gang rape. If that analogy offends you, I don't think I'm sorry. It certainly offended me.

It became apparent at the Metro vote that this was about money and power, not really about fairness for the people. It was about getting more money into the areas where councillors could be re-elected based on getting more money for the constituents, and to get more money from the city of Toronto's coffers into those of the other municipalities. Even with MVR capped, I want to point out that East York, which gains the least of all the municipalities, would gain $1.7 million; uncapped it would be $10 million or more.

I have some criticisms here of the Metro process. I'll skip over those, because I want to get to the provincial responsibility.

The Acting Chair: These would be your concluding remarks, please.

Mr McDonald: I want to point out how it is an untruth to talk about the province supporting Metro's municipal autonomy. That's the whole point: Metro is not a municipality and does not have local autonomy in this matter. The province should wait, even if it's the fall of 1993, for the results of the Fair Tax Commission and indeed, in the shorter term, the property tax working group of that commission.

MVA is quite contrary to the objectives of the Ontario Environmental Assessment Act. I want to point out too that it's against the Ontario planning commission's intentions to increase the intensity of housing and to reduce urban sprawl.

In conclusion, I see this MVR as a replay of the Charlottetown accord, that the majority or a substantial number of the people are saying: "This is not good enough for us. It's not a good, commonsense approach." It doesn't reflect the will of all the people by any means, and I urge you not to give Metro the power to implement any stage of the proposed MVR legislation either now or later.

The Acting Chair: Thank you for your presentation.

The clerk will be handing out the York Mills Ratepayers' Association brief.


The Acting Chair: Our next presenter will be Mohammad Akram.

Mr Mohammad Akram: Good evening, Mr Chairman and members of the committee. My name is Mohammad Akram. I own a properties on Queen Street and I live in the Junction Triangle area myself.

First of all, I would request that it would be wise for the committee to have a tour of the main streets of Toronto, like Queen, Dundas and College, and then you'd know what people's feelings really are, how people are reacting to this MVA proposal.

To be a little personal, there are many people like me who are going to suffer with how MVA will affect their lives. Way back in the 1970s, I bought a house in the Dupont-Ossington area. A friend of mine bought a house in Scarborough. He said, "Downtown is a dump," and he had a good job driving for the TTC. So I said: "It doesn't matter to me. I want to be independent one day." So all along I suffered. His standard of living is far higher than mine. I don't even have a car today; I did not at that time. I saved enough money, so I bought a couple of properties on Queen Street, old stores, apartments above. Neighbours are very happy. I am improving them.

The lot is 12.5 feet by 100 feet. There's an apartment upstairs and a store downstairs. The store gives $560 a month, the apartment upstairs gives $500 a month. The back garage is shared -- half goes to the next side -- and I get $150 for my share. So out of this, my taxes are going to go from about $1,700 to $5,900 if full market value assessment goes in. What will happen? I think half the year will go to taxes, four or five months, plus I have to pay the utilities; I pay all the utilities there.


I went next door and the next one too, 12.5 feet, and I asked my neighbours, "What will you do?" They said they will board it up. They will do just like in Chicago. I haven't been to Chicago, but these people have been. When I showed them their future taxes with market value assessment -- those people are established; they have their own appliance stores; some of them own -- they said: "We can't even pay the present taxes. There's no way we can pay this one." We are right across from the mental hospital and one day a guy just came through the window, just went right in; the whole big glass was broken.

How can you assess properties being on Queen Street or east of us? It doesn't matter. I think the whole assessment process is wrong. If the property is commercial property, it should be done with the income, what kind of income it can generate. If you assess a property that was built in 1895, 1905, 1910, how can you assess it if the property is not generating enough income? It is useless. It's better for people to leave the properties. They can't pay the mortgage, so I believe what people are telling me, that they will do that.

I don't know who's representing me. I read in the media that the Conservatives represent big business and the NDP represents the unions. So for small people like me -- what decisions I make; I'm going to independent -- I think nobody represents me. Everything I did there I did with my own labour, with my hands. That's my only living. To me it's very sad. I could not believe it when I got a letter from the city that my taxes are going to be so high. I said, "No, it must be some joke," so I came to the office, but they said, "It's true."

I still say it is wrong the way properties, commercial or industrial -- I don't own any industrial, but I believe they should be assessed according to the income, not potential. Potential is when it will be there. If they demolish the building and they build some building, okay, assess whatever you like. But this basic assessment process should be changed; otherwise it's the beginning of the decay of the city of Toronto. That's definite. If you don't believe, go on Queen Street from Ossington and keep walking up to Dunn Avenue. Stores are already vacant, and it will continue. It was not so bad before. When I talk person to person, people say they are going to close.

I would say further that since the 1970s I have seen at Spadina and Dundas, Pape and Danforth, or College or Dundas West, that these areas have been wonderfully improved. I believe Metro is punishing these people -- most of them, I believe, are ethnic -- and this thing is not going to be good for the city or, eventually, for Metro. Nobody will gain anything from it.

I request you to please scrap this MVA. Let's have a new plan, a new procedure where commercial or industrial properties will be assessed according to the income. As to the residential, call it quality of life. If I owned a house in Scarborough with a 50- or 60-foot front -- but my house has only a 15.5-foot front, so how can we compare apples and oranges? It's not right. Facilities are there. My friend chose that area; he's happy. I chose this area and I want to keep my will. I want the willpower to do something. I think everything is at a dead end now. Maybe one day I will get out of it.

Honestly, I love this country. When I was in England I said this is the most wonderful country on this earth. But now this will drive me nervous. What is happening here? I went to the Metro MVA management committee hearing, but a Greek gentleman said, "There's no point going inside." I said, "Why?" He said: "In the old days there used to be two societies, the rich and the poor. Nobody wanted the middle one." I said, "My goodness, what is this guy talking about?" It's true. If you continue like this, if the MVA goes through, people will get out.

That's the only thing I would request of you: Change assessment procedures. Assess them according to the income, or the quality of life of the residential properties. Thank you.

The Acting Speaker: Thank you very much for your presentation this evening.


The Acting Speaker: Our next presentation is from the Seaton Village Residents Association, with Roslyn Pauker. You have 20 minutes for your presentation.

Ms Roslyn R. Pauker: It won't take that long. I didn't bring any written material; I figured we would spare some trees. You're probably buried under paper anyway.

My name is Roslyn Pauker. I'm the cochair of the Seaton Village Residents Association. We are a rather small area bounded by Bloor on the south, Christie on the west, Dupont on the north and Bathurst on the east. We have a very interesting neighbourhood and one of which the residents are extremely fond. We are an ethnically mixed neighbourhood and economically a very mixed neighbourhood. We have mostly owner-occupied homes. They are quite small. Most of them are attached. We have small businesses on the commercial streets and some small corner stores within the area.

We are very close to the downtown core of Toronto. We are, we like to think, a truly urban neighbourhood. We are densely populated, and I think it's a wonderful place to live. We're very close to good public transit and many of us do not own cars. It's not necessary to drive very much in that neighbourhood. We can walk to most things and we think this is really one of the most favourably situated neighbourhoods in Toronto. It's not fancy, but it's a great place to live.

We feel that the impact of MVA on our neighbourhood will be entirely negative. We are very concerned. We have people who have very modest incomes and they'll be hurt by this. Many people rent out their homes. It is not a particularly wealthy neighbourhood, although there are people who are well off, but for the most part it is not a wealthy neighbourhood.

We have a lot of very small businesses whose property taxes are just going through the roof and they are not going to be able to continue. They are small business people. They're having trouble hanging in now. A lot of them have gone already, and we are concerned that they will be forced out.

What happens to a neighbourhood when this sort of process starts is that you start getting a lot of vacancies on the street and you start losing your diversity. It becomes a place where the middle class gets pushed out. As the gentleman before me was saying, you wind up with the rich and the poor. That is not something we want to see happen. We want to see the diversity of our neighbourhood continue.

I can only speak personally from our neighbourhood. I don't have the ability to give you statistics. Actually, there has been no economic impact study done on MVA, so even if I wanted to, I couldn't be that specific. It seems to me that the effect on our neighbourhood will be reproduced throughout the city of Toronto and that we will discourage middle-income home owners, we will reduce diversity, we will discourage small businesses and we will discourage the kind of model of city development that Toronto represents.

Maybe those of us who live here and enjoy this city lose sight of the fact that a good part of North America doesn't have anything like this any more. When my family comes up from the United States and I take them on walking tours around Toronto, they're incredulous. This is gone from the American city. It just doesn't exist any more. We are lucky to have it. We should work to keep it.

Eventually, I understand, Metro council has to represent the people who elect it. Of course no one wants to pay taxes, and the suburban home owner who feels heavily burdened is represented and Metro reflects that, but Metro will not in the long run benefit if the city core deteriorates. The deteriorating city core is a North American phenomenon. It doesn't happen much in Europe but we've seen what happens here. Once that happens, once it starts to go downhill, you can't just turn it on and off. It's not like a tap. Once those businesses are gone, once people move out, once the schools start to fall apart, you can't just restore it; it is gone, and the crime and the blight spread out from the centre, and they eventually affect the surrounding city.


You have an opportunity, sitting in the Legislature, to put a stop to this and to try and find a fairer and more equitable solution, one that is more acceptable to everyone concerned. I'm appreciative of the inequity of some of the assessment, because of course it is not based on any kind of reason. It's not based on income, it's not based on size, it's not based on market value, it's random. Surely we can do better than that. But to go just to a market value system is not an answer. It just simply will not work, and you can do better than that.

There is a Fair Tax Commission, which will finish its report in the next couple of years, which I hope will point the way towards a better system. We should have an economic impact study so we can really be more specific than I have been able to be. Above all, you should think about why it is that the Legislature has to act on this legislation. If the only thing that were necessary would be for Metro council to pay us a bill, you wouldn't be here and I wouldn't be here, and there would be no need to have these hearings at all.

But the statute provides for the Legislature to make that final decision, the Legislature which has an overview and can think about the entire province and the value of Toronto to the entire province, a group that is broadly representative and has a duty to think of all the factors that go into making this a fair and correct decision. You are not here just to rubber-stamp whatever Metro council says. Otherwise, we wouldn't need to do this.

I am asking you, on behalf of our residents' association, to listen very carefully to all that you will hear here and have heard before and think about what the effect of this will be.

I am cognizant of the fact that Metro has provided for a cap on assessments, but a cap can be removed. Once this process is there and once you start handing out market value assessments to each home owner and each business owner, there is nothing to prevent that cap from coming off in the next couple of years, because the financial pressures are not going to get any lighter. Before we go down that road, I urge you to reject this in favour of a well-reasoned and carefully considered study. Try and find a better way of doing this.

