CONFEDERATION OF RESIDENT AND RATEPAYER ASSOCIATIONS
YONGE RIDGE HOMEOWNERS ASSOCIATION
TENANT/LANDLORD COALITION FOR EQUAL TAXATION
FAIR RENTAL POLICY ORGANIZATION OF ONTARIO
FEDERATION OF ONTARIO COTTAGERS' ASSOCIATIONS
BUSINESS SURVIVORS ASSOCIATION
ONTARIO PROPERTY TAX CONSULTANTS
CONCERNED BUSINESS PEOPLE AND PROPERTY OWNERS, CHINATOWN DIVISION
CONTENTS
Tuesday 1 December 1992
Metro Toronto Reassessment Statute Law Amendment Act, 1992, Bill 94
City of Toronto
June Rowlands, mayor
CP Rail System
Barry Scott, chairman and chief executive officer
Katharin Braid, chief legal officer
Bardo Marcolini, president, United Transportation Union
Ron Mason, senior manager, property tax
Confederation of Resident and Ratepayer Associations
Howard Joy, chair
Linda Lynch, executive director, Environment Watch Inc.
Save Our City Inc.
David Payne, director
Richard Wookey, director
Arthur Eggleton, director
Robert Brown, member
Yonge Ridge Homeowners Association
Jay S. Burford
Tenant/Landlord Coalition for Equal Taxation
Andrew Stewart, representative
Judy Smiley
Ray Merkin
Fair Rental Policy Organization of Ontario
Philip Dewan, president and chief executive officer
Florence Geneen, chair
Federation of Ontario Cottagers' Association
Barry Mitchell, president
Business Survivors Association
Laurence Cazaly, founding member
David Philips, founding member
Ontario Property Tax Consultants
Keith Noble, representative
John Dickinson
Ben Parr
Concerned Business People and Property Owners, Chinatown Division
Tony Yu, director
Rick Welzel
STANDING COMMITTEE ON SOCIAL DEVELOPMENT
*Chair / Président: Beer, Charles (York North/-Nord L)
*Acting Chairs / Présidents suppléants: Grandmaître, Bernard (Ottawa East/-Est L); Brown, Michael A. (Algoma-Manitoulin L)
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:
Brown, Michael A. (Algoma-Manitoulin L) for Mr Beer
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
Mills, Gordon (Durham East/-Est ND) for Mr Martin
Poole, Dianne (Eglinton L) for Mrs O'Neill
Rizzo, Tony (Oakwood ND) for Mrs Mathyssen
Stockwell, Chris (Etobicoke West/-Ouest PC) for Mr Jim Wilson
Swarbrick, Anne (Scarborough West/-Ouest ND) for Mrs Mathyssen
Turnbull, David (York Mills PC) for Mrs Witmer
Wiseman, Jim (Durham West/-Ouest ND) for Mr White
Also taking part / Autres participants et participantes:
Cooke, Hon David S., Minister of Municipal Affairs
Marland, Margaret (Mississauga South/-Sud PC)
Clerk / Greffier: Arnott, Douglas
Staff / Personnel:
Drummond, Alison, research officer, Legislative Research Service
Richmond, Jerry, research officer, Legislative Research Service
The committee met at 1544 in room 151.
METROPOLITAN TORONTO REASSESSMENT STATUTE LAW AMENDMENT ACT, 1992 / LOI DE 1992 MODIFIANT DES LOIS EN CE QUI CONCERNE LES NOUVELLES ÉVALUATIONS DE LA COMMUNAUTÉ URBAINE DE TORONTO
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 afternoon, ladies and gentlemen. We'll begin the second day of hearings before the standing committee on social development looking at the matter of Bill 94, the Metropolitan Toronto Reassessment Statute Law Amendment Act, 1992.
Before getting into the bill, I would like to report to the committee and ask for the committee's approval. The subcommittee looked at three questions regarding our schedule. As you know, the House has just given us permission to sit beyond today at 6 o'clock. There are just several issues that arise.
One is that on Saturday this building is going to be full of 5,000 children and it was thought it might be best if we met elsewhere. We've made arrangements for the meetings on Saturday to be held in the Superior Room of the Macdonald Block, which of course is just adjacent to Queen's Park, so we would like approval on that.
We also need approval to sit Monday morning, Monday afternoon and Monday evening, and approval to meet on Saturday and Sunday at the hours already determined. If I can just find my hours, determined with the assistance of the clerk, I'll read out what those are. Okay, 9:30 to 12 and 1 to 5.
Those were the three issues the subcommittee agreed to and on which I need the committee's approval. Are there any questions on that?
Mr David Turnbull (York Mills): It's my understanding that the two opposition parties did not agree with the Speaker to the idea of having the school children here and their using these premises, and that the Speaker has in fact acted without any authority in this matter. It seems ridiculous that these facilities where we have television cameras and everything will not be available to us when the Speaker has been acting incorrectly. I would ask that we put it to the Speaker that we want to know under what authority he was operating, and that any cost of this should be borne out of his budget directly, not any other budget, with respect to ensuring that there are cameras and translation services.
The Chair: Mr Turnbull, I wasn't aware of that. We can certainly look into it. We were simply informed that the 5,000 would be here, and it was felt our hearings would be saner if we were not in the building. I can ask the clerk to get some answers and we can get back. Could we do this subject to that?
Mr Turnbull: The principle in play here is that the Speaker is spending money the taxpayers can't afford at the moment, and then we'll be incurring other expenses because it is essential that these hearings be televised because there are so many people who are interested in this issue.
The Chair: Would the committee be willing to leave that one with the Chair to explore with the Speaker? I can report back tomorrow. But if we could get approval on items 2 and 3 -- Mr Owens?
Mr Stephen Owens (Scarborough Centre): I thought we were voting. Are we just doing voice assent?
The Chair: Yes, and just to be clear, I'm going to check with the Speaker on number 1 and report back tomorrow.
Mr Owens: That's fine.
The Chair: But, yes, just a voice vote if people agree, then.
Mr Owens: I'm not quite sure why the third party has a problem with a literacy program, but I guess that's for its caucus to decide.
The Chair: I'll check into that and get back. The second and third points, then, for Monday, Saturday and Sunday: Agreed? Agreed.
We can then move on to the main business of the day. I would call Mayor June Rowlands from the city of Toronto.
1550
Ms Dianne Poole (Eglinton): Mr Chair, just prior to going to the presentation by the city of Toronto, I would like to make a motion.
I move that the Minister of Municipal Affairs be requested to appear before the social development committee to answer committee questions on market value assessment.
Furthermore, I move that the committee sit during the dinner hour, 6 o'clock to 7 o'clock, on Tuesday, December 1, 1992, for this purpose.
The Chair: The motion is on the floor. We must deal with it first. Is there any discussion on the motion?
Ms Poole: Yesterday I saw a precedent being set that I have not seen in my years at Queen's Park. We have a very major issue here, a very contentious issue, and the minister chose not to appear with his ministry to answer our questions.
We have a number of questions that we want to ask of Mr Cooke. We want to know why he is not telling people the truth when he says this is not an MVA plan; we want to know why he's allowing the rights of the city of Toronto, a municipality of some 635,000 people, to be trampled upon; and we want to know why this minister has refused to protect the city of Toronto by ensuring that the cap for homes remains on at the point of sale.
These are just a few of the questions we have for the minister. We would like him to clarify confusing and contradictory statements he's made. I would request that if we meet during the dinner hour, 6 o'clock to 7 o'clock, we would have time to address these concerns and ask for answers from the minister.
Mr Owens: In terms of the discussion we had yesterday, it's my recollection -- I did double-check the subcommittee report to refresh my memory -- that while it's certainly a tradition to have ministers here at the opening of hearings, it's also been some level of tradition to have the parliamentary assistant appear on behalf of the minister. Again, it's my recollection of the discussion we held during the subcommittee meeting that it was the view of myself. I certainly don't recall any great umbrage being taken either by your colleague on the subcommittee or the member of the third party at the fact that there was not to be an appearance by the minister. If you looked at the agenda yesterday, there was no place on the agenda even for the parliamentary assistant to make remarks.
It was our view that the people who are important to this process are the people who are sitting in this audience, the people who have requested time to be heard, and that people had heard quite enough from the politicians.
You have an opportunity in question period if you think there is some level of contradictory comment being made in terms of statements coming out of the minister's mouth. In terms of getting on with this process so that people like Her Worship the Mayor of the city of Toronto can present her deputation, as she was expecting to do, we should just move on.
I'm certainly going to vote against this motion.
The Chair: I'll hear from a couple more, because I think the issue is clear and we want to deal with it. Ms Swarbrick, Mr Turnbull, and then we'll end up with Ms Poole.
Ms Anne Swarbrick (Scarborough West): I think Gord Mills is making good money as parliamentary assistant for exactly the purpose that he's here today, to represent Dave Cooke in this committee meeting. I think we should let him earn the money he's being paid as parliamentary assistant by his role here today. Let's get on with business.
Ms Poole: Yesterday he didn't answer our questions.
Mr Turnbull: Quite frankly, yesterday, when asked, he simply said that he couldn't answer and I'd have to wait until the minister was here. So whether he's making good money or not, he's not answering the questions.
Ms Swarbrick: On a point of order, Mr Chairman: I have the floor. Those two people have not been recognized, but since they have taken the liberty, I'd like to indicate, for people who have heard those comments, that Mr Mills answered every appropriate technical question or every question of any type except for answering with regard to very much a political agenda that was being raised in terms of Mr Cooke's words, which should more appropriately be put to Mr Cooke in the House. Let's deal with the business before this committee and get on to hear from the mayor who has taken her good time to come here and depute before us today.