Ms Poole: Roslyn, thank you very much for taking the time to come tonight. I'm constantly impressed by the calibre of the presentations before us. They are very thoughtful and, to a certain degree, very passionate because people really believe what they're saying, with some justification.

The gentleman we had before you, Mr Akram, lives in the Junction Triangle. He mentioned his house was 15 1/2 feet wide. You've described the houses in Seaton Village, which again are not very big.

Ms Pauker: They're a little bigger. I think mine is 16 feet. They're very small lots.

Ms Poole: I live in North Toronto, so we have very luxurious lots. My house is 23 feet wide, and it has nine inches on each side. I have nine inches, plus my neighbour has the other nine inches, making an 18-inch alleyway on either side of our house, without a driveway.

The Acting Chair: Big enough for a tricycle driver.

Ms Poole: Exactly, except you'd have to go up steps to get up to the -- you have to be there to understand. Anyway, the point is that people from Scarborough and Etobicoke believe, I think with some justification, that the present system is inequitable. I think that's one thing that everybody agrees upon. What they don't agree upon is the solution.

What I'd like you to comment upon is the fact that the Bridle Path, Rosedale and Forest Hill are the three areas of Toronto and North York that constantly get used as examples of why the suburbs are subsidizing Toronto and certain parts of North York. I'd like you to describe what most of Toronto and North York is like outside those areas.

Ms Pauker: I live in an attached house, and most of ours are attached houses. It's with a 16-foot frontage and it's a very densely populated area, so our use of city services is quite different from that of the large home. We use, obviously, less water, less hydro, less road space, because we are densely populated.

Not everyone wants to live like that. I chose it and I'm certainly glad I did. As the gentleman before me said, his friend went out and lives in a different house, but it's a far cry from the Bridle Path. I have no backyard at all and my front yard is just a few feet. That's true of the entire neighbourhood. We have a very compact kind of neighbourhood.

I'm not about to give proposals for a correct kind of property tax. I think there has to be some basis in services used when the final decision is made as to how to assess fairly.

Mr Mammoliti: Thank you very much for coming out. Can I ask how much your home is worth, if you don't mind me asking?

Ms Pauker: I honestly don't know. I bought before the speculative boom that Metro proposes to use as the standard. I bought it for $150,000. I have no idea what it's worth now because the values have gone down so much since 1988.

Mr Mammoliti: How big is it? How many bedrooms?

Ms Pauker: There are three.

Mr Mammoliti: Square footage?

Ms Pauker: I don't know what square footage it is. The house is a 16-foot house.

Mr Mammoliti: How much do you pay in taxes currently?

Ms Pauker: Around $2,000.

Mr Mammoliti: Around $2,000?

Ms Pauker: Around $2,000, and the MVA figure would have been a few hundred more. I'm not one of the big losers.

Mr Mammoliti: Yes. It would be just under $2,000 or just over?

Ms Pauker: I think it's a little under $2,000. Just under, something like that.

Mr Mammoliti: I tend to agree with you when you say we need to keep the downtown core the way it is. It's comfortable for a lot of people, and it is unique --

Ms Pauker: Livable.

Mr Mammoliti: -- if you compare that to other places in North America. But where I have a problem is to keep it at the expense of others. Those others have to be listened to as well.

Those others are saying, "Enough is enough," and, "If the people who want MVA stopped succeed, we're going to have to wait until the government" -- us -- "spends another seven, eight years determining what the next property tax policy will be." They don't want to wait any more. They feel they've paid enough. In my community, they're up around $4,000, $5,000 a year for an average-sized home. Those homes in my community don't necessarily have large backyards either, or front yards for that matter.

The Acting Chair: Would you like to begin to wrap up, Mr Mammoliti, please?

Mr Mammoliti: I guess the question I have for you is, what would you say to those who are waiting for their decrease, in response to, of course, what you're asking us to do here today?

Ms Pauker: I'm perfectly aware that a good deal of politics is whose ox is gored. I understand that. But I do think that when you talk about, "at the expense of others," I don't think the answer is really to do something at someone else's expense. I don't want someone to be unfairly burdened, but I don't want to see the city torn apart either.

I think we have to come to something that is fair to everyone and that is recognized as fair to everyone. Of course, it's the ideal of all legislation, and I know nothing is perfect, but I think we can do a lot better than this and I don't think it should take any seven or eight years. The Fair Tax Commission is struck and working --

Mr Mammoliti: No, but it will.


Ms Pauker: It shouldn't. It's working. There's an interim report out. Maybe one of the things that should be done is some pressure should be put so that we do get to a solution sooner, because I agree with you that the perception of unfairness is not a healthy thing.

The Acting Chair: Could I now turn to Mr Turnbull for his question, please.

Mr Turnbull: Thanks very much, Roslyn, for your presentation. Indeed, the Fair Tax Commission report is supposed to come out almost immediately. It has been suggested it might be out by the end of next week. But by that time it's the government's intention to have this legislation passed through. Why would you pass it through at a time like this?

Of all the presentations we've had here -- and I might have miscounted -- to the best of my recollection six of the innumerable presentations we've had have spoken in favour of market value. Two of those people had strong vested interests. One was Tonks, the chairman of Metro, and the other one was Mayor Trimmer. Four other people have spoken in favour of it.

All of the people who have spoken against this market value, every single one of them has said he or she is in favour of fairness and recognize that the present system isn't fair. There was no suggestion of wanting to keep the status quo, but they were saying, "This is not the way to achieve fairness." I really appreciate what you've had to say. I don't really have a question. I just want you to reflect on the fact that the government seems to think that it's managing to get those fat cats. I don't think many of the people who have been here represent the fat cats. They're hardworking people who are paying their taxes. Maybe they're paying a little bit less than they should and maybe a new system would adjust that, but this doesn't seem to be the right way. Why not wait for the Fair Tax Commission report in a week? Would you just like to respond?

Ms Pauker: I couldn't agree more. It just seems to me that to go ahead and institutionalize, legislate a mistaken idea is truly a mistake. It's hard to undo legislation, as you all must know.

The Acting Chair: I'd like to thank you for your presentation tonight and to congratulate you on living in compact urban form, the wave of the future.

Ms Pauker: One hopes.

Ms Poole: The only problem with compactness is that in the city of Toronto we're not allowed to have garburators because our sewer pipes are too small.


The Acting Chair: I would now call on Costa Kotoulas. If you could state your name for the Hansard record, then you have 10 minutes, please.

Mr Costa Kotoulas: My name is Costa Kotoulas. I live at 3 Northcliffe Boulevard. I'm here tonight to talk about the MVA system, which is unfair to everyone. I have my daughter here. We're going to share the time tonight. She's going to read the speech and I'm going to respond to the questions. Is that fair with you?

The Acting Chair: Fine, but if she could put her name into Hansard as well, then she could just begin.

Miss Bessie Kotoulas: My name is Bessie Kotoulas. I also live at 3 Northcliffe Boulevard, apartment A.

Mr Kotoulas: Before my daughter starts the speech, I want to ask a couple of questions to the present committee. Can I?

The Acting Chair: This will be part of your time. You can do your presentation any way you wish.

Mr Kotoulas: Yes. The first question I want to ask this committee is, how many of you have the time to come to the Metro hall to attend those MVA meetings and listen to those people who spoke there? How many of you? So only the Liberals or the Conservatives. You know what I mean? Not one of the NDP, because already the deal is cooked.

How many of you here, before coming to this committee, had the opportunity to listen to those tapes -- you know, like one who speaks has a tape.

Miss Kotoulas: Recordings.

Mr Kotoulas: How many of you took the time to listen to 40 hours of tapes the public was talking about for MVA? Not one of you, and you sit on this committee to make a solution. I don't think you can.

The other question is, how many of you are aware of those ads the city put out? They cost us over $100,000, but the city had an obligation to put out them because the city thinks we pay enough taxes. We put over $360 million to East York, North York and Scarborough, our money, and now the Bob Rae government needs another tax grab from us to spend more. No, this has to be stopped. That's why the city spent that money, because the city thinks we pay enough. We can't afford to pay any more, because when the cow doesn't produce any milk and you're still squeezing, you get blood.

Thank you. Start the speech.

Miss Kotoulas: Members of the committee, ladies and gentlemen, I am an owner of several properties within the Metro Toronto limits. My name is Costa Kotoulas, and I wish to give you a brief outline of why I feel it is necessary to make my voice heard on the issue of market value assessment. I am no one special; however, when it comes to paying taxes, I then become someone, according to the eyes of the government.

I immigrated to Toronto in 1969 and have laboured long and hard with my wife to provide a decent living for my family. Over the past several years, I have managed to purchase several properties, with the financial assistance of the bank, one being a one-half interest in the properties municipally known as 618, 620 and 620A Bloor Street West. At the time I purchased a one-half interest in these properties in 1987, the appraised value was $1 million. However, in 1988, the following year, the city reappraised these same properties, total frontage being 55 feet by a depth of 95 feet, as having a value of $1.76 million, resulting in a 76% increase. If I were to sell these properties at today's appraised value, the properties are worth less than the original purchase price in 1987, not taking into account the overinflated value set by Metro Toronto in 1988. Currently I pay $16,000 in realty taxes. However, with the new proposed tax increases under market value assessment, my taxes would increase to $35,000, more than a 100% increase.

I'd like now to take this opportunity to ask you, where am I going to get the money to pay the additional $19,000 in taxes, as my options are very limited, because (a) I have an existing mortgage of $425,000 on these properties; (b) these properties are more than 40% vacant; (c) my present tenants are requesting decreases in their rents because their cash registers are empty. If I do not decrease rents, I end up with a vacant store.

All in all, my hands are tied and my pockets are empty. I cannot turn to the bank for help, because if I did so, this would only be a temporary measure. Even if I did apply to the bank, I have been informed by the bank that my income from these buildings is not sufficient to cover my expenses.

This proposal is literally going to force myself as well as my tenants out of business. Just as much as the city depends on its taxpayers for money, I depend on my tenants for income to meet my expenses.

I hold in my hand a list of commercial properties around my area, and this list states: Property taxes at $1,700 will increase to $7,000; property taxes at $3,000 will increase to $14,000; property taxes at $5,000 will increase to $26,000; and so on.

In addition to realty taxes, business taxes would also be affected. Attached is a notice given to one such business owner where it states his business taxes are to be increased from $4,683 to $33,282. This increase is also compounded by the fact that most businesses, as part of their rent, also reimburse their landlords for a portion of the property taxes payable. How can businesses exist when they are working just to pay taxes in one form or another?

It was also brought to my attention by June Trimmer, who indicated that in Scarborough a home having a frontage of 50 feet assessed at $300,000 pays $3,200 in taxes, whereas a similar property in Toronto would only pay $1,200. I would like to see where her figures were arrived at, as my property in Toronto, having a frontage of only 40 feet with an assessed value of $417,000, carries a tax of $7,466.04.