Mr Turnbull: That just simply isn't true. I asked yesterday whether this was MVA. I was told no, this wasn't MVA. Then I asked the parliamentary assistant what it was and he didn't give me an answer. If that is not a technical question -- it may be a very simple technical question -- but it's still a question that isn't a political question; it's a matter of fact.
Quite frankly, we have a right to have answers from the minister, since he has made completely contradictory statements at various times and has erroneously suggested that he's giving protection to the people of Metropolitan Toronto. There has to be some ministerial accountability in this government, although we're hard pressed ever to see any.
The Chair: Final comment, Ms Poole, and then we'll put the question.
Ms Poole: I find it totally outrageous that members of the government suggest, first of all, that the minister doesn't need to be here, and that if we have any questions, we can ask him in the House.
The purpose of the committee is to have public hearings. It is also to make a decision on a very contentious issue. Every instance you look at when there's been a contentious issue of this nature, the minister has appeared to answer questions. To say, "Well, he didn't need to be here because these questions were technical," is missing the entire point. People are confused about where this government is.
They have abdicated their responsibility, they have shown no leadership and they now have to put their money where their mouths are and tell us how they stand on this issue. The minister should be here.
The Chair: I will put the question.
All those in favour of the motion by Ms Poole, please raise your hands.
All those opposed?
The motion is defeated.
CITY OF TORONTO
The Chair: We'll now turn to the agenda. I'd like to welcome Mayor June Rowlands from the city of Toronto to the committee. Again, you're no stranger to these environs. You have half an hour. Please go ahead.
Ms June Rowlands: Thank you very much and good afternoon, Mr Chairman, members of the committee and ladies and gentlemen.
You'll not be surprised, I am sure, if I tell you that my position and city council's does not coincide with that taken by the Metropolitan chairman in his statement to you last night. All city and Metro Toronto councillors are unanimous in their opposition to MVA.
May I point out that the city of Toronto takes just over 19% in taxes from its own assessment base, Metro takes over 26%, and the city of Toronto now pays 42% -- a little more than that -- of the cost of Metro government.
I know the Minister of Municipal Affairs says that Bill 94 is not full market value assessment, but the fact is that this scheme puts full market value assessment on selected sectors of our economy: vacant land, railway rights of way, hydro corridors, properties paying grants in lieu of taxes and residential properties when they are sold.
In his presentation last night the Metro chairman stated that protection measures available to homes and businesses are not subsidized by these properties. Nothing could be more inaccurately stated. Using the table found on page 12 -- it's right at the very back of the text, if you care to turn to it -- a table that was produced by Metropolitan Toronto but accorded very limited circulation, you'll note that there is a $57-million reduction in residential taxes. How does Metro explain where this huge reduction comes from, and who will pay for it? Similarly, industrial taxes are reduced $20 million. Where does this come from?
It is very clear to me that certain classes of property have been assessed at full market value and that the taxes raised have been used along with the clawback of tax decreases to finance protection accorded to commercial and residential properties. Please note the increase of $48 million for the category headed "Other" -- that's vacant lands and all sorts of other things -- and $26 million for the pipelines and railway rights of way.
The following are some of the more serious impacts of the proposed MVA scheme and certainly not anticipated or addressed by Metro because of Metro's refusal to do a comprehensive economic impact study. They told us there were too many variables and they couldn't do it.
For the past six months city council has worked intensively with the rail companies to zone the 90 acres of rail lands and begin the process of building infrastructure: roads, bridges, parks, schools and eventually housing. The added tax burden of $40 million on the rail companies puts this plan in serious jeopardy. Hundreds of jobs that could have started as early as next summer will now not be available.
The Toronto Transit Commission's taxes rise by $2.25 million. GO Transit riders will pay 45 cents per fare more, $240 per rider per year, if the extra tax burden of $13 million is passed through to commuters. Ontario Hydro, already reeling under tremendous debt, will pay between $30 million and $40 million a year extra. The Toronto Parking Authority will pay an extra $13 million on revenue of $30 million, in effect putting 85 to 90 parking lots in the city of Toronto out of business.
These are some of the impacts that Metro failed to foresee as a result of its refusal to carry out the needed study.
Yesterday, at the city's executive committee -- you'll find it here on 3A; it's the next page -- there was a report before us that illustrated in a very small way what's going to be repeated many times. This is 2185 St Clair Avenue West, the stockyards, the only little green patch in the stockyards.
1600
The writer, the vice-president, Mr Goddard, writes:
"The above property is the `park' to the east of our research building. It is the only green area on that stretch of St Clair.
"1992 realty taxes were $4,870. Under MVA, because it is classified as vacant land, it looks as if our taxes will be around $20,000. We've had our doubts for some time about the cost of maintaining this land, which is used mainly by our employees at lunch time during the summer. The new tax level will be the final straw. Before I start tearing down the trees and ripping up lawns to turn it into a car park I wondered if you had any other solution."
It's been suggested that perhaps the railway lands should pave themselves over and turn themselves into a car park, and then the other suggestion was made that perhaps they could grow wheat there and become some kind of a farm.
Joni Mitchell wrote a song about just such an event, you know, and we thought it was funny because that of course applied to Los Angeles.
I am calling upon this committee to recognize the very real economic impact of moving to full market value assessment on vacant lands and rail rights of way and other properties, and I'm asking that you amend the legislation to ensure that these properties benefit from the same protective caps other property classes in Metro have been accorded. The minister has recognized that full MVA imposed on homes when sold is inappropriate, given his position that this plan is not full MVA, yet in terms of fiscal and economic impact, the vacant land, railway and utility issue is many times more significant and will hit with immediate force just one month from today.
In North America today we see once-proud cities in decline while their suburbs prosper. Compare what is happening today in New York, Detroit and many other American cities with the revitalized and prosperous inner cities of Paris, Lyons, Amsterdam and Frankfurt. MVA is the foundation of the property tax system in the United States, a country not noted for the vitality of its city centres.
We now have had three impact studies on the Metro-wide MVA, and each time the tax bite on the city of Toronto gets deeper: $24 million a year in 1980; $100 million a year with 1984 values. This year reassessment would have cost us $180 million per year were it not for the temporary caps that bring it down to $46 million for now. That figure was kept under wraps by Metro until the last minute.
Last night the Metro chairman's submission indicated that based on 1984 assessments, 63% of residential properties would get tax decreases and 37% increases, compared with 56% receiving decreases and 44% increases based on the 1988 assessment. What this indicates is the volatility of the assessment base in Toronto and, more importantly, the distortions that occur with each rise and fall of the real estate market. MVA does not and cannot be made to work in a highly volatile real estate market that rises and falls abruptly, exerting uneven pressures on the real estate and land markets.
When a city works well, property values go up. Since we beat back the Spadina Expressway, Toronto has prided itself on building the kind of city that works and residential neighbourhoods and retail strips that were the envy of city dwellers throughout North America. Although these neighbourhoods are densely packed together, many 80 to more than 100 years old and more often than not without parking or backyards, houses in Toronto have appreciated in value. That increase in value does not necessarily bring with it the ability to pay higher taxes. The value results from increased demand for space and higher densities. Long-time residents and businesses may actually have less ability to pay as rents and values go up.
The millions in added taxes coming from the city of Toronto are not coming from the banks and the large corporations -- not this time around anyway. By whatever magic the assessors have managed to make small business the prime 1988 victim -- small businesses run by ordinary people -- the large corporations, banks and department stores are mostly getting tax reductions.
Increases for small businesses are capped at 25% -- it sounds sort of gentle -- that is, 10%, 10% and 5% phased in over three years, but what it really means is a tax hit of approximately 30% in just over one year: 10% plus the usual 5% increase on January 1, 1993, and 10% plus the usual 5% increase on January 1, 1994. How many businesses in today's environment can absorb that level of increase, at least 30% within a year?
How much investment will take place in any business with a 30% tax increase hanging over its head? And there are hundreds of them. Remember that the full MVA tax will appear on every tax bill. The downside of the caps is that they create unprecedented uncertainty, and uncertainty is the enemy of investment.
It is cynical in the extreme for Metro to bemoan that senior levels of government have failed to approve large capital works projects funded through the public purse while at the same time promoting a tax scheme that will wipe out hundreds of jobs in small businesses and downtown development projects like the railway lands.
On the residential side, you may have been led to believe that only high-income areas will face tax increases, but that's simply not true. Councillor Pantalone's ward in Toronto's west end, north of the CNE, very much a mixed-income area, is the hardest-hit area in Toronto in terms of assessment increases.
There was a great deal of righteous fury at Metro council over how much the city is subsidized and how regrettable it is that the city's getting off so lightly. However, Metro council has refused debate about public school funding, a locally delivered but regionally financed system. Metro Toronto schools are financed by an assessment pooling arrangement not used elsewhere in Ontario, let alone in North America. It's totally unique to Metro Toronto. This completely ad hoc arrangement will cost the city of Toronto taxpayers $316 million more than the city of Toronto needs for its own school system: a direct subsidy to three cities in Metro. The 1977 Robarts report recommends that area municipalities should be responsible for their own public school costs once their systems are mature, a condition which is long past in Metro Toronto. That's the Robarts report recommendations 17.4 and 17.5.