I put the following questions to you:

(a) How can you collect taxes from people and businesses when there is no money to be had?

(b) How do you collect from businesses when the stores are now empty?

(c) How do you expect a person who collects rental income of $12,000 to pay taxes totalling $14,000?

If you are proposing changes to the tax system, I would suggest that you find an alternative to market value assessment, and I would point out to you that the property owners pay, as part of their property taxes, 75% of the total bill for schools, education and police.

The right to education and protection is a right shared by all, yet we continue to hear the government state that we should change to a user system. It would therefore be feasible that the burden of supporting our schools and police be shared by all. After all, why should the minority pay for the majority? Tenants have a greater number of children attending our schools and a greater voice in how money for education is to be spent. Why should they then not be required to contribute to the financial burden?

The more taxes the government increases, the higher it pushes the inflation rate. Please stop spending and increasing taxes, because it's the only way we can all survive. Tax increases are digging our economy's grave, and by bringing in this proposal, a lot of small businesses will be put out of commission, a loss we can ill afford. This will not only be disastrous for the owners and the employees but also for the government itself.

The taxpayers pay enough taxes as it is. Every day, there's an article in the newspaper about our government asking for more taxes, but there are no articles setting out the government's attempt at cutting spending. Just like the residents of Metro have cut their spending, the government must also reduce its spending if it plans to improve the economy. If you come to my house and look in my kitchen cupboards you will see that they are less than half full compared to what they used to be. Why, you might ask? Because I have to pay my bills, and cutting corners is the only way to do so.

Market value assessment is not only unfair to property owners but to everyone in general, from tenants, both commercial and residential, to the average consumer who will ultimately pay the price. When a commercial location is rented, it is generally rented based on square footage and not volume. Volume is like the stock market: Today you may be rich but tomorrow you may be poor, and if everyone becomes poor, the welfare population will get bigger. This will be bad for our city, and you will be the ones responsible for it because you are the ones who started the market value assessment.

I ask you once again: Please vote against this proposal. Thank you.

The Acting Chair: I'd like to thank you for your presentation and I'd like to also thank you for your contribution to this process.

Mr Turnbull: Mr Chair, can I just correct for the record? I want to point out that tenants do pay taxes. I want you to understand that tenants in apartment buildings pay a very high amount of taxes. It's hidden inside their rent.

The Acting Chair: Sorry, Mr Turnbull, but we're running a little over time here.

Ms Poole: In 10 seconds, can I clarify? I think they meant business tenants, not residential tenants. Didn't you mean, when you said tenants have more children --

The Acting Chair: I will, in the essence of fairness --

Mr Kotoulas: That's correct. You see, the system penalizes the home owner. A boy or girl or anybody who works hard to buy a home because he likes it then has to pay taxes for tenants who have five, six kids, and maybe the guy who bought the property doesn't have any kids at all.

The Acting Chair: I'm sorry to have to cut in, but I must because we have other deputations. Just as a clarification, the mayor of Scarborough's name is Joyce Trimmer. Thank you for your presentation.

Miss Kotoulas: That was my mistake; I'm sorry.

Mr Kotoulas: That means there are no questions for us.

The Acting Chair: I'm afraid you've run out of time.


The Acting Chair: Our next presentation is Edna Hudson. You also have 10 minutes.

Mrs Edna Hudson: Thank you. I am Edna Hudson. I am the co-owner of 63 Rowanwood Avenue; that's the only property I own.

I am very glad to have this opportunity to speak to you tonight. I live in the south Rosedale district of the city in a nice but not overly grand house that I like very much. Indeed, I hope I will continue to live there and I want to be able to live there as long as I live. Whether that will happen, of course, is not certain.

My husband and I adopted Canada as our homeland many years ago when we were both young. We had hopes and expectations of many kinds. We hoped Canada would provide us with opportunities to use our talents, education and willingness to work. We have found Canada to be a kind and generous land. We have achieved a good many of our hopes and have enjoyed a full life. We have raised a family. We have been part of the ongoing task of building the country. We have reaped happiness as well.

We look forward now to an impending retirement, but suddenly the rules have changed a bit. The threatened doubling of our taxes, if implemented, would consume half our retirement income; that's just a fact. Retirement has been anticipated, by me anyway, to be a time in my life when I would have time to make peace with the world, to achieve finally some wisdom in living. It is this peace of mind that is attacked by MVA.

Market value assessment is, I feel, unfair to those already retired or facing retirement soon. It puts an additional burden of uncertainty also on those who are faced with loss of job. You see, for a woman of my generation, a house represents certainty of shelter and nurturing that should be worry-free once owned.

It's true, of course, that life holds few certainties, but loss of a job and difficulty in finding another represents much larger areas of uncertainty and worry to the individual than they did when our economy was more robust.

Is MVA a fair tax? First, the point I suppose I have been making is that MVA bears no relationship to the income of the home owners. Second, if the city were to adopt MVA, set its income by real estate values, that city would expect a fluctuating income. Real estate values rise and fall with the state of the economy. In the economics classes I took, housing starts were a basic measure of economic activity, so real estate values respond to demand.

In the ideal case, of course, the city will change its MVA base valuations every year instead of only every five years or so. To be really fair and honest in its devotion to the MVA principle, that's what it would do, but I'm not going to get hung up on details of implementation.

Now, the resale value of any property can change in response to neighbouring properties and what happens to them. Market values really do go up as well as down; down as well as up. For example, more intensive development or the building of a freeway nearby can and will depress all property values in the area. Or if the neighbours go in for gigantizing their properties to maximize their investment, that would increase the average value of properties of the neighbourhood irrespective of what an individual did with his own property.

This kind of value fluctuation is largely out of the control of the individual. How does the city feel about participating in the economy, sharing fluctuations in income?


Third, a point about the MVA tax following on from the previous point is that MVA represents a tax on enterprise. If a person finds a way to exercise his or her skills to increase the value of his or her home without adding to the cost of services required of the city, why should he or she be required to pay more in taxes?

If you don't wish to accept that, consider this fourth point: Why does the city not tax people on the value of their furnishings? An investment in electronic gear can flatten your bank account, leaving less to be declared as investment when the federal and provincial tax forms are filled in. But the value hasn't all been consumed. So why don't we tax the capital that has been converted into hi-fis and home computers? Surely they're a store of value, the same as a house.

The fifth and most important point: The MVA income to the city bears no relationship to expenses. Expenses incurred by the city are for services, basic things like fire departments and roads, education and administration. These are predictable and non-varying expenses, or they should be. Why should the city be discontented with a fixed income? Why does the city want a variable income?

Sixth point: The MVA basis for taxation can be seen as a capital gains tax, paid ahead of realizing your capital gain of course, but nevertheless a tax on what you might get if you did sell your property. Supposing that you held on to you your property through all the years, but despite the efforts of the city, your property lost value dramatically. The loser is the home owner, unless taxes can be adjusted retroactively, because under MVA taxation, the home owner has been taxed for a capital asset that turns out to be illusory.

This idea is easier to see in operation if you think of a pensioner who owns a house and decides to let the taxes accumulate. The city will set up an account which must be satisfied on the death of the owner. The city may have 30%, 50% or more of the MVA of the house owing to it -- we've a long-lived pensioner here, you see -- and of course the city must get paid from the estate.

In this case, it's easy to see that the city is interested in getting money owed, and nothing more, from the property, yet the city will have a large interest in the capital transaction. How can we be confident that fair market value will be achieved in the sale of the property when a dominant player, that is, the city, is passive in the transaction?

There are other scenarios. Suppose that a house were to lose so much value that the taxes owed could not be recovered from the sale of the property. Suppose there are no heirs -- anyway.

Seventh point: If the city core loses its resident home owners and loses its businesses, it has lost its value. If this MVA tax proposal were allowed to win the day, business owners will respond by closing down their businesses and the middle classes will move away, leaving the heart of the city to the very poor and the very wealthy. The city then is not a livable city.

The Acting Chair: Could I ask you to wrap up, please, because you're almost at the end of your time.

Mrs Hudson: One paragraph?

The Acting Chair: Yes.

Mrs Hudson: It may be that the number of the middle class is shrinking anyway. The downsizing of many businesses brings in its wake many shipwrecked hopes. But I believe we can choose a good future for our city. We can find the desire and the courage to cherish our cities. We need them. Let MVA perish.

The Acting Chair: Thank you for your presentation. Unfortunately, we have no time left for questions.

Mrs Hudson: Thank you very much.

The Acting Chair: Our next presentation is by the Metropolitan Toronto Civic Employees Union, Local 43, Margaret Gardner. Is she present?


The Acting Chair: Then I would call Kingsway People, Harold Bradshaw, to come forward, please. If you could please state your name for the record and introduce your fellow panellists, we can then begin. You have 20 minutes for your presentation.

Mr Harold Bradshaw: Thank you. My name is Harold Bradshaw.

Mrs Grace Hunter: My name is Grace Hunter.

Mr Eric Jones: My name is Eric Jones.

Mrs Marion Jones: My name is Marion Jones.

Mr Bradshaw: Mr Chairman and members of the standing committee on social development, I'm here tonight representing a number of concerned citizens of the Kingsway in Etobicoke. Our taxes will be greatly increased due to the implementation of market value assessment. On my street alone, the average increase would be about $2,000. Our taxes will all be between $5,000 and $7,000 if full market value is implemented, not including annual increases.

We are very concerned that the provincial government has the gall to say that this is not market value assessment and like to refer to this bill as the interim reassessment plan. Because it is market value assessment, the values of our properties will be changed to reflect what has been termed market value by the provincial assessment officers.

Another grave concern of ours is the clause in the act that allows the implementation of full market value upon the sale of our properties. Mr Cooke is saying through one side of his mouth that the government is very concerned with this. As home owners, we're being unfairly penalized by this feature. He does not want the bill to go through with this clause, yet Mr Cooke plainly gives Metro, through the implementation of a bylaw, the ability and the power to proceed with this facet of its plan.

I fail to see the difference between the two, especially after it was reported in the Toronto Star on Tuesday, December 1, that Mr Tonks intends to proceed with the bylaw, with his council's support. If it is clearly the position of the provincial government that it doesn't want this facet enacted and that the government is so unhappy with it, there should be no condition under which Metro is allowed to implement this clause.

It is important to point out that the current provincial government, in its election platform, was clearly against the implementation of market value assessment and is prepared to do an about-face and pass this legislation. The very least we think should be done is that the government should allow a free vote in the Legislature on this issue so that the members can vote on their own convictions and not on the revised party line.

It is a shame that people have to take time out of their busy schedules to ensure that the elected politicians do the jobs they've been hired to do. We the taxpayers, the people of Metro, are sick and tired of the games being played between the province and Metro at our expense.