If any Ontario government has the mandate to question MVA, it is the present one. Since 1984 the NDP platform has opposed further introduction of market value assessment in the province. To give this government credit, it does seem to understand how disastrous MVA would be in Metro at this time. The government's fault is in its naïveté, believing that it is dealing with a compromise that will not lead to full MVA. This MVA scheme is an abuse of accepted public policy, an irrational hybrid with no equity justification at all. It encourages urban sprawl, it taxes intensification, taxes public transportation and hastens the shift from environmentally friendly rail freight to truck traffic on already crowded highways in southern Ontario.
Bill 94 sets us on a course diametrically opposed to everything the Ontario government says it wants for the GTA. The government recently released a document entitled Shaping Growth in the GTA. The report notes, on page 55:
"At the very least municipal taxation must be made consistent with compact urban form, if not proactively supportive of it. At present, industrial and commercial property taxes in the inner area are high compared to peripheral areas. This has been an important force in the peripheralization and the growth of low-density, land-consumptive development. Taxation policy must be supportive of the urban form."
The government has announced plans to begin a study of a new property tax system for the post-1988 era, which is good. However, there is a danger that the negative impacts over the next five years will bring about a downward spiral, causing irreparable damage. The status quo, as inequitable as it is, is the system we should maintain while studying alternatives, because we at least know how it works. We shouldn't take the risks involved in this interim reassessment plan. The government seems to believe there are non-toxic dosages of MVA. The city of Toronto does not want to participate in a scheme that makes a gamble of our future.
The assessment base of Toronto pays 42% of Metro's and 15% to 18% of the province's revenues and has more impact on the national economy than New York and Chicago combined have on the national economy of the US.
1610
As Jane Jacobs said, cities are organisms. They can be damaged irreparably by ill-conceived actions. This is why she has spoken out so strongly against MVA. We must all be aware that Bill 94 will allow the postponement of the next round of reassessment indefinitely. At the very least, the government should ensure that a reassessment is required within a clearly indicated time frame.
If accepted public policy is to promote intensification and discourage sprawl, we should be looking at alternatives that better reflect the cost of providing services to property. As a very perceptive brief from Mr John Newhouse of Tavistock, Ontario, noted: "The longer the distances that infra- and superstructural municipal services must traverse -- sewer and water lines, pumping stations, road upkeep, sidewalk repair, garbage collection, policing trips and police substations, fire truck trips, firefighting substations, mail delivery, school busing, snow removal, hydro lines, upkeep etc etc -- the higher the cost per property to service."
The present situation demands not only the cost of servicing to be reflected in assessment, but also that an element of stability be introduced. The property tax working group of the Fair Tax Commission will be recommending study along these lines. That's where we should be heading. Bill 94 should be voted down now or, at the very least, deferred until the Fair Tax Commission has reported.
We should begin to examine cities that are successful and not cities headed for failure. Assessment systems are the basis of that success or failure. We should begin to examine cities that are successful, cities that have maintained vital downtown cores over decades of time, cities that renew infrastructures, maintain a stable and positive business environment, encourage the arts and sciences to flourish.
The Chair: Thank you very much, Mayor Rowlands. We'll move right into questions. Mr Stockwell.
Ms Rowlands: I thought you would enjoy that brief, Mr Stockwell.
Mr Chris Stockwell (Etobicoke West): I will say about the city of Toronto and its mayors -- and I welcome you -- that they are consistent in their position on market value assessment.
Ms Rowlands: Absolutely.
Mr Stockwell: That troubles me, though, the consistency of the argument, and I would like to ask a couple of questions of you. I can't remember ever hearing anything different from the city of Toronto over the last --
Ms Rowlands: Oh, this is a little different.
Mr Stockwell: Well, marginally different. The mayors change sometimes, but the message seems to be the same, that it's not the right time for market value assessment, it's not a fair system, it's fundamentally flawed and the city of Toronto will be hammered in the most unreasonable and unfair way.
You mentioned that the status quo is the best route to go right now. That doesn't shock me, considering the fact that the status quo is the best from a money point of view for the city of Toronto. But I was on a committee at one time at council which in 1989 asked the city of Toronto and the city of North York to come back with an alternative plan; they were given a couple of years to come up with a plan that would do away with market value assessment and implement this plan that is sort of an esoteric, cosmic discussion that takes place between the city of Toronto members that never seems to materialize. What happened? Why don't we have that plan?
Ms Rowlands: We do. The plan took two years to put together. It was a cooperative plan between North York and ourselves. A committee worked on it for a long time. It was taken to Metro council. Metro council sent it, I believe, to the province for comment and it hasn't been seen since. It was a plan based to some extent on unit assessment, and it is certainly here. I'm sorry, Mr Stockwell, that you're not aware of it.
Mr Stockwell: I was aware of that. I just was aware of the fact that it wasn't adopted by Metro council, and the city of North York mayor, who was part of the process to put the plan together, doesn't support the plan.
Ms Rowlands: I don't know whether he supports it or not. I think he'd forgotten that it existed.
Mr Stockwell: Oh no, he was very public about that: "No, the plan stinks. It's not a good plan," I think was the way he put it.
Ms Rowlands: His council supported it and the city of Toronto council supported it, so I'm surprised he said it stinks, but occasionally I guess he does disagree with his council, as we all do occasionally.
Mr Stockwell: So your idea of a fair market system for raising taxes is some hybrid of MVA and unit assessment?
Ms Rowlands: There are a number of ways it can be done, and I have suggested one way that it should not be done: We should not pattern ourselves after the system that is used in most American cities that is resulting in real problems now.
Mr Stockwell: You're really clear on that.
Ms Rowlands: Yes, I am. I'm suggesting that we should take a look at those cities that have remained successful over decades, and I've named two or three of them. But what we must have because of the volatile nature of the city of Toronto market -- it may be that MVA works very well in smaller places where you don't have this up and down, the theory being that if everything rises equally and falls equally, it's the relative value between properties that counts and that doesn't really change; everybody goes up or everybody comes down. But that's not the city of Toronto. It rises in peaks, it falls in peaks, and of course it's distorted. We're dealing with a distorted 1988 and applying it to a distorted 1992.
But you're asking me what we must do. In my view -- and I'm not an expert on this -- we have to put in a base that is stable, some base, and that perhaps simply has to be property dimension, size of house and cost of servicing. The large lots in the municipality that you occupy would cost far, far more than thousands of little houses in the city of Toronto sitting on 20-foot lots.
Mr Stockwell: But I've heard this before. For 40 years I've heard this, and I'm waiting for the study to come through.
Ms Rowlands: Of course you've heard it before. Do you think the situation has changed? Do you think suddenly the lots have all gotten big in the city of Toronto and you've shrunk? Of course you haven't; the situation's the same.
Mr Stockwell: I'm just waiting for the system. Where's the system? For 40 years we've been waiting for this system. Every time we debate this -- 1984, 1988, 1992 -- I have a mayor from the city of Toronto saying, "What we need is a different system," but no one seems to want to give me the system.
Ms Rowlands: As I said, the city of Toronto did bring forward a system with North York. It has disappeared, but it was a system where we felt --
Mr Stockwell: So the only really good system's disappeared?
Ms Rowlands: No, I haven't said it's the only really good system. There are a number of ways to do it, but I would suggest that this is the worst possible way. When one comes to think of it, what does this do? The city of Toronto takes a little over 19% out of its base. Metro takes 26%. This province relies on it. It isn't the city of Toronto wanting more money out of its own base. It affects Metro, it affects --
Mr Stockwell: You're arguing again. I'm not asking you that question. You were very clear in your statement about why this is a terrible system; I'm buying the fact that you think it's terrible. My question, though, is still on the table from 1982.
Ms Rowlands: I answered it.
Mr Stockwell: What is your alternative --
Ms Rowlands: I answered it. Mr Chairman, I answered it.
Mr Stockwell: -- and all I see is a system that apparently has been lost.
Ms Rowlands: No, I have suggested that a base has to be added in. You haven't made your point. A base must be there which gives some stability to the kinds of fluctuations that occur, based on, I think, the cost of services to that particular municipality if the services are particularly expensive, and they are. We are now undertaking a study to compare the cost of servicing a residential property in the city of Toronto as opposed -- perhaps we'll choose Etobicoke; we were thinking of Scarborough. Who knows? There has to be something there. There also has to be something to recognize the size and the dimensions of properties, then some proportion, perhaps market value, I don't know. Perhaps it shouldn't be market value at all.
Ms Poole: Thank you very much, Mayor Rowlands, for your presentation today. You asked in your summary for the government to reconsider this, to defeat it or at the very least to defer it. Unfortunately, the vote today showed that every government member voted in favour of this particular proposal, including four city of Toronto cabinet ministers. Three NDP members who in the Legislature have said they are opposed to market value assessment did not vote at all; they did not show up for the vote. So I'm not sure I'm overwhelmingly confident that the government will reconsider. The best we may be able to do is to get some amendments to at least try to salvage the city of Toronto in the meantime.
1620
There are a lot of questions I could ask you about impact studies and the decline of our city, which you articulated so well, the volatility, but I'd like to start with one on the government's position on market value assessment.
They have said repeatedly that this is not market value assessment, they have said it is not full market value assessment, but it is my submission that it assesses all houses on the point of sale at full market value assessment, that all new construction will be full market value assessment, that all vacant lands will be full market value assessment, that railway rights of way, GO Transit, municipal parking, hydro are all on full market value assessment, that all expansions and additions to businesses would be on full market value assessment, and new businesses -- not where one business has been sold to another but a newly created business going into a vacant space -- would be subject to full market value assessment. Is it your prognosis that over the next five years a significant portion of the city of Toronto will be forced under full market value?