If a taxpayer calls Metro, Metro says that the province has given it only one choice: market value assessment or the status quo. If a taxpayer calls the province, the province says that Metro is the one that has the choice as to how its taxpayers are assessed and that Metro chose market value assessment.


Metro has not only chosen market value assessment, but also 1988 as its base year, a time of economic boom, a time of speculation when speculators pushed the prices of our properties through the roof, a time when properties in particular areas were going up out of proportion to other areas and are now being penalized for this. However, since then, the values of these same properties have fallen in proportion to their rise, but again out of proportion to other areas.

If the constitutional accord taught our politicians one thing, and one thing only, it is that we the taxpayers, the people, are sick and tired of these games. It is about time to start listening to what the people are saying and to stop playing games. We the taxpayers are not going to stand for this any longer.

There are a number of reasons for our taking this very strong position against market value. As we see it, there are at least 10 things wrong with market value assessment.

Market value is not based on market value. Part of it is a secret formula, part of it is guesswork and none of it is what you can buy or sell your house for on the open market.

I have attached two schedules to my handout. Schedule 1 is my summary of how the assessments are arrived at, with a map of the Kingsway's economic areas, whatever they may be. It took months to get this information from the regional assessment office. I would advise you to read this to see if you can figure out how your house is assessed.

In this schedule, my house is used as the example in the calculation. It has an adjusted sales price of $475,200, yet its MVA is $589,000, overvalued by $113,800. Another sale in our economic area was for $1.010 million, and that house has an MVA of $703,000, undervalued by $307,000. This evaluation system is horrendous. It is more erratic than the old system.

Schedule 2 is a summary of actual sales in 1988 as compared with MVAs. You can see that there are large variances throughout Etobicoke, not just in our ward.

The most glaring example I have come across is a house at 48 Valecrest Drive in the Edenbridge area. The purchaser bought this house for $1.95 million in October 1988. Under MVA this property is valued at $782,000, undervalued by $1.168 million. Another is 35 Burnhamthorpe Park Boulevard, which sold in August 1989 for $860,000, yet its MVA is only $373,000, $477,000 undervalued.

It is not pleasant to be ratting on my neighbours, but this proposal leaves us no other choice. It pits neighbour against neighbour in order to see that MVA is being applied fairly. What a mess. From my limited sampling, I have found many serious errors. I know there must be many more. I would like to know where the fairness is.

MVA attacks our most important asset, our homes. One buys because one knows the price. One buys because one knows the maintenance charges, including the taxes. Re-evaluation every four years will change both in ways we cannot control and cannot estimate.

MVA is a divisive political tool. Each round makes winners and losers, and the confusion is ideal for sliding in unwanted tax increases. Politicians can be good at that, and we don't think we need to give them this power.

MVA attacks the elderly. With time, your property value goes up while your income comes down. MVA hits the surviving spouse with the biggest tax bill, just when he or she can no longer generate more income. Call it old age insecurity.

MVA attacks businesses by loading them with taxes they cannot possibly pay out of earnings. MVA simply doesn't care about earnings.

MVA blocks the resale of homes. Re-evaluation changes the value of every home. Who will invest when their investment can be lost at a whim?

MVA stifles the growth of new businesses. Re-evaluation makes just one more uncertainty that discourages investment.

MVA blocks mobility. If you are in a place that is undervalued, you will be loath to leave it. If you are in one that is overvalued, it will be hard to sell. MVA is the most expensive assessment to make. It takes years to do and then it must be redone again and again. After that, MVA leads to appeals and appeals and appeals.

What about fairness? Who uses most municipal taxes? Families do. Families use schools, and there goes half the money. Families use parks, libraries and much of the roads and public transit.

Who uses the least municipal taxes? City businesses. They use no schools, they use no parks, they use no libraries. They have small frontages with little road costs and they use little public transit.

Who pays the most taxes? Last year city businesses paid the same property taxes as homes three times their size because frontage on commercial streets costs more. Then they paid business taxes, as well. Metro said this was unfair. Businesses already paying more for less should pay two to five times more again. This is not equity. This is madness.

The Metro plan calls for creeping increases. The idea is that no one is supposed to notice that his taxes are slowing going out of all proportion. But what if one has to move? The new owner has to pay much more than his neighbour. Why? Simply because he just moved in.

What about lifestyles?

Some people choose to live on small, costly lots in the downtown core. They pay a lot more for their property and get less for their money; however, they travel less and pay less for transportation and cars. Many have small families or need no schools.

Some people prefer suburban life. Farther out, land costs are less. House costs are less. One gets more home for your money. But the lower density costs more to service. Distance requires more expenditures on transportation. More families, hence more need for schools.

Under MVA, the greater the density, the less service you need, the more you pay.

Some people buy and invest in one place. Some people rent and enjoy the mobility. What does that have to do with the level of municipal service used? Some people even invest in businesses and stores. They have even more at stake because their livelihood depends on the stability of the neighbourhood that provides their customers.

Municipal tax is just one factor you must know in choosing where to live or work. Like other factors, it should make sense; that is, the amount should be appropriate for the service being offered. Like other factors, it should be predictable so that you can rely on it staying appropriate in the future.

The Metro plan for MVA splits new buyers from old tenants. It makes predictions about the future impossible. In many areas, people will be forced to uproot their families and move to areas that are more affordable. Re-evaluation every four years could impose this burden on them repeatedly.

It happened in Kitchener. In the first round of their MVA, the city got hit hard and the suburbs basked. The city cried foul. The second time around, the suburbs got hit hard and the city got the reductions. The suburbs cried foul.

Another reason why MVA should be stopped is to wait until we hear from the Fair Tax Commission. One of the criteria of the Fair Tax Commission is the ability to pay. MVA does not meet this criterion. What does the value of one's home have to do with the ability to pay taxes? If we are to be taxed on ability to pay, let us tax incomes. Anyway, why waste the taxpayers' money on the Fair Tax Commission if the government does not intend to use its report?


We believe in the premise that if one is going to complain about the current process, one should offer an alternative. Here is our proposal. It is basically the unit value system. Taxes should be based on a designated general use of the property such as residential, business, recreational, multiple-unit housing; square footage of the property; square footage of the building, and then apply a mill rate.

It is plain. It is simple. It would take a quarter of the staff in the assessment office to manage. It would also be fairer and more stable. MVA fails on all of these counts.

It is very disheartening to read in Hansard that many of our politicians think we have accepted this. They want to know where we are. They don't see us in the gallery and they don't see us demonstrating. It is a very busy time for most of us and frankly we're getting tired, but that doesn't mean that we accept this. We are too busy trying to make a living out there to pay these taxes.

In closing, I hope that our contribution tonight has been of some value. We feel that within our hearts we have done all we can to represent our friends and neighbours, because our elected politicians have abandoned us.

The Acting Chair: Thank you. We have four minutes and I will begin the questions with Ms Poole. If we can keep them short we'll be able to get through each caucus.

Ms Poole: Thank you very much for coming tonight. Not all your elected politicians have abandoned you but perhaps not enough --

Mr Bradshaw: My elected --

Ms Poole: Oh, your elected politicians. Okay. Some of us are still fighting, although we share with you the disheartened attitude and also the fact that we're very tired.

You mentioned so much in this brief that I totally agree with. In fact, I totally agree with every part of it. But there are a couple of things I was going to bring out. On your first page you talked about the point of sale and that you have a lot of difficulty with Mr Cooke saying, "Oh, yes, but we've provided a mechanism for Metro to change its mind on this."

Since Metro council has voted on this three times and since Metro council has decided three times that it agrees with full MVA on point of sale and since Metro council is dominated by suburban councillors who are, for the most part, in favour of market value assessment and full implementation, do you place any credence or do you have any hope that Metro council, when it looks at it a fourth time, will change its mind?

Mr Bradshaw: Of course not. Mr Tonks says he is going to pass a bylaw to put it through, according to the Star. It's crazy. If they believe it's that unfair, then it shouldn't be there. They should just disallow it, period.

Mr Rizzo: I want to thank you for being here tonight. I also want to congratulate you on your brilliant presentation. In spite of a political difference, I also agree with you but I want to point out a couple of things.

You are criticizing the fact that the value for 1988 has been the highest because we were in a period of boom, but I can tell you that if the assessment was going to be done in 1987 or 1989 or 2000, it wouldn't make any difference to the total amount of taxes you would pay because they are all comparable to each other. The total amount of taxes that are going to be collected would be the same, so it makes no difference which year the assessment is done.

Mr Bradshaw: I agree with that.

Mr Rizzo: Okay. Let me finish. I agree with you again with the fact that this is a mess and has been a mess since its creation. This market value assessment has been created by those friends down there when they were in government. It was not created by the NDP. The NDP always fought against MVA and we are going to keep on fighting against MVA. But what we have to understand --

Mr Bradshaw: Why are they going to put it through?

Mr Rizzo: What we have to understand is this. We have a proposal by Metro and Metro has autonomy.

The Acting Chair: Wrap up, please, Mr Rizzo.

Mr Rizzo: They are entitled to ask us to enable legislation of what they approve --

Mr Bradshaw: That's the point.

Mr Rizzo: -- and that's all they are going to do. As a matter of fact, we interfered with that and told them, "Please come back and make sure that you are not going to have full market value assessment for people who sell their homes." That's the only thing we've done and the only thing that we were able to do.

What we are telling you and what we are telling the people of Metro, at least on my part, is that I'm going to vote for this because it's a little bit better than what we had before. But we are also saying --

Mrs Jones: Not for us.

Mr Rizzo: I can give you examples --

The Acting Chair: I'm going to have to ask you to terminate --

Mr Rizzo: We are also saying we are not going to allow Metro to go to full market value. In the meantime, we are going to make sure we are going to have a new type of tax before 1998.


Mr Rizzo: Now, why it's more fair; I can tell you. In my area, the area I represent, 57% --

Mr Jones: Marion has a question, please.

The Acting Chair: Mr Rizzo, you're running the clock out.

Mr Rizzo: Why should I have my constituents, who have been paying thousands, literally thousands of dollars more and now they should have thousands of dollars in credit and they're only getting 50% while other people --

The Acting Chair: Thank you. Mr Rizzo.

Mr Rizzo: -- for the same value, other people in Toronto are paying much --

The Acting Chair: Mr Rizzo, please.

Mr Bradshaw: Is market value assessment the route to go?

Mr Rizzo: No.

Mr Bradshaw: Is that a fair route to tax people on?

Mr Rizzo: No, it's not.

Mr Bradshaw: Then we are in agreement. Market value assessment is garbage.

Mr Turnbull: Thank you very much for an excellent presentation. You can tell by the doubletalk you've just heard. This is the kind of nonsense we've got. You've proved the incompetence of the assessment. You're showing that it doesn't work and it is not correctly done and yet we have the doubletalk that the NDP is against --

The Acting Chair: Language, please, Mr Turnbull.

Mr Turnbull: -- MVA and at the same time they're saying they're fighting against MVA and they're going to put this through because they have no choice.

Mr Mills: So are your party members.

The Acting Chair: Excuse me.

Mr Turnbull: All of your party voted for this.


The Acting Chair: Excuse me, Mr Turnbull. Excuse me, Mr Mills.

Mr Turnbull: Don't give me this nonsense. All of your party voted for it.

The Acting Chair: Mr Turnbull.

Mr Turnbull: They fought on the last election --

Mr Mills: Don't give us this holier than you.

Mr Turnbull: You are so hokey. Everybody voted for it against what they said.

The Acting Chair: Mr Turnbull, this is really counterproductive.

Mr Turnbull: Can you believe this kind of nonsense?

The Acting Chair: Mr Turnbull, please.

Mrs Hunter: We have to pay for this.

The Acting Chair: Thank you. Thank you for your presentation and --

Mrs Jones: And we don't like it.

Mr Mills: Holier than thou.

Mr Turnbull: What do you mean, "holier than thou"? Some people campaigned against it, and every one of you --

The Acting Chair: Mr Turnbull, Mr Mills, if you would mind, please --


The Acting Chair: I'd like to call the next witness, please.

Ms Poole: You still haven't figured out you're the government.

Mr Turnbull: It's absolute hypocrisy. You're trying to have it both ways.

The Acting Chair: Please, Mr Turnbull.

Mr Mammoliti: Control yourself, please.

The Acting Chair: Mr Mammoliti.

Mr Turnbull: I have this interjection from Gord Mills --

The Acting Chair: I'd like to call the next witness, Mr Turnbull.

Mr Mammoliti: If you can't control yourself, leave.

Mr Turnbull: People who can't control themselves -- I've seen you bring Little Red Riding Hood into the record of committee meetings.


The Acting Chair: Could I have Doug Carroll come forward, please. Mr Mammoliti, Mr Turnbull, I would caution you. This is very counterproductive and I think it would be very good for the witnesses if they could expect to come before a committee that has control of itself, so please, Mr Turnbull --

Mr Turnbull: I would suggest to you, if we didn't get the interjections from the parliamentary assistant --

The Acting Chair: Mr Turnbull, I am asking you to calm down.

Mr Turnbull: Ask the parliamentary assistant not to interject with his stupid comments.

Mr Mills: It's the truth.

The Acting Chair: Mr Mills --

Mr Turnbull: It isn't the truth.

The Acting Chair: It is counterproductive. Please contain yourself.

Mr Turnbull: It's the truth that all of them voted for MVA.

The Acting Chair: Mr Turnbull.

Mr Mammoliti: On a point of order, Mr Chair.

The Acting Chair: I would just prefer to move along with the deputation.

Mr Mammoliti: On a point of order, Mr Chair.

The Acting Chair: No, I think I will move along to the witness, please.

Mr Mammoliti: There's a point of order --

The Acting Chair No, I think I'll move along.


The Acting Chair: If the witness could perhaps use the mike and read your name into the Hansard, we will then proceed to your deputation. Thank you.

Mr Doug Carroll: My name's Doug Carroll. I'm not sure what presentations you already heard. I have sort of a body of qualitative commentary I just want to make.

The Acting Chair: We have allocated 10 minutes for your presentation. You can either use all of it for your presentation or you can use part of it and leave time open for questions at the end.

Mr Carroll: It seems to me that the purpose of collecting the taxation at all is a combination of delivery of services and also redistribution of income in that it's a sliding scale that depends on asset value, as it presently seems -- the value of a property or whatever; 55% of it's education; that's the biggest single chunk.

I've got a problem with MVA because it appears to be a capital gains tax on unrealized capital gains, which is a fairly remarkable entity. Even Revenue Canada will not ask people to pay tax on amounts they have not yet realized in profits in a case where a property has gone up in value. It seems to be an effort at an income tax. I assume its purpose is to distribute the cost of services according to those best able to pay for them, and in that sense it's a good thing that's being attempted.


I don't feel that MVA is a particularly articulate way to do it, because people's income does not necessarily track their asset base. Also, especially in terms of market value assessment, somebody's property could readily go up without his having anything to say about it. They had no intention to increase their income to those levels, but somebody else comes along and says their property is more valuable. It's almost like enforcing community income standards on people who are really just trying to live their lives. I think it substantially interferes with the meaning of what home ownership is when you have a situation where the city is charging what amounts to a yearly rental for somebody's own property. That's the difficulty I have with it.

The value base, as I understand it, is 1988. That was a speculative bubble year, the peak of the market. I've also heard of a sliding three-year scale. I don't know whether it's going to continue to slide through the entire period over which market value might provide an assessment of somebody's tax debt.

It provides wild cost variations. Somebody can't predict ahead of time what his costs on his own home are going to be, or on any property he owns. Another assessment of its value could come along at any time. Someone else could offer higher amounts of money for a nearby property. At that point they no longer have cost control. As we know, properties can go up by a factor of four in four or five years. We've just seen it. In that sort of situation, somebody trying to plan his actual costs is going to find himself wildly out of line.

Another thing is that anyone who tries to improve his property, rather than taking the usual pride in ownership or whatever is going to find that he has tax collectors coming around, quite rightly according to this proposed law, to charge him more money for the improvements he's made, which are going to be valued at the market cost of labour even if he provides the labour himself. It's a disincentive.

A lot of people seem to be presently oppressed by the system as it is. Home owners are likely to encounter difficulties, as mentioned. The downtown area is 27% of the population and makes a 42% tax contribution, which is a mix of business and residential -- 60% business and 40% residential. There's a net $300-million outflow from the city of Toronto on education, which is quite a subsidization for anybody. It's hard to see, in my mind, why the downtown core could be expected to pay higher taxes and therefore why a system designed to relieve inequities between the surrounding areas and the downtown core, those supposedly more valuable properties, is justice.

Another thing is that the suburbs, the areas that are the most likely to benefit from this initially, make extensive use of the downtown core and its services and require it as a cultural centre. The downtown core is good for them; it's good for everybody. They work downtown, shop downtown, play downtown. All the facilities that are downtown are used by everybody.

Business presently pays 75% of its rental dollar in the form of tax. This is the highest rate in the world, as far as I know. London, England, has a 56% rate; New York, the financial hub of the universe, has a 49% rate. I don't know what more you could expect of your business users if you charge them much more money. If you took another 25%, they wouldn't have, really, any landlord at all except for the city.

Mr Frankford: Can you explain that?

Mr Carroll: Of their total rental dollar, apparently 75% is going in tax. If another 25% went, they wouldn't pay any money at all to their actual landlords. It would all go directly to the city.

If votes were proportional to tax paid, business would run Toronto. Tax without representation: You figure that the only vote a business has got is through its owners or direct participants. If those are maybe even 5% or 10%, they're underrepresented in proportion to their tax contributions. They may well be driven out of the downtown core by tax; 17% of the businesses are likely to see a 100% increase if MVA comes through. That's a lot of money. Small merchants are also going to be in trouble. Everybody shops there.

Tenants are oppressed with a 250% higher tax than the equivalent residential space. Maybe you already know this. It's taxed as commercial space because it's an income property. This is a real problem and it's not addressed in MVA. I don't see how a system which promotes inequity like that could be considered a fair bet at this time. It means that tenants pay more for everything than equivalent nearby home-owning residential people.

There's no guarantee in the MVA of reductions being passed through to tenants if they should occur, but there is the possibility of a 10% increase. That's the limit of the cap, as I understand it. It's a strong exception to the philosophy of rent control and of evenly dividing costs.

I consider MVA to be a document founded on division between different special-interest groups: It divides the suburbs versus the downtown core, it divides business versus residents, it divides developers, who see an immediate MVA tax increase with no cap, versus everybody. Even Go Transit is likely to be negatively affected by it. You'd think that would be a community project. The philosophy of division in a political document is not -- I mean, it may work, it may be politically expedient, but it's somewhat reprehensible. It basically divides people against each other and doesn't really work to a synergistic whole. I believe MVA is, unfortunately, in that category.

The wrongs it tries to address are real. I think there can be a solution which will satisfy everyone, and I sure hope it can be found. I think it's good political insurance in the long run to take a philosophical position of resolving inequities, and that the absence of that philosophy can turn back on you. You could be a member of one of those minorities at any time yourself. It's no use building a political philosophy around oppressing people who aren't necessarily able to fight back at any given political situation.

I hope there'll be some consideration for all the needs that need to be met here, those of the suburbs and those of the downtown people. Although MVA is intended to address those things, it's too inarticulate a document to be accepted at this time. As you folks, members of the NDP, have a mandate to try to redress inequity wherever possible -- I guess any government does -- I sure hope you'll see a way to wait for the Fair Tax Commission report since it's right around the corner. This has been going on for decades and you're very close to having a complete solution, and I hope you'll find it reasonable to wait that long. Maybe some deal could be worked out with the city to turn this document back for a rewrite or whatever you know to be possible.

Another thing that occurred to me is a tax which is more oriented around the services consumed and more explicit redistribution of income, something which would more or less be a user-pay system with exemptions for those who are not able to make a full contribution. Variability presently could occur with MVA, which is where somebody does a whole bunch of renovations to his house and even though the increase is not reflected in city costs, he none the less sees a tax increase. I think in that situation MVA is unfair and that a consumption-based tax would remain completely level through the same event. Two bags of garbage two times a week should cost a certain amount, likewise other services: water, board of health, everything else that's needed. That is a fixed basis with a variable element that might even vary per community and would be, I think, a more reasonable basis for taxing people.

The Acting Chair: Could I ask you to wrap up? We have about a minute and a half left.

Mr Carroll: I think the NDP's in an excellent position to help resolve this situation so that it's even satisfactory to the city and Metro councils. They have a mandate to do so, and I sure hope you folks who are responsible for this vote are going to do the right thing. It's what you're here to do.

The Acting Chair: Thank you for your presentation. If you have written material that you did not present, you can give it to the clerk and he will make copies of it and distribute it to the committee members.

Ms Poole: Could I ask one question?

The Acting Chair: Actually, there is no time left. Sorry. Thank you for your presentation.

While the next presenter is coming forward, do we have any representation here from the Metropolitan Toronto Civic Employees Union, Local 43? No?


The Acting Chair: I'd like to call on Alf Mallia. If you could state your name for the record, you have 10 minutes for your presentation.