Ms Rowlands: Of course it will, there's no question about that, but before that really happens we're going to see decline in the city of Toronto, because people will simply move out. That's the history when this sort of thing occurs. There's no question about it. You see, to pay for it, to pay for the caps, that $57 million which is the decrease in the tax for the residential area, that has to be paid for somewhere. So it's being taken right out of the pipelines and hydro and GO and the TTC and all the public transportation. It's being taken out of vacant land.
Then gradually they're hoping, as of course the income begins to come in from the imposition of full market value in the situations you're talking about, that some of the decreases people haven't been able to get will slowly factor in. So you're absolutely right; the further we go on in this five years, the closer we come to a full market value, and it's going to be extremely difficult to roll that back. It's extremely risky. We're risking the core of this metropolitan area. We're risking it, and it is the engine, and it does pay for a lot of government in this part of the world.
Ms Poole: The second question I'd like to ask you relates to the volatility. We have had members on Metro council changing their vote like ping-pong balls.
Ms Rowlands: They're expressing volatility.
Ms Poole: Exactly. Mike Colle, using 1984 values, voted in favour; using 1988 values, he voted against. Mel Lastman voted against it. Now he's in favour because all his beautiful big office towers in North York City Centre, by some miracle, have been protected and they all get decreases. Talk about a fix.
Maria Augimeri has changed her vote three times. Joe Pantalone, the author of this compromise plan, voted against his own plan. I think you're absolutely right, what you've expressed in here. This in itself shows the volatility.
Ms Rowlands: Yes. Political representatives, of course, are voting on how it affects their particular constituents, and one can expect this. Joe Pantalone's ward has been very heavily hit -- unexpectedly, because it's full of small houses, and it was not expected that this would occur in the lower-priced housing areas of the city of Toronto, and that's precisely where this has come in; it's most unfortunate.
But the small strip commercials really appear to have been reassessed on the highest and best use based on those speculative land values of 1988, and to suggest that those businesses, if they try to sell, won't be seriously appreciated by that overhang of that huge reassessment is just nonsense. It's going to sterilize those buildings and those businesses for years. It has a very serious impact.
The Chair: I have three questioners left, and I know we're getting a little tight: The parliamentary assistant, Ms Swarbrick and Mrs Marland.
Mr Gordon Mills (Durham East): Your worship, good afternoon. At the top of page 12 of your submission -- I'm just going to ask you your comments -- it's dated October 21, 1992. We had Mr Tonks in here yesterday, who said those figures were not the final ones that were arrived at; the final ones were composed on October 29. Also, at the committee yesterday, he indicated in response to a question from Ms Poole about subsidization that he felt the figures on October 29 would indicate a subsidization net transfer of $15 million. I just wonder how you would like to comment on that.
Ms Rowlands: The numbers that I have are these numbers. I don't know what ones you're referring to on October 29. Oh, you mean in his brief?
Mr Mills: Yes, yesterday.
Ms Rowlands: I think these are extremely accurate. If you look at just the first group of numbers, under the heading "Group" you have residential, commercial, industrial, other and then the pipelines and what not. If you go along two columns, you'll see a decrease of $3 million under "other."
You all know the story of the city of Toronto not being able to get hold of the tapes. Finally we got them, a number of weeks afterwards. I don't know whether you've heard the story. It's kind of interesting. We had to go to freedom of information to get them. Then when we began to run them, that $3 million showed up, and that represents the small agencies under the United Appeal, all the little small arts groups, all the little theatres. They were all in under "other" and they would have all gotten that 100% increase at the beginning of January, so they were pulled out and capped, and that's really what that $3 million there is.
These figures obviously were compiled after that occurred. My feeling is that they're fairly up to date, but if there is some variation, it's going to be very slight, because this doesn't reflect the 10%, 10% and 5%, which was the latest wrinkle. This is the effect three years later when in fact the full 25% cap is there, when the full 10% is there on residential. That's what these figures represent. I'm not sure what he was talking about, but you can see quite clearly that there are $57 million fewer coming out of residential, $20 million fewer coming out of industrial. Then if you take a look at "other," there are $48 million extra coming out of there and out of the pipelines, $26 million.
Mr Mills: Your worship, thank you very much. I'd just like to briefly turn to page 4 of your submission, paragraph 2, where you're asking that the legislation be amended to benefit from the same protective caps. My comment is that Metro can provide those protective caps through our plan if it so desires.
Ms Rowlands: We're simply saying, because of the tremendous impact it will have on all those jobs in the railway lands and the tremendous impact it has on GO and the impact it's going to have on the railways, and they won't be as competitive with the trucking industry, so all that traffic, the extra tax on Hydro, for heaven's sakes, $30 million to $40 million -- we weren't able to establish that exactly. These are huge impacts. That's going to be right across the grid. The whole Ontario Hydro grid is going to have to pick that up. I don't know how.
When one looks at these impacts that are so severe, we're simply saying, "Cap these," because the chairman in his submission to you said that in fact those properties are not subsidizing. The statement is right there. I think he's wrong. But he is saying those properties don't subsidize anything, and if they don't, then Metro should be perfectly happy to cap them.
Mr Mills: Okay. Thank you very much.
Ms Swarbrick: Hello, Mayor Rowlands. Good to see you. The member for Eglinton took great pains to refer to the vote in the House today, and of course didn't refer to the Liberal members who were absent today, nor to the fact of Mr Mancini standing up to vote against this. We learned yesterday that in fact when he was Minister of Revenue he wrote to the Metro government encouraging it to go ahead and get things under way to move towards market value assessment as well.
Ms Poole: Mr Chair, on a point of order: Just to make the record perfectly clear for Ms Swarbrick, I made the reference that all of the government city of Toronto backbenchers were absent. You will note that all city of Toronto members for the Liberal caucus were present and voted against this infamous plan.
Ms Swarbrick: And I would note that when they were the government, they wrote to Metro encouraging Metro to go ahead with exactly the same thing that Metro's now --
Interjections.
Ms Rowlands: I'm sorry, I must correct that, Mr Chairman. At the time the Liberals were in power I had an absolute commitment from Bob Nixon at that time that they would not go ahead if the local municipalities resisted -- any of them did -- because at the present time the assessment authority rests with the local municipality. What this does, as you move into this system, is you are depriving the local municipalities of that authority, because this isn't just what it seems to do.
1630
Ms Swarbrick: That does fly in the face of the letter we learned about yesterday that was written by Mr Mancini to Mr Tonks in January 1990.
But in any event, I want to get to your statement that you would like us to maintain the status quo, because at least we know how it works. I would imagine that sparks must fly between you and Mayor Trimmer, whom we heard from last night.
Ms Rowlands: Yes, we occasionally cross swords.
Ms Swarbrick: Mayor Trimmer last night told us about inequities that sound just as unequal as the kind of inequities you've been describing to us today, which I certainly don't deny. She talked about houses in the city of Scarborough worth $300,000, where people pay $3,000 more in taxes than equivalent-valued houses in the city of Toronto. She talked to us last night about comparing many small Scarborough lots where people are paying more than $5,000 with some lots in the city of Toronto where people might be paying in the neighbourhood of $1,000. I'm wondering what you say to her when she throws back at you the inequities, such as the examples she gave us last night.
Ms Rowlands: There are those kinds of inequities that exist in the city of Toronto. Most of the city of Toronto isn't paying low taxes. Most of the city of Toronto houses, because they're 80 years old, have been fixed up, and they're reassessed when they're all fixed up. And there are houses that are monster houses. You hear the whole monster-house discussion in the city of Toronto, houses that have high taxes, so there are inequities within the city of Toronto.
But when one looks at the situation as a whole, when one looks over the whole metropolitan area, when one looks at the core of the city that drives this Metropolitan area in terms of tax revenue, then the question becomes much wider and broader. The lots in Scarborough are large. I am sitting on a 50- or 60-foot lot. It's 100 feet or 110 feet deep. I'm paying an extra $2,000 over a house which is valued at the same price in the city of Toronto that's paying less taxes, which is sitting on a 20-foot or a 25-foot lot. It's very difficult, I think, to draw these kinds of comparisons. One has to look at the impact on Metro Toronto and the tax base, and the tax base of this government.
Ms Swarbrick: I think the point being made is that right now under the present system, and even under what we're looking at moving to, there are clearly inequities on both sides. You've made the statement also --
Ms Rowlands: Yes, but one has to look at what is more destructive.
Ms Swarbrick: You've made the statement also that you believe this government is naïve if we don't think that this system would move us towards MVA.
Given that what we are doing is to point out that we'll very clearly be sitting down with Metro, and with the other communities such as yours, between now and 1997 to do a full study of the social and economic impact of future changes, given that we're going to be examining the soon-to-be-expected report from the property tax working group of the Fair Tax Commission, given that we're going to be dealing early in 1993 with a report from the Ministry of Education looking at other ways to possibly finance education, given that we're engaged currently with the various municipalities in disentanglement discussions to look at whether there are other ways to finance things like welfare and to shift the load in a fairer way, given the GTA report that was referred to last night, and given the Sewell report we've got now, would you not say that someone would be naïve if he was sitting back with that kind of hope that it wouldn't move towards MVA and be doing nothing, but that in fact those are the very kinds of things that need to be done to look at how one can move to a truly proper system?
What I'd like to ask you is, do you have any concrete suggestions as to anything else in addition to the things I've listed that you'd like to see our government do in the deliberations over this next assessment period to better make sure that really all of the information needed will be available to bring down a fair property tax system in 1998?