Mr Alf Mallia: My name is Alf Mallia. As you know, all you hear from everyone in government these days is, "We can't afford this," and "We can't afford that." Yet I ask you: We spend more than 60% on education. Do we need nine boards of education, with all these bureaucracies that waste money like water? We need money to go towards teaching our children, and teach them at least how to spell potato, not fattening bureaucrats' posteriors. The Metropolitan Separate School Board does its job with one school board. Surely the public school should do the same.

And do we need six layers of government in Metro? It's the overhead that's eating the tax dollars like an elephant eating peanuts. It's not the school teacher, it's not the fireman, it's not the policeman and certainly not the garbageman; it's the politicians who are costing us these billions of dollars. We have so many layers of government and all their committees, committees to the committees, like this one -- now you probably have to send it to another committee -- trustees, board of trustees, boards of boards, more than you can imagine. Even the Soviet Union was not governed half as much as we are now.

It's time, ladies and gentlemen, to cut government. Proposition 13 in California proved one thing, and I'll guarantee you it's going to happen here too. It could also be implemented, not as Proposition 13, because the law doesn't allow it as such, but if all the people in Ontario stop paying taxes, you have to start listening. Believe me, it's started already. I myself have stopped paying and I urge everyone, especially those people who have been cheated by this system, to stop paying taxes. If money stays in our pockets, you can't spend it. I'm talking about the people who are being cheated, especially the people in the suburbs.


When Mayor Joyce Trimmer of Scarborough was here she put it very mildly when she said -- she was quoted in the paper -- that the city people are angry. The word is "furious," I think. She and everyone else know that people in the suburbs have been overpaying their share of taxes for the past 40 years and are now being allowed to get robbed again even further. They tell us: "We're not robbing you the full 100% this time. We'll only rob you 50%, therefore you should be happy."

This is not legalized theft; it's extortion. Even the dictionary explains it as such: "Extortion: obtains money by intimidation and use of power, as in government." That's what this government and every other layer of government is doing.

She also said you won't see too many people here speaking in favour of MVA because of the way people were being intimidated at Metro Hall, which is true. I also question, though, the criteria that were used to bring people in here to speak to you. Can anybody answer that right now?

The Acting Chair: All the deputations were formulated on the basis of advertisements that were put in the local paper. People who wanted to make a deputation phoned the clerk and the clerk then put their names on the list as they arrived so that everybody would have a fair and equal opportunity to be a witness.

Mr Mallia: Were they called as they called in, in that sequence, or selected? I think they were selected, because I have proof of that. You don't have to answer that; I know how it works. Don't worry about it. It's taking my time.

Mr Rizzo: Hold on. Wait for an answer.

Mr Mallia: Yes, but then he'll tell me my time is up.

Ms Poole: We'll make sure you get an extra minute.

The Acting Chair: I was just conferencing with the clerk. I'm not the regular Chair for this committee. The scheduling for this committee was done by the Chair and by the clerk, and it was done on the basis of first come, first served.

Mr Mallia: That's what you told me and I don't believe you. I got different news for you. I called on Thursday morning, and people who called after me, even up to Tuesday, were already here.

The Acting Chair: That is not relevant today because --

Mr Mallia: The reason I am here today is that I kept calling every day. You can check my name and how many times I called. This morning was the seventh time; at 9:45 this morning I called.

The Acting Chair: The basis of the timing could be that when people phoned in they were asked when they could appear, so somebody who may have phoned after you could only appear prior to you and they were scheduled in. That is normally what we try to do on these committees so that everybody can be heard, and you are here being heard.

Mr Mallia: Well, thanks to my persistence.

Anyway, whatever happened to this democracy we supposedly talk about? One would think that with the collapse of the Soviet Union, democracy reigns supreme. Not so in Toronto, especially not in the city, where the minority, political and wealthy élite, dictates to the taxpaying majority. The city of Toronto, through the mayor and its Metro councillor, have been using distorted facts and scare tactics ever since MVA came on the scene. Even ex-Mayor Eggleton tried his best to delay MVA when he was in power.

The latest were three full-page ads. Here they are. The first one was scaring the tenants, saying "17,000 tenants will get rent increases," but it never said anything about 309,000 getting a decrease. The next day, "221,000 home increase," but it never said anything about 306,000 getting a decrease. What tops it off and everything else now -- this is the biggest lie, and I don't know if I can sue anybody, because this is distortion at its best -- is "MVA means a tax increase for more than 124,000 businesses," when in fact the total number of businesses, commercial and industrial included, is only 125,000; 67% of them -- actually, nearly 68%, because it's 67,600 -- are supposed to get a decrease. Only 57% get an increase. Why are these people allowed to lie like this?

Supposedly, they're saying that they're only trying to protect small businesses. These are the small businesses that they are trying to protect. This is the mayor's own advisory committee on property taxation: William A. Farlinger, from Ernst and Young; Michael De Pencier, Key Publishers Co Ltd; John C. Eaton, Eaton's of Canada Ltd; J. Trevor Eyton, Brascan Ltd; Peter C. Godsoe, Scotiabank; Jack Lawrence, Burns Fry; Donald Macdonald, McCarthy Tétrault; John McNeil, Sun Life of Canada; Albert Reichmann -- of course, we have to protect him too -- Olympia and York; Isadore Sharp, Four Seasons Hotels; Galen Weston, George Weston Ltd. These are the small businesses they're protecting.

Then, all of a sudden, another group appears. They say they are a newly formed concerned citizens group which calls itself Save Our City. Here's the board of directors of these people. These are really nice people too: Art Eggleton, former Metro mayor and appointed federal Liberal candidate; Bev Salmon -- I think there's a conflict of interest right here -- Metro councillor from the Bridle Path; David Payne, downtown Toronto lawyer; Richard Wookey, Yorkville businessman; John Adams, Toronto city councillor. These are the people who are running the city, not small business.

Yet again we don't have even that. These are from the MVA itself now. Sorry, I have to stand up. That's my house, estimated at $240,000. There's a house in Toronto -- I couldn't even find one exactly the same -- but this is more, so you can see for yourself; it's $31,000 more. Under MVA I'm supposed to pay $2,291. This house is supposed to pay $2,528. I'm currently paying $3,526. You tell me where the God-damned -- pardon my language -- fairness is. This guy is only paying $800 a year.

In 1993, with my big reduction, I'll be paying $3,459. With his 5% increase, he'll be paying only $941. In 1994, another big decrease for me, I'll be paying $3,694. He'll be paying $1,125. In 1998, with a minimum of only maybe 10% mill rate addition, I'll be paying $5,408, and this house will only be paying $1,648. Any of you, please answer me where the equity and fairness is in this one? This is not MVA; this is a sham if you call this MVA. I admit that if my house is $240,000 -- I couldn't get that money now, I'll guarantee you that -- it doesn't matter where it is in Metro, we're all in Metro and should be paying the same.

The Acting Chair: Could I ask you to wrap up?

Mr Mallia: Actually, if you cut off half these governments, I'll guarantee you you won't raise anybody's house. Besides, I think there are 40,000 houses still supposedly capped since the First World War for First World War veterans, and these people are paying less than $300.

The Acting Chair: Thank you for your presentation this evening. We have run out of time.

Mr Mallia: There you go. I've got my answer.


The Acting Chair: I would like to call now on the Taxpayers' Alliance.

Mr Mallia: Can I just ask one question? Isn't this just like barking in the wind, like we had with the Spicer commission, everybody here and listening and it doesn't mean anything? We're here barking against the wall for nothing. Are you supposed to be doing something about this? Is it going to be fair and equitable taxation? That's what I'd like to know.

The Acting Chair: I'm afraid if we were to sample the room, we would not get a consensus this evening.

On a point of clarification, Mr Owens? Make it very quick, please.

Mr Owens: I'm just wondering if the Chair or the clerk knows, out of interest, what a full-page ad in the Toronto Star is worth. Could we find that out?

Mr Mallia: I'm only here for equity and fair taxation. Until that's done, you're going to see a lot of people not paying taxes.

The Acting Chair: Thank you. Could I have the Taxpayers' Alliance, John Lavin, vice-president, or Ray Morand, executive vice-president? Could you come forward now? Are they in the room?


The Acting Chair: Then could I have William Boehm? Could you come forward now, please? Would you state your name for the record and then you can make your presentation.

Mr William R. Boehm: My name is William R. Boehm. Thank you very much for this opportunity to speak. I believe you have a copy of my paper. I'll just run through it reasonably quickly. You've heard quite a few people today.

One of the things I have found very stressful is that when people are looking in the other direction and then they compare the city of Toronto to American cities and other world-class cities, they don't remember the fact that what happens is that their own city may be going bankrupt. I believe that's what's happening now and that's the main reason why politicians and other people have started to look at the tax system, so that more money, more finances, can be given to allow for services to take place. Otherwise, there would be no services. It would just become as dry as a summer creek.

What happened when New York City declared bankruptcy five times? It was bailed out. That's just one example. It was Capitol Hill that bailed cities out. They never had MVA. They had a good number of flaws in their system and they still do. We have a much better system than they do and I have to state that fact. Most people, I'm sure, have not spoken of that. I may be wrong. Please correct me if I am wrong at any time.

The main thing I have found after speaking before the Beaudoin-Edwards committee is that partisan politics really should never be allowed, and I'm sure you'll find that towards the bottom of my first page.

However, what I would like to see is a very good, well-balanced, reformed, improved tax system. I can't give a solution as to how to go about doing it, but I'm sure MVA is the basis. It's a start. The last time we had a uniform assessment rating of all the properties was in 1953. So when you think of it, if this act goes into effect on January 1, 1993, that's 40 years. We've got 40 years to think about it. We don't have to pass anything really quickly. That's where my concern is. If any one party tries to push things down anyone's throat, it may be a short-term benefit, but the long-term benefit is that party is going to lose a lot more.

Our country is just beginning to start to grow. With MVA in its present form, comparing it to the other industrialized countries -- all Canadian citizens would like to see that Canada does come forward, as it is doing. It has been rated number one by the United Nations over Japan.

However, with MVA, if it goes into effect and it's used as a precedent, that could become a situation that would be applicable to all other cities. If that happens, who's going to be at fault? The cities are just going to say one thing: "Oh, well, Toronto passed it, and Toronto's the biggest city in our country. We don't have anything to worry about." Most times, they never look into the source of the problem, if there is a problem at all.

This is where I believe communication really counts. Everyone should be cooperating. That's why I say partisan politics should not take place in any way. It doesn't matter to me how or whom the person is aligned with, but what does matter is the communication and the implications from the words. If those implications come across and make the other party feel they're stubborn, they're going to walk away.

Of course, as a corporate fund-raiser and insurance broker, I've been dealing with people since 1979. Before then, I was travelling all around the world and I worked all around the world with Anglo American Corporation of South Africa and such like.