Ms Rowlands: What you've said is all very admirable. It will take a long time to do those things, and in the meantime it's inexorable. We just move step by step towards full market value. What we continue to experience, while that is going on, is the loss of our strip commercials, the increase in housing prices, the increase in taxes on houses, the decrease in people's equity, because there's a clear relationship between taxes and the selling price of houses.
What you are suggesting to me is that there's a heck of a lot wrong. There's something wrong with the way we fund welfare. There's something wrong with the way we fund education. We've got to look at all of these very factors. We want to see what the Fair Tax Commission is going to say. If there's all that to be done, for heaven's sake, why move in this direction when I think, by what you're saying, you're saying this is deeply flawed.
The Chair: Excuse me. I'm afraid I'm just going to have to interrupt, because we're a bit over time and Ms Marland has the last question. I regret, but if we don't try to stick to our timetable we're going to be in big trouble at the end of the day.
Ms Rowlands: You'll miss dinner.
Mrs Margaret Marland (Mississauga South): Mayor Rowlands, speaking as the member for Mississauga South -- and of course Mississauga is the largest municipality with market value assessment -- and also as a former seven-year councillor in that city before I came here seven years ago, I'm very well aware of the issue and how it becomes even more convoluted with regional government. I am, personally, totally opposed to market value assessment, based on our experience in Mississauga.
Ms Rowlands: Or anywhere when it's been tried. It's really interesting; it's consistent wherever it's been tried.
Mrs Marland: Yes. So I'm just wondering whether after one year in your mayoralty role in the city of Toronto, and based on your current experience, this is now the time where you might agree with some of us that perhaps regional government has had its day.
Ms Rowlands: I'll answer extremely briefly, Mr Chairman.
The Chair: Thank you.
Ms Rowlands: I was very surprised when I was talking with a business group at a breakfast meeting that it came up; the business community brought it up. You can go into any crowd today, anywhere, and say, "We're overgoverned," and everybody cheers. There is a really strong feeling out there that we've got too much government.
Compare our population to California. California's got a state government. Think of the number of governments we have across this country, if you really want to think in terms of overgovernment. But as far as this area is concerned, we have to get into some kind of restructuring. There's no question about it.
It isn't that the city of Toronto wants to get out and keep its big assessment base all for itself. That's not what we're talking about. But what this argument at Metro council convinced me of is that the outer municipalities, the municipalities of Etobicoke, Scarborough and North York, have no real understanding of the problems of the inner cities, which are the city of Toronto and the two little cities beside us. Somehow or other those inner cities have to come together and be recognized and, obviously, the GTA and the tremendous developments going on there in the GTA and the regional government of Metropolitan Toronto -- somehow there has to be a structure to recognize that and a structure to recognize those inner cities.
You know, it's a lot of nonsense. Metro does some roads; the city of Toronto does other roads. Metro does some parks; the city of Toronto does some parks. We've suddenly decided who it is that operates the sidewalks. I've forgotten who it is; I think it's us. But who does the little brick strip between the sidewalk and the road? Which sewers -- I mean, it's nonsense, and the amount of time.
We're told we can't have trolley buses because it's going to cost too much money. Nonsense. We're paying $316 million more than we should be for education and we can't put $50,000 a year into some trolley buses when they're pollution-free and they're right under people's bedroom windows as they go up streets with very small little lawns.
In the city of Toronto and those other two municipalities we must have far more jurisdiction to look after ourselves so that we can save this great city, because we have something tremendously unique in the city of Toronto.
I said I'd be short. We need restructuring. The municipal setup in this area needs restructuring. Given the pressure of population growth, the pressures now of what is happening downtown, the exodus of people now, we've got to somehow restructure so that we can begin to tackle those problems. It isn't keeping it all for us. It's nothing like that.
The Chair: Thank you very much, Mayor Rowlands, for your presentation and answering all of the questions.
1640
CP RAIL SYSTEM
The Chair: I would now ask the representatives from CP Rail System if they would come forward.
While they are coming forward, I'd just indicate to committee members that in the interests of ensuring that we stick to our time, I'll recognize one person from each caucus, and as time is available, others, but we're going to be in some difficulty if we don't follow that pattern.
Welcome to the committee, and perhaps one of you might introduce the members of your delegation and begin your presentation. We have half an hour.
Mr Barry Scott: My name is Barry Scott. I'm the chairman and chief executive officer of Canadian Pacific Railway. With me are Mrs Katharin Braid, who is our chief legal officer, and Bardo Marcolini, who is the president of the United Transportation Union, a union that represents the majority of our train service employees.
We would like to speak to you today. I wish to make --
The Chair: Excuse me, if I might, just for the purposes of Hansard: and the gentleman at the right end is?
Mrs Katharin Braid: Ron Mason of CP Rail.
The Chair: Thank you. Please go ahead.
Mr Scott: I'd just like to make brief opening remarks and then I will ask Mrs Braid if she would also briefly review the material that we have brought to the committee to submit to the committee, and then Mr Marcolini might like to make some observations too before we hold ourselves available for questioning.
We're here today because we want members of the committee to appreciate the deep concerns that we have about this taxation measure. I'm told that Metro Toronto chairman Alan Tonks has called this a return to fairness. If Chairman Tonks's idea of fairness is what he proposes for the railway rights of way in Toronto, namely a 220% increase in taxes beginning next year, then I never want to learn what he considers unfair.
As applied to the railway rights of way, this reform is bizarre. It will be destructive not only for the railway industry in Toronto but also for area manufacturers and shippers served by the railways.
Paul Tellier, the president and chief executive officer of Canadian National Railway, and I have written jointly to the Premier of the province and to Chairman Tonks and said that we cannot help but look upon this approach to taxing railway rights of way as a huge disincentive to future rail investment leading inevitably to reduced railway facilities, reduced services and reduced choices for shippers.
This tax approach will be such a gross burden upon the railways that if it were applied in the same manner across Canada, the industry would be forced to shut down. If Ontario and Toronto want a viable, effective railway system to serve industry in this province and help that industry be competitive in reaching North American and offshore markets, this is a very strange way to make the point. As it stands, this piece of legislation is a major signal to the railways that you, who are the members of the government, either don't understand the positive role the railways can play in the economy or, worse still, you don't care. It is the only way we in the railway industry can read this move.
Our brief that Mrs Braid will comment upon is not about the so-called railway development lands. What we are talking about is the property used fully for railway purposes -- in effect, to move traffic to market. That's what this brief is about. Mrs Braid, you might like to review it.
Mrs Braid: CP Rail System appreciates the opportunity to present its views regarding the proposed implementation of market value assessment on railway rights of way in Metropolitan Toronto. I will be brief. I will not be reading the large brief that you have a copy of. I will make three very simple points.
This tax will have a serious negative effect on the railway industry and its users in Ontario. The process by which Metro's assessment plan and this amendment have been open for public debate has been inadequate. The tax on railway rights of way is grossly inequitable.
On the first point, this tax will be a crippling disincentive to future investment by railways in rail infrastructure in Ontario. This will affect not only CP Rail System and its employees but all those businesses which depend on the railways and their employees, and potentially will affect GO train passengers. It will jeopardize thousands of railway jobs in Ontario. It will jeopardize $1.3 billion spent by the railways annually on purchases and payroll in Ontario. It will significantly reduce railway services available to businesses in Toronto. It will force business across the border into the United States, which, by law, cannot tax railway right of way in this manner. It will force GO Transit to either raise fares, seek subsidies or cut back services. Two of these three possibilities will increase automobile traffic into this city.
The process by which Metro's assessment plan has been considered has not allowed those affected by the plan any effective opportunity to make submissions. Metro did not conduct an economic impact study that included railway properties. CP Rail System was not provided any market value data upon which to conduct its own impact analysis until one working day before the beginning of a public hearing. The one-day hearing was unfocused and dominated by individual ratepayers who could only argue against market value assessment in concept rather than discuss the particular formula planned by Metro, because in fact no formula had been made public until after the hearing. The formula adopted at the 11th hour has been moved on to the provincial government for approval with no real opportunity for analysis or discussion by those most seriously affected by it.
CP Rail System contends that the passage of enabling legislation, Bill 94, would legitimize a fundamentally flawed process. With respect to the equity of the tax on the railway rights of way, I want to point out first that CP Rail is not a public utility. It is an investor-owned company in the Toronto area. CP Rail owns roadways or railway rights of way, other properties used in conjunction with the operation of the railway and a 50% interest in the Toronto Terminals Railway, whose principal assets are Union Station and the tracks used for the GO Transit commuter service.
The fact that both CP and CN's railway systems in eastern Canada are in serious financial trouble has been recently highlighted by CP Rail's announcement of its intent to abandon operations over all its lines east of Sherbrooke, Quebec, and through the Atlantic provinces, and by the report of CN's employment reductions of 10,000 jobs.
Railways are taxed not on the use they make of the land occupied by their tracks but on the value of land owned by others adjacent to them. Even though we don't need police protection the way a shopping mall does or snow removal the way a housing subdivision does, our property is taxed as if we did. Now we learn that we are expected to pay a much higher tax increase than our neighbours who do use those services.
Major tax burdens have already been shifted to the railways. In 85 communities which have undergone reassessment since 1989 our municipal property taxes have gone up a staggering 55%. Metro's proposal would set a far more damaging precedent that could be used by other municipalities in Ontario and spread to other provinces. This result could well bring rail services in Canada to a standstill.
In 1991 CP Rail System spent more than $700 million and paid more than $12 million in property taxes in Ontario. In our brief, for your reference, at page 3 is a summary of the property taxes payable by CP Rail System in Metro Toronto in 1992 and our estimate of the 1993 taxes should the market value assessment formula contemplated by Bill 94 be implemented. It should be noted here that no part of the lands commonly referred to as the railway lands or the railway development lands is owned by CP Rail System, nor are any taxes on those lands included in this chart on page 3. The tax we are talking about is the tax load on properties owned solely for the purpose of operating a commercial right of way.
1650
That tax increase is slated to be $12.8 million or about 220% in one year. The total tax payable in the province of Ontario in 1993 would exceed CP Rail's operating income from its entire rail system for 1991. Meanwhile, property classifications of other businesses in Metro Toronto are protected by a cap which limits increases to 25% over three years with a subsequent two-year moratorium. After five years other businesses will still have moved only a quarter of the way towards market value assessment, while railways will pay full increases from day one.
Our opposition and our anger with respect to Metro's market value proposal is rooted in the history of rail property taxation in Ontario. Ontario's Assessment Act dates back to 1869 when railways were the dominant form of transportation. Today, railways compete rather than dominate. There is world competition in the markets for Canadian commodities and plenty of surface carrier competition among railways, among truckers and between railways and truckers.
However, legislation respecting the assessment of railway rights of way in Ontario has remained virtually unchanged in this century. Ontario governments have tried three times since 1963 to come to grips with the issue of the tax treatment of the railways. Each time it has been concluded that the practice of assessing railway rights of way based on assessed values of neighbouring lands is outdated and inequitable. The Smith committee in 1967 recommended that railway rights of way be totally exempted from property and business occupancy taxes. One commission and two committees have noted that while total railway rights of way may add up to an impressive number of acres, that land does not have market value comparable to its neighbours.
That is because railway rights of way are long strips of unserviced property, 30 metres or less in width and whose location is regulated by legislation and which must in law be used solely as a railway, unless an abandonment order is obtained. Government approval is required for abandonment of any right of way as an operating line of railway. This legislation also limits the amount and controls the timing of such abandonments. If and when railway activity ceases, the size, the shape and the access restriction of rights of way generally prevent their development for other purposes. Abandoned rights of way are typically of very little value to adjoining property owners as they lack access and municipal services. Rights of way are not even comparable to utility land such as corridors used by hydro commissions. Those public utilities have a captive clientele and a guaranteed rate of return on expenditures. CP Rail does not.
Railways finance and build the roads they run on entirely from their own resources. Unlike any other transportation organization, railway companies maintain their rights of way at their own cost, including services such as security and snow removal. Highways are not subject to property tax. Commercial truckers do not have to cover such costs when they set the rates they charge to their customers. Why should railways now pay property tax increases many times higher than those imposed on other businesses and infinitely higher than the 0% increases imposed on the rights of way used by their competitors in the trucking industry?
If you'll turn to page 5 in our brief, which actually is after page 4 and before page 6 but has no number on it, you will find a coloured graph which will indicate the taxes paid on the public right of ways and what increase they will incur, and that paid by adjacent property owners and that to be paid on the CP Rail right of way.
Metropolitan Toronto's proposed tax assessment changes treat railways inequitably and ignore advice consistently given whenever the Ontario provincial government has examined the issue in a comprehensive manner.
Railways are an economical, fuel-efficient and environmentally responsible form of transportation which offer unique value and choice to Ontario's job-providing industries and to riders of the GO Transit system. Doubling or tripling the municipal tax burden on railway facilities at a time of nearly universal fiscal austerity will serve only to make Ontario unattractive for the allocation of private or public investment in activities which depend on railway transportation, and will expose thousands of railway employees to an even less certain future than they enjoy today.
Successive Ontario governments have recognized the need to review, amend and update property taxation. An independent body known as the Fair Tax Commission was established almost two years ago, and the commission's property tax review subcommittee is scheduled to release its recommendations within 10 days. In the short term, it is inconceivable that far-reaching decisions will be made by this committee in the absence of the Fair Tax Commission's findings.
CP Rail System recommends that Bill 94 should be amended to provide that the railway rights of way not be subject to assessment for realty tax purposes, and that the other lands used for railway purposes be taxed comparably to other designated classes both in their market value assessment and in the application of the cap on that taxation.
In the alternative, as an interim measure, we would recommend that you amend Bill 94 prior to its enactment to create a distinctive railway property class for the roadbeds or rights of way. The property owned by the railways, other than the roadbeds, should be taxed comparably to other designated classes.
Or we recommend that further consideration of this legislation should be deferred until Metro has completed and publicized a full economic impact study of its plan and until after the Fair Tax Commission report on property tax is released and until all concerned have been provided with time to analyse and comment on the impact study and on the Fair Tax Commission report.
We have appreciated this opportunity to speak to you.
Mr Scott: Mr Chairman, perhaps Mr Marcolini would like to speak.
Mr Bardo Marcolini: I don't usually sit at the same table with CP and support its causes but in this thing here I have to.
I have a problem with it. We, the United Transportation Union, sat down with CP and CN and we negotiated crew consist, which is a conductor-only train, to give them relief so we could save some jobs and have them competitive. It's very difficult then when you come along and you find out later that all of a sudden, where you give up a man through attrition to make the railroads competitive and try to keep them in business and save our jobs, this market value assessment -- we're talking about $30 million and $40 million.
I was in Montreal last week. I'm not a very eloquent speaker; I don't know figures or anything like that. I've railroaded since 1948 and I know the facts of life today. The railroads today are in bad shape, and unless you people put us on a level playing field we are going out of business.
1700
If you think market value assessment is great, what are you going to do with 16,000 or 17,000 people who aren't going to be paying any taxes? That's not a threat. That's the facts of life. You people better get out on the property and take a look around. The east of Montreal is gone. They're talking about secondary lines in Havelock, Owen Sound, Sault Ste Marie. You know, it's not a game. I'm telling you that you better take a hard, long look at this.
The thing that I have a problem with is, how come the railroad is the only one that isn't capped? I'm going to gain out of this. I live in Etobicoke. I'm going to make maybe 50 bucks. Big deal.
Are you people trying to put the railroads out of business? That's what I'd like to know. Because I tell you, you're doing one hell of a job if this bill goes through. That's all I have to say.
The Chair: Thank you very much. In the time that we have left, I will hear from a representative of each of the parties. I have Ms Swarbrick, Ms Marland and Mr Grandmaître.
Ms Swarbrick: I would like to thank you all. I think you've presented an excellent case of what is the most disturbing part of the Metro proposal to me. I know I've heard from my own constituents. I've heard from other MPPs in the House. Brad Ward from Brantford was raising the concern with me today.
Of course our government has been hoping and wanting to be able to treat the proposal from Metro council as we've treated the proposals from other municipal councils around the province of Ontario, and deal with the Metro government as a mature and autonomous body that has presented what we would like to believe is a reasonable compromise at this point in time, subject to the longer-term work that needs to be done to make radical changes, hopefully for the 1998 assessment period.
In attempting then to try and deal with the concerns that you've raised, of course, we have put into the legislation before us the ability both for Metro to apply protective caps to the rail lands and for Metro to create a public utilities category, as you're asking for, and we're strongly encouraging them to do that.
The question I have for you, because I have a hard time understanding why the Metro level of government wouldn't want to also share the same kind of concern that we do and that our government does in terms of what you're putting forward -- and unfortunately, I wasn't here when Metro Chairman Tonks was presenting to us last night; I was up in the House at the time. I assume you're a big enough body. Have you met with him? Have you met with Metro council? Number one, what is it they're saying to you in terms of why they're not willing to make some accommodation, to put caps on or to declare a special public utilities category for your situation? What are they saying to you?
Number two, what are your strategies to try and help? I would certainly like to work with you to make sure they do make some changes to accommodate your concerns.
Mr Scott: We have asked Metro Toronto. I've written, as I indicated to you earlier, to Chairman Tonks. We have requested a meeting with him. This afternoon we had a call indicating that there was a prospect of setting up such a meeting. I'm not sure just how quickly. I can't yet tell you what the response would be.
I just make the observation, however, that given the seriousness of this and the impact that both of us have spoken of, I find it, I have to confess, strange on the part of representatives of the government to pass this problem across to Metro without an apparent concern that manifests itself in some action on your part.
Mrs Marland: Exactly.
Ms Swarbrick: I've expressed what part of the action is, our action in terms of, since it is their proposal, making sure that there are abilities then for them to deal with what your concern is.
I know that the Minister of Revenue and the Minister of Transportation are most concerned and I understand that you've been encouraged to meet with them. I know that they very much want to sit down and look at meeting with you to see what they can do to help. Is that meeting set up yet, do you know?
Mr Scott: It hasn't resulted in anything and I have to say the same thing results from the letter that Paul Tellier and I wrote to the Premier. I've had no response to that either.
Ms Swarbrick: I know that those two ministers want to meet with you, so perhaps we can make sure we follow up on that.
The Chair: I'm going to have to move on to Mrs Marland.
Mrs Marland: If I didn't know I was wide awake, I'd think I had died and gone to heaven. I never thought I'd see the day when somebody from a union would come in here and tell the government members to get out into the real world. That's the message we're trying to tell the government every day. Mr Marcolini, I congratulate you for coming in and telling them to get out and realize what's going on.
Mr Marcolini: Excuse me. I'd like to make a statement on that. I'm not in here on politics. My concern here is jobs. Another thing I'd like to mention is that I was also one of Mr Tonks's campaign managers when he was running for mayor in York. I'm going to have to have a talk with him.