The personality of the Canadian people I have found to be apathetic, passive and sometimes very negative. I'm sure we've all experienced that. What we have to do is we've got to try to turn that whole situation around. No one's really at fault. We've got a domino effect that has taken place. We can't pass the buck.

The provincial government is going to have a very difficult time and I can sympathize with that situation. If there was a way of changing everything, if the provincial government was able to go ahead and just say, "Hold it; I think it's more important to wait. Let's do a complete, thorough study on this" -- we haven't seen any studies. We haven't read any studies about this.

A very good example is when I went into the Metro reference library and checked to see if there was any information. The Metro reference library in Toronto is the largest library across Canada and there wasn't one iota of information about this type of survey anywhere. Two librarians went all around the place looking and they said: "We're terribly sorry, Mr Boehm. We can't find any information for you. I'm afraid you'll have to call New York City or Washington, DC, to get information, and I don't know whether they'd even be willing to give you the information. They may want to maintain it as is."

If that is the case, then we obviously have not done any work on the alternative ways in which we could finance some of these things. Metro wanted to go ahead and build an office complex and a housing complex.


The Acting Chair: Could I ask you to wrap up? You have about one minute left in your time.

Mr Boehm: The housing complex is $45.9 million in a recession time. It's the wrong time to be doing that. I believe that with all the taxes -- as they are surtaxed to people, the businesses, the way they're being dealt with -- we're going to have nothing but an exodus of people leaving. Over 50,000 people have left over a year, and that's documented. The reason they left, as it's found and documented to be, is the high standard of living plus the instability of the real estate market with the debating back and forth about MVA.

The Acting Chair: I'd like to indicate that your time has run out. We have your presentation, and all the committee members can read it in their deliberations. Thank you for your presentation tonight.

Mr Boehm: Thank you very much. I believe it's very important for everyone to read these things carefully and to keep in mind that 40 years is a lot of time. No one did anything for 40 years. Why should we do it all of a sudden now?


The Acting Chair: I'd like to ask the Taxpayers' Alliance to come forward, please. If you could read your names into the record and then begin your presentation, we have 20 minutes for the presentation.

Mr Tony Natale: My name is Tony Natale and I am a vice-president of Taxpayers' Alliance. With me is John Lavin, a vice-president of the alliance and Ray Morand, also a vice-president of Taxpayers' Alliance. We represent Taxpayers' Alliance, the greater Toronto area. We have over 3,000 members in Metro Toronto and are a chapter of the Ontario Taxpayers' Coalition, which has over 70,000 members in southwestern Ontario.

We are a common voice of taxpayers to change government spending behaviour and to ensure government is publicly accountable and responsible. We are here to challenge Metro's claim that the proposed Metro MVA tax is revenue-neutral. There are no statistics available showing that the new scheme is revenue-neutral and, until proven otherwise, we unequivocally state that this scheme is nothing but a tax grab by Metro, not to mention its other inherent faults. We intend to touch on some of the negative attributes of MVR and its disregard for due process.

Ms Poole: I'm sorry to interrupt, but just as a point of information, several witnesses have used the term "MVR," and I just think a lot of people who are watching the television might not understand that that's market value reassessment. Sorry to interrupt.

Mr Natale: Thank you. Because of the structure of this law, certain very disturbing situations will arise. Based on information received from Ministry of Revenue staff, it would appear that under a Metro interim MVR plan, the majority of taxpayers will lose their old accustomed right to appeal their reassessment for the purpose of adjusting their tax payments.

Starting in January 1993, the only assessment roll will be the roll showing 1988 market values. Only these 1988 assessments can be appealed. A taxpayer may well win his or her appeal and achieve an adjustment to the 1988 assessment, but this may have zero effect on his or her current tax payment since the property tax will not truly be based on this assessment for the next five years except for one-to-two-unit residential, if sold.

For the next five years, appealing one's assessment thus will become an academic exercise for the vast majority of property taxpayers in all classes. The only contribution made by the 1988 assessment is to determine to what extent Metro's arbitrarily chosen percentage increases or decreases will apply. Quite clearly it is the 1992 tax which will govern what tax is to be paid during the next five years, and not the 1988 assessments. Yet according to the Ministry of Revenue, this 1992 tax base is not appealable.

Under the Assessment Act, taxpayers have long had the right to appeal their assessments once a year if they believe that they have been overassessed and overtaxed. The situation created by Metro's interim plan will effectively take this right away and discriminate intolerably against Metro Toronto property taxpayers. On this ground, MVA introduction should be halted until correction is made.

At some point in time our public representatives at all levels must learn that the taxpaying public must be consulted on pivotal matters such as these and not brought in at the last minute to comment futilely on a backroom deal that was cut in less than 24 hours. Rather than passing this odious legislation, we would suggest that the provincial government direct Metropolitan Toronto to conduct a referendum on the proposed taxation scheme.

We have also analysed the short-term economic impact of the MVA since it was introduced in the media in the late fall. We have noticed that real estate values have begun to depreciate by an estimated 10% in the city of Toronto since the beginning of this fall due to the possibility of MVA passing into law. MVA discourages and penalizes the improvement of residential and commercial neighbourhoods because as these communities spend time, money and energies to improve their area, market values appreciate and, under MVA, taxes increase.

MVA destroys jobs for the same reason. We presently have a situation where 40% of the residential and commercial properties for sale on the market are under power of sale or foreclosure. Businesses are going bankrupt in record numbers. MVA will make this situation even worse.

In addition, the fluctuation of devaluation is not uniform across Metro since 1988. Properties in Rosedale have been devalued by up to 70% while comparable properties in other areas have depreciated about 12.5%. It is obvious that unless market re-evaluation is done annually, there will never be fairness in the system, but Metro wishes to have its assessment in for five years, an obvious situation of the conscious introduction of an unfair system. John?


Mr John Lavin: You've heard many before us expound various reasons why market valuation is not a proper basis for realty taxation. While we hope that you have been listening, our fear is that, having regard to the various levels of government, either nobody is listening, nobody wants to make an effort to develop a different basis of taxation or you simply don't care as long as you can shift the political effect of the obvious current anger of all taxpayers. In any event, we would like to remind you that politicians originally put their minds to amendment of realty taxation. As it was obvious to everyone, the then system was patently unfair.

If any of you were watching the meeting, you would have seen the billboard protest of that taxpayer whose one-bedroom condo is assessed to produce the same tax as Metro council Chairman Tonks's single-family house. There was also the ridiculous example of assessment expertise cited by a Scarborough group that pointed out the situation of two Scarborough subdivision houses, one identical to the other except that one had a finished basement and one did not. Wonder of wonders, it is the house with the unfinished basement which will be taxed at the higher rate.

What no politician has yet paid attention to or tried to correct is the fact that market value is not a proper basis for taxation in support of municipal services and education. What was unfair in the past remains as unfair or even more so under the current proposed system. We would like to address a number of points that illustrate our contention of unfairness.

We have included for your perusal a comparison to your market value assessments of actual realty sales by ward in the city of Etobicoke for the year 1988. You will note that the majority of properties show that assessment established for MVA is seriously lower than actual sales in that period, which is going to govern realty taxation for the next five years. Although we don't have comparables available for your review, as many, if not more, examples were presented to Metro management committees of astounding over-evaluations by MVA assessors in comparison to actual sales.

There was also the example of the Scollard area semidetached property, each semi having been purchased and renovated at approximately the same time for the same ground-floor commercial purpose with upper-floor residential. Although the two semis are almost identical, one is to be taxed at $21,000 under MVA and the other at $36,000.

We also understand that students were brought in from Sudbury to establish the assessments on which MVA is to proceed.

Is it any wonder that all Metro taxpayers are angry for one reason or another? It is very clear to us, if it is not to you, that in addition to market value not being a proper basis for realty taxation, the assessments have been done without expertise, without any relation to reality and have produced a result which has no regard for the principles of fairness.

Gentlemen, the system you want to allow Metro council to implement is even worse than what is currently in existence. Politicians are at the bottom of the trust ladder in most polls, and these hearings are a good example of why voters have good reason not to trust their elected representatives. How can you allow all the people who have appeared before you to make the great effort they have obviously made when the NDP House leader, David Cooke, has already publicly indicated that MVA legislation will be passed by December 10, 1992, regardless of presentations, hearings and the warranted exercise of democracy by public participation? We would beg you to listen to the voters who have appeared before you and vote down MVA until a truly fair system can be developed.

The Acting Chair: I have a clarification from the parliamentary assistant, and then we will get into questions.

Mr Mills: I'd just like to say a few words about the right to appeal property assessments. I believe there was some comment made that it wasn't allowed.

I'd just like to read a note I have and it says, "All taxpayers have the right to appeal the calculation of their tax burden under section 241.20 to the council of the municipality."

Under this provision, taxpayers may appeal their 1992 tax base calculation and the application of the capping provisions. In effect, this provision provides taxpayers with an additional right of appeal beyond the provisions of the Assessment Act. I just want to make that point clear.

The Acting Chair: Thank you, Mr Mills. Ms Poole, one question, please.

Ms Poole: Thank you for your presentation tonight. I think many of the things you said are a reflection of the anger that is out there against politicians and against the system. There's a certain merit to your distrust of politicians. I would like to very clearly state one thing for the record: There have been comments made, in particular by the parliamentary assistant, about how the vote went on this. You alluded to the fact that it's a done deal if it's going to be through by December 10. When we had second reading earlier this week, 60 members of the NDP voted in favour of this plan. None voted against, even though they campaigned in previous elections against market value.

Forty-one opposition members, Liberals and Conservatives, voted. Thirty voted against the plan; 11 voted in favour. Of the 11 who voted in favour, there were people who voted their conscience, because both the Liberals and the Conservatives had a free vote. Secondly, there were people who have been, for many years, in favour of market value assessment.

The Acting Chair: Ms Poole, I see we're running out of time for you at this point. If you have a question, I would appreciate your putting it now.

Ms Poole: My question for you is, if this is indeed a done deal and if the government decides to ram it through by December 10, do you think the impact, particularly on the small businesses and on the home owners who go to full market value at point of sale, will be such that the city of Toronto will become unlivable?

Mr Lavin: I think all of Metro will become unlivable. If the city of Toronto goes down, the taxation burden is going to end up back in the suburbs at some point or other. My alluding to its being a done deal -- I am just stating what I've read in the newspaper. The statements have been made. I read it today.

Mr Turnbull: Let me commend you for coming forward. I know the amount of time it takes and there are so many volunteer groups who've come forward to register their protest against this tax. Indeed, I've been fighting market value assessment since long before I was in politics. It's the issue that brought me into politics. Don't get disconcerted by the fact that the government isn't going along with its election promise. Keep on fighting at all cost, because we've got governments in this country which are out of control. They're spending too much money and we have to bring them into control. This is not a good piece of legislation and it's time we go on down to fundamental tax reform.

The Acting Chair: If there's a question there, Mr Turnbull, I wish you would put it now, please.

Mr Turnbull: Given the fact that market value reassessment is so subjective, how could it possibly be an appropriate method of taxation?


Mr Natale: Well, that's the unfair part of market value assessment because, as you know, being in the real estate business, you'll find the market fluctuates from area to area. You could be in Forest Hill appreciating 30%, whatever, within a given time, while in an area in Etobicoke it may only appreciate 15%. So there is a difference there. These taxpayers are both taxed according to MVA based on value, but they're receiving basically the same services. I think that's the unfairness. Again, right now, the market in a certain area may be depreciating by a lot more, like in Forest Hill perhaps up to 70%, and in other areas it may only depreciate about 12%. So who's carrying the load?

I know you're all being kind to listen, but I think what the public is demanding is not to just sit here and listen, hoping that this is going to go away. The same thing is happening as happened when they brought in the GST. The government felt, "Oh, this is going to be fantastic; it's going to do wonders for this country." Look what happened to it. The same thing will happen to MVA.

The Acting Chair: Could I ask you to wrap up?

Mr Natale: If you allow it to go through, two years from now we're going to be scratching our heads and saying: "Oh, gee. My God, we didn't know this was going to happen to Metro." So who's going to be responsible then? Who's going to be carrying the load?

Mr Owens: Just quickly, I'm glad Mr Turnbull put his personal philosophy on the table that spending money on schools and hospitals is irresponsible and that he wants to get it under control.

Mr Turnbull: Excuse me, Mr Chair, on a point of order --

Mr Owens: My question is to the --

Mr Turnbull: Excuse me; a point of privilege.

The Acting Chair: I really think that --

Mr Turnbull: You have no other course of action but to accept a point of privilege.

The Acting Chair: Mr Turnbull, I would ask --

Mr Turnbull: You have no choice but to --

The Acting Chair: I would ask all honourable members to reflect upon where they are and what we are here to do.

Mr Turnbull: Mr Chair, I would ask Mr Owens to retract the suggestion that I said it was inappropriate to spend on hospitals or schools.

Mr Owens: The money that you suggested --

The Acting Chair: I do not feel we should entertain a debate. If that's the course of the direction, I would then ask --

Mr Turnbull: Excuse me. He is attributing something to me which I did not say.

The Acting Chair: I would think that at this late hour of the evening we should reflect on what we're trying to do here and exercise some decorum. If that's the direction we're going, I would like to thank the deputation for their presentation and I would like to call on the next deputation to come forward. Brian McConville, please.

Mr Turnbull: Excuse me. I would like a retraction from Mr Owens of what he said.

The Acting Chair: I do not believe that's a point of order. I think we should move along.

Mr Turnbull: It is a point of privilege. I did not say that, and Hansard will clearly indicate that. Unless you give a ruling to that effect, I will request a ruling from the Speaker. You have no choice but to ask him to withdraw that, because he is attributing something to me which I did not say.

Mr Owens: Excuse me, Mr Chair. In the interests of moving these proceedings along, I will withdraw the remark. However, I will have the remark clarified in Hansard and will bring this back to the committee in the morning.

Mr Turnbull: Good.

The Acting Chair: Thank you for your presentation this evening.


The Acting Chair: We can move along now to Mr McConville, who has 10 minutes. While we're waiting for this presenter to come forward, the clerk is handing out briefs from previous deputations we have heard this evening and the presentation for the current deputation.

Could you read your name into the record and begin your presentation, please.

Mr Brian McConville: Mr Chairman and members of the committee, my name is Brian McConville. I don't represent any group except myself. I'm a taxpayer and that's my reason for being here tonight.

The Acting Chair: You have 10 minutes.

Mr McConville: Thank you. I won't take up 10 minutes.

As part of my submission, I would like to read to you a letter that I have sent recently to Premier Bob Rae. I also sent that letter to Floyd Laughren, Mike Harris, Lyn McLeod, to the chairman of the Fair Tax Commission, and I believe I gave copies of the letter to Mr Arnott. I'll start off by reading my letter, which I think is relevant to the issue at hand. The letter is headed "Market Value Assessment and Tax Reform."

"Dear Mr Rae:

"I am writing to you to give you my views on property taxes in Metropolitan Toronto. I am a single wage earner on a modest income trying to support a wife and three children. My annual property tax bill is $5,000 and will increase by about 2% under market value assessment in addition to probably another hefty" mill rate increase this year. "I am very concerned about these huge taxes and do not think it fair that just because I happen to live in" what people call a wealthy area "my taxes should be up to 100% higher than someone in a similar size house in the suburbs with a similar income and family to support."

I'm not so sure people are listening to what I'm saying.

Mr Rizzo: I'm listening.

Ms Poole: I'm listening.


Mr McConville: I can't do that.


Ms Poole: You can't even talk and think at the same time, let alone listen.

The Acting Chair: Let's not get into that. It's late.

Mr Mills: You speak for yourself, madam.

The Acting Chair: Members, please, let's remember who we are. Please continue.

Mr McConville: "Basically I cannot afford this kind of taxation -- "

Mr Mills: Mr Chair, on a point of personal privilege: The gentleman in question asked, "Are you listening?" In fact, sir, I was discussing a point in your letter with my executive assistant.

Mr McConville: I didn't single you out.

Mr Mills: No, but I just want to make that point clear.

The Acting Chair: Thank you for making that point clear. Please continue.

Mr McConville: "Basically I cannot afford this kind of taxation and feel that I and many others like me are paying more than our fair share. I do not have a problem with my property taxes financing local services such as policing, fire protection, libraries, garbage collection, parks etc. My main concern is with property taxes being used to finance education and welfare." This consumes up to 70% of the annual property taxes that I pay. "These areas are not local," in my opinion, "they are the responsibility of all citizens in the province.

"As such I feel they should be financed out of provincial tax revenues and in this way, if you consider our progressive income and corporate tax system fair, the wealthier citizens would pay a larger proportion of taxes. Only in this way can you be sure the `rich' pay their fair share." Believe me, Mr Chairman, "I am not rich and have wondered many times what relationship the `value' of my house in 1988 has with my ability to pay a disproportionate amount of taxes to finance the education and welfare systems."

The point I'm trying to make here is that over 50% of my taxes go to education and another 20% or so goes to welfare. Those numbers may not be exactly correct, but I think they're in the ballpark. It's my submission that these areas should be areas of provincial financial responsibility and not the responsibility of local government.

As I said, I'm a modest single-income earner, I have a wife and three children and I've spent years saving to buy a house, only to see property taxes take an inordinate amount of my annual after-tax income.

When I complained to North York, my local municipality, about these high taxes, it said it was responsible only for 20%. I accept that, because that's what they're responsible for. The school boards in Metro are responsible for the rest. When I complained to the school board, it said, "Queen's Park has taken all our funding away." When I complain to Metro, it gives me a similar pass-the-buck answer. The buck has to stop somewhere. People just can't keep passing it along.

I feel that if you approve the introduction of market value assessment in Toronto, you're really putting the cart before the horse, because this whole issue is an issue of fairness and it's the responsibility, in my opinion, of the Fair Tax Commission to address inequities like I'm talking about. For instance, I work with people who earn the same as I do, they live in the same size of house, they happen to live 10 miles further west or east and they pay half the taxes I pay. That's not fair. The Fair Tax Commission's report is due shortly, and I would urge you to wait until the Fair Tax Commission presents its report before you make a decision on recommending that market value assessment be approved at this point in time.

In conclusion, I'd just repeat my questions: What relationship does the value of my house have with my ability to finance the education and welfare system? Why do I have to pay a larger portion of taxes to finance these areas of society when someone of similar income in the suburbs pays 50% less? Why are these areas not financed under provincial taxation, which by and large is based on ability to pay?

I'd also say that I would hope you were not swayed by the fact that more voters will get decreases than increases, because this is not a matter of voting; this is a matter of fairness in the tax system.

Mr Chairman and members of the committee, I feel you must take these issues into account when making your recommendation, and I urge you to be fair to all taxpayers. MVA might be fair for local services; I'm not saying it's not. But it's not fair when education and welfare are also part of the tax base.

The Acting Chair: One question, Mr Rizzo. You have about one minute.

Mr Rizzo: Do you believe in democracy, sir?

Mr McConville: Generally, yes.

Mr Rizzo: In a democracy, the majority of people decide how things are going to be done, so the minority has to do it the way the majority wants, yes? I don't think market value assessment is fair. You are right 100%: Welfare shouldn't be absorbed by property taxes, education should not be paid by property taxes. We are the only party that has been fighting for this for as long as it has been in politics. We are going to do that, but we cannot do it overnight. We are working in a system created by other parties.

Mr McConville: So if you recommend MVA, you're perpetuating a system you don't believe in.


The Acting Chair: I would ask the audience to refrain, please.

Mr Rizzo: As a politician, I vote for my people, the people I represent, and in my area the majority of people will pay less with this system. As a democrat, that's the way I'm going now. But I agree with you this is a matter of principle, and the future principle should be established in the direction you are suggesting.

Mr McConville: That's the point I make: Don't be swayed by the fact that the majority will receive decreases. Use the idea of fair taxation. Wait for the Fair Tax Commission to make its recommendations. Why do you want to make a decision before that?

The Acting Chair: Mr Rizzo, I'm afraid the time is past for your questions. I turn to Ms Poole now.

Ms Poole: Thank you very much for your presentation tonight. I think you've made three main points: one, that this legislation should be deferred until after the Fair Tax Commission reports; second, that a house in Toronto or North York that is the same size as one in the suburbs pays proportionately significantly more taxes; and third, the fact that it is not based on an ability to pay.

I thank you for coming tonight, because I think it's important to emphasize time and time again that this market value plan will benefit urban sprawl and penalize areas where the houses are smaller and where the situation is in a much denser area, so I appreciate your coming.

Mr Turnbull: Thank you very much for the good presentation. You're quite right. We must get to a system which recognizes ability to pay and consumption of services. That is what I've always fought for and I'll continue to fight for.

You make so much sense when you say that we should wait until the Fair Tax Commission reports. That report is pending. By the end of next week it might be out, but by that time, we have already been told, this bill will be through the House and it will become law. Absolutely nuts. One of the leading authorities on urban life has commented in the Globe and Mail that it is nuts, yet we have a government that is still determined to put through legislation that will perpetuate these problems for another five years --

The Acting Chair: Thank you, Mr Turnbull. We have run out of time.

I would like to thank you for your presentation tonight.

Before we adjourn, I would like to remind the committee that this committee will meet tomorrow morning at 9:30. This committee now stands adjourned until tomorrow morning at 9:30.

The committee adjourned at 2205.