The Chair: Now that we've got politics out of this --
Mrs Marland: I guess the reality is that whether or not we're here discussing politics, we are truly discussing jobs. In my job, that's one of the roles I try to play, which is to protect jobs. I appreciate the fact that Mr Marcolini is here speaking on behalf of the United Transportation Union. I think it's very significant that you're here and I think it's very significant what you said. It certainly will be something that I will be able to quote a lot in the future when we're fighting other job losses in this province because of this Bob Rae socialist government.
Having said that, I would like to say that I found that I'm certainly not surprised, Mrs Braid, that you're vice-president of legal services. Your presentation this afternoon was very convincing. Is it correct to say that in 1979, in the derailment in Mississauga, in fact my municipality of Mississauga billed you for the fire protection services that were rendered?
Mrs Braid: That's correct.
Mrs Marland: You see, there's a perfect example where you do pay the assessment and even in that emergency situation you were not able to access any of the municipal services for which you are assessed. I always thought that was a very blatant example of how unjust the assessment system is.
When you talked about the assessment aspect -- and obviously your company has been to the Assessment Review Board a number of times, I'm sure, and argued for your 30-metre rights of way -- are you always given the same answer? I mean, even when you give these convincing arguments like you gave this afternoon, are you always given the same negative response?
Mrs Braid: There was a special class that was instituted in 1979 for railway and "other" lands, which was at that time another interim measure which continued until 1990. In 1990, the special class designation was removed for railway properties only and we were taxed comparable to the adjacent properties. We have appealed through the courts some of those assessments and they are pending.
Mrs Marland: They're pending?
Mr Ron Mason: There's been no resolve at this time. The issue -- I guess we're in 85 municipalities, and of those 85, we've all contested the appeals. They're all pending and waiting for the judicial process to continue. We are challenging it, but it hasn't been resolved.
Mrs Braid: The position we've been taking is consistent. I do not see relief tomorrow.
Mrs Marland: Mr Scott, did you say that you had asked for a meeting with the Premier?
Mr Scott: Yes, I said that both the president of Canadian National Railways and I had written the Premier and asked for a meeting.
Mrs Marland: How long ago would you have made that request?
Mr Scott: The letter was dated November 25 and it was delivered by hand that day.
Mrs Marland: And have you had any response?
Mr Scott: Not yet.
The Chair: Mr Grandmaître.
1710
Mr Bernard Grandmaître (Ottawa East): I'll be very short. You do realize that MVA puts a 25% cap on most of the industry, and I find it very, very strange that a tax customer like you, who will be faced with a $40-million tax bill on January 1 -- that the government of Ontario doesn't have time to meet with you to consider the inequities of Bill 94. My question is a very simple one: Why do you think you're being treated differently from other industries?
Mr Scott: I can't answer that question as to why we would be treated differently from other industries or why we're being treated the way we are. I can't answer that. As to the question of why we haven't had a meeting yet, perhaps that will change with time.
Mr Grandmaître: Well, it might change, but don't forget we had a vote this afternoon and all of these people voted for Bill 94. You know, you weren't too lucky with Metro and personally I don't think you'll be very lucky with the government, so 15,000 jobs are at stake. On Monday morning, will you try to meet with the Minister of Labour not only to explain the inequities of this bill but to talk to him about the possibility of losing 15,000 jobs in this province?
Mr Scott: You have to recall, sir, that we are federally regulated and when we meet with the Minister of Labour, in our business it's the federal Minister of Labour.
Mr Grandmaître: Yes, but at the same time, your 15,000 people are paying provincial tax.
Mr Scott: Yes.
Mr Grandmaître: And they'll be losing their jobs, as pointed out by your friend.
Mr Scott: Yes, that's right. That is a concern, I would presume, to this government, and I'm prepared to talk to anybody reasonably about these problems.
Mr Grandmaître: That makes sense.
The Chair: Thank you very much for coming this afternoon, for your brief, as well as the comments you have made. I'm sorry, one last comment.
Mr Marcolini: One comment: You know, we talk about highways, but we also have to realize that we're competing with railroads that go north and south today, okay? The railroad can handle this traffic that we handle out west and the stuff that we run from Detroit to Montreal. They come down over the Sault line, Milwaukee, into the D and H. Also, CNR has the Burlington Northern. So it's just not the highways any more; it's railroads in the United States that are taxed about 40% less than the railroads in Canada. So if we don't get a level playing field, maybe you guys will accomplish what you set out to do -- no railroads.
The Chair: Thank you again. We appreciate your coming this afternoon.
Mrs Braid: We appreciate the opportunity.
Mr Mills: If I might just say one word before you leave, attempts are being made at this very moment to set up a meeting between the Ministry of Revenue and the Ministry of Transportation for CNCP.
CONFEDERATION OF RESIDENT AND RATEPAYER ASSOCIATIONS
The Chair: I call the Confederation of Resident and Ratepayer Associations, Mr Howard Joy, chair, and any others from that organization. Order, please. Could those who are leaving the room please do so and those who are going to be making a presentation please come forward. We will distribute copies of the confederation's presentation.
Order, please. I realize that we're in tight quarters here, but if we could have the representatives from the confederation to please come forward. I believe it's Mr Joy who is the chair. Mr Joy, would you be good enough to introduce the other members of your delegation. You have half an hour, and we can begin as soon as you're settled. We are running a little bit behind and if we could proceed, I would appreciate it.
Mr Howard Joy: I am Howard Joy of the Confederation of Resident and Ratepayer Associations of the city of Toronto. On my left is Linda Lynch, a member of the Lakeside Area Neighbourhoods Association, one of the CORRA members, and on my right is Katherine Packer, who is known to some of you in connection with the fair taxation task force. They're here to help me with questions that you may have.
You have my brief. I'd just like first of all to tell you about CORRA. CORRA is an umbrella organization of the city of Toronto resident and ratepayer groups. Through our organization, memberships represent more than 10,000 Toronto households, and we thank you very kindly for having us here today. Listed below on the bottom of my letter to the members are the names of our association members.
CORRA has concerns about the market value assessment system's application in Toronto. In general, CORRA has serious reservations about the effects that market value assessment will have on the economy, environment and social wellbeing of the city of Toronto. We believe market value assessment is not a satisfactory or fair method of determining taxes.
In particular, our concerns are amplified by the selection of 1988 distorted assessment values as the benchmark for all calculations. The year 1988, as you all know, was the most volatile real estate year in memory, and speculation ran wild, particularly in Canada's largest and most susceptible city, Toronto. MVA has its deficiencies at any time, and these become most visible in an unstable market.
Impact studies should have been an imperative first step. It is unbelievable that the most controversial municipal plan in the history of this province, a plan that is criticized for its anticipated impacts, does not have impact studies for its very first step before any legislation is passed. But no, the first small steps will put it on its irreversible way to full market value. In fact, full market value comes in, in some categories, in giant steps, followed by the first and every subsequent real estate sale. What kind of thinking is this?
People are frantic about the impacts this plan is expected to have on the city of Toronto: economic impacts, environmental impacts and social impacts. We fear from what we have heard, seen and read that there has never been an issue on which people's feelings have been so passionately aroused. There is angry talk of the city of Toronto seceding from Metro and of people withholding taxes.
Impact studies could very well defuse a mounting situation. We feel sure that properly conducted impact studies would not be ignored by either the politicians or the populace. To us, it makes so much sense to study the impacts before forging ahead with a system so controversial.
History shows that MVA is bad for large, fast-growing cities. Jane Jacobs, one of North America's foremost authorities on urban planning, has written extensively on the decline of US cities. High taxes in the inner city, low taxes in the suburbs will alter the economic mix of Metro's population. Only two large population groups, the rich and the poor, will remain in the inner city. Middle-class tenants and home owners will move out to the suburbs. She says the decision by some municipal politicians to push for higher taxes on city properties shows they know very little about creating healthy urban areas. She also says that their civil servants who advise them to do this are incompetent.
Roberta Brandes Gratz, lecturer and writer on urban affairs, warns of the bad effects that an overabundance of cars is having on the city. Cars, and the pollution they create, do not make a healthy city. Pollution aside, cars and people don't mix. Car use in Metro has increased 250% from 1975 to 1991 and compounds 2.5% each year.
1720
Before it is too late, we must encourage other modes of transportation with a view to cutting down on the need for the ever-polluting automobile within the city. If we don't improve our public transit system, bicycle lanes, wider sidewalks for pedestrians, then cars will take over completely and there will be no room for people, except in cars. But we can't improve public transport and related services until we intensify suburban land use. The suburbs must intensify, or they will never be able to pay for the services they use now and will want later.
Gary Gallon of Environmental Economics International, and a former senior policy adviser to Ontario's Minister of the Environment from 1985 to 1990, sees the MVA scheme driving people and businesses away from the inner city as a prelude to the urban-core rot. This, he says, is just what happened to Detroit, Los Angeles and Chicago.
You have all heard the awful things that have happened to so many cities south of the border when their elected officials overtaxed the prosperous activities at their cores. In time they weren't prosperous any more. People and businesses moved away. The tax base dried up. The infrastructure broke down. The healthy core became dirty and unsafe and environmentally hazardous. It was no place to be, and none except the poor remained.
I imagine most of you have seen the result, as I have, in places like those mentioned above, and also Buffalo, New York, Albany, Chicago and many more afflicted cities. Most of them are now faced with a cost of hundreds of millions of dollars to clean up the decayed interior slums they have allowed in their rotting cores.
If Toronto can hold on to its neighbourhoods, including especially its downtown neighbourhoods, this should not happen here. However, it will happen here if we aren't careful, if we don't learn from the mistakes of others.
History has a nasty habit of repeating itself. Not without reason has it been said that "Those who ignore history are doomed to repeat it," and isn't that exactly what we are doing, ignoring history? Shouldn't we have learned that MVA is unpredictable, that it is as unstable and volatile as the market, and therefore dangerous in a crazy year like 1988? Shouldn't we be looking at other systems such as unit value which is said to be more predictable and not prone to market fluctuations?
It is a myth that the suburbs have been overpaying taxes. Why on earth are we under the false impressions that suburban residents are currently taxed too much when in fact Toronto taxpayers are required to subsidize them? If the suburbs feel they are paying too much in taxes, let them intensify as the city of Toronto has done and plans to do more. Let them live on economically serviceable lots as city of Toronto residents do. Why should we live on as little as 12- to 14-feet lots, and now, under MVA, be taxed to high heaven so that we can increase our subsidies to promote still more uneconomical land use in the suburbs? Let's put a stop to the suburbs gobbling up our arable land, and let's insist on their living responsibly. In spite of our economical lifestyle, we're being taxed to death, and our once healthy businesses are being taxed out of existence.
Under MVA tax levies will shift from the suburbs to the city. Historically, when urban taxes rise dramatically, the financially squeezed middle class move out to the suburbs. This will happen here, and that will leave fewer people in Toronto to subsidize yet more people in the suburbs where inefficient land use will exacerbate the problem of uneconomic urban sprawl.
Consider that as things stand now, the inner-city taxpayers, who represent about 30% of Metro's population, currently pay 42% of the education costs and 38% of the cost of other services; this in spite of the fact that the per-person cost of services is less in the inner-city than in the rest of Metro. With the proposed MVA scheme, the tax cost to the inner-city taxpayer is going to rise even higher. With the exodus of the middle class and small business taxpayers, who in the inner-city is going to pay for this?
The current MVA scheme has potential for ruining small businesses. The scheme will see the transfer of $78 million a year from residential to non-residential. Much of this will hit small business. But that's not all; under full MVA, there's a transfer of $100 million of municipal tax from large commercial businesses on to smaller businesses. What will this do to small businesses? We don't know for sure without an impact study. It seems highly likely that in conjunction with the present recession, it will put them out of business. Surely we can't stand by and wait for this to happen. Many are falling by the wayside as things are right now.
Wait. There's more. Small retailers in malls are really being shafted. Malls get a big tax reduction, but the large, anchor tenants get a reduction about twice what the malls get. So who covers the shortfall? The small tenants of course. So you have the small tenants paying about half as much as the big tenants are getting knocked off their taxes. It's really bizarre. If it wasn't so tragic, it would be hilarious. It's so ridiculous.
Look at the 11% vacancy rate in downtown office buildings. Rents being collected are just a fraction of what they were in 1988, yet landlords are paying out, on property and business taxes, up to three times what they take in. So what's going out is up to three times what's coming in, and then there is still the mortgage that must be paid. How long can this go on? We're starting to lose the core already, we fear.
Highest and best use is not necessarily best. The sort of mindset that determines that all property should be developed to the fullest extent imaginable shows no imagination whatsoever. If one piece of property gets fully developed, it should not drive up the taxes of its neighbour. This is the surest way to wreck neighbourhoods and significant buildings in the residential areas, and the ambience of a varied streetscape downtown.
Private gardens should not be classed as vacant land. We understand the importance of developing vacant land, but to penalize an owner of a double lot is mean-spirited. An owner who enjoys gardening should not be charged full MVA on a large garden. Double lots are disappearing fast enough without this sort of harassment. Neighbourhoods benefit visually and environmentally from well-kept gardens in their midst. We don't need this kind of pressure. The garden will disappear soon enough.
Seniors and others on fixed income may lose their nest egg. MVA is a location tax which does not consider ability to pay, the size of the house, the size of the lot, the services used and the efficiency of the use of land. In a changing market, it is unpredictable. The new evaluations will seriously affect the options of many seniors. They and others on fixed incomes will have to sell their houses sooner than they had intended.
Under 1988 market value assessment, their houses' values exceed their wildest dreams; a cruel joke, because at no time, in 1988 or any other year, could they have sold anywhere close to the 1988 assessed values. Yet they are penalized by the unproven, highly speculative and certainly questionable values which they are told could have been realized if the houses had been sold in 1988.
This assessment was a very shoddy exercise indeed. Nevertheless, whatever they could have got if they had sold in 1988 would be far lower today, and come January 1993, or whenever MVA is passed, seniors will find their houses have been effectively discounted even more because of the huge jump in taxes to 100% MVA that will have to be paid by the purchaser.
We cannot understand how the provincial government can, in conscience, leave this clause of full market value at time of sale unchanged. After all the election promises about being opposed to MVA, it is no wonder that politicians are not believed. We say, "For shame." It reminds us of George Bush saying, "Read my lips."
1730
We urge the government to rectify this before it is too late, as not only will it set up two categories side by side; it will most certainly discourage the turnover of homes. This may be the most important reason of all, as in our present economy we can't afford to discourage business.
If the seniors plan to stay put and not sell their houses, they will have to pay increased taxes without the help of the property tax credit, which this government has eliminated. Seniors have a lot to be thankful for.
What is the real reason not to wait for the Fair Tax Commission? The Fair Tax Commission was set up to examine taxation. It had a lot to do with just what we are talking about here. We all know unofficially what the Fair Tax Commission's property tax working group recommendations are. Newspapers have seen and printed them. Everyone in the government could have seen them and must know how pertinent the findings are to Bill 94. What's all the rush? It doesn't say much for integrity to set up a commission to study the matter for more than a year and then, just when it's needed, to ignore it. What a terrible waste of taxpayers' money.
In conclusion, that's our report. We might have said more, but we think we've said enough. At the very least, we ask you to reject the provision that would permit full market value to be applied to houses on change of ownership. However, we urge you to hold up Bill 94 until another system can be examined. For all the pitfalls noted above, we feel it will be unconscionable to do otherwise.
I was going to ask about the meaning of this ad that was in the paper yesterday, which to anybody who doesn't know what's going on would tell them that it's all been completely decided by Metro. There it is. It tells you exactly how it's going to work and when the full values are coming in. This sort of arrogance on the part of Metro is what hurts most of us the most. I think it's intolerable the way Metro didn't hear and didn't listen to all that was said in the hearings. I was there myself for one complete night, until 3 o'clock in the morning, and they weren't listening. There were some very good things said.
Linda Lynch has one little thing she wants to mention in connection with market value and then we could have some questions.
Ms Linda Lynch: I'll be very brief. I suppose I could probably direct my remarks to Anne Swarbrick.
One of the things that's wrong is that we sit in the city of Toronto. For example, I live on a 15-foot lot and I checked on the costs of government servicing my lot, the cost for the sanitary sewer, the cost for the storm sewer, the cost for the water service and also fire protection out of that line. It works out to $430 a foot for a residential street. So for the government to service my 15-foot lot it costs $6,450.
That property, a little tiny house with no driveway and a four-foot frontage to the sidewalk, was valued at $180,000. The same house, the same value, a $180,000 home on a 150-foot lot, is $64,000. So tell me where the equity is. Why should we intensify? Don't we get a break if we save people money and we intensify, and we've got 20 15-foot lots on a street versus the luxury of 150-foot lots and five houses on a street? What are we getting for our tax dollars? Why should I be penalized because I live in an intensified neighbourhood? I can't help it if there's not more land and my house is worth $180,000 on a 15-foot lot. Could you live on a 15-foot lot?
The other point is that for a 50-foot lot -- that's what everyone's building now -- those services would cost $21,500. So if we're supposed to buy into the province's push for intensification and the city's push for intensification, and we're doing that because we're supposed to get more bang for our buck and government gets more results from its investment, then how can you support market value assessment with 1988 property values? A 15-foot lot, $6,400; Joyce Trimmer, 150-foot lot, $64,500. So if you want more money in burbs, intensify your streets. Don't ask me to pay any more for my little 15-foot lot.
The Acting Chair (Mr Bernard Grandmaître): Thank you for your presentation. We have some 12 minutes and I'll recognize all three parties.
Ms Poole: Thank you very much for your presentation today. It was really an excellent synthesis of all the things that are wrong with market value assessment.
There are two issues I'd like to address. The first is your statement, "We cannot understand how, in conscience, the provincial government can leave this clause of full market value at time of sale unchanged." I would like to address that particular point, because that's exactly what the government has done. They have left the city of Toronto unprotected and said that Metro can go ahead and pass a bylaw to allow homes to go to full market value at point of sale. They said, "Look, we're protecting the city." The question I would have for the government is, how is this protecting the city of Toronto when at Metro council they've already had three votes on this and three times Metro council has rammed it down the throat of the city of Toronto and said, "Yes, at point of sale, full MVA"?
I just want to tell you that I have put the government on notice that I am introducing an amendment to this legislation whereby at the point of sale, homes would still have the protective cap. At that stage, we'll really see whether this government is committed to protecting the city of Toronto. I have a feeling that you'll find their actions are as hollow as their words.
The question I would like to ask you about is the impact on our neighbourhoods. You have made an excellent case that what market value does is reward urban sprawl -- I think, Linda, your comments highlight that point -- and at the same time, it promotes decline of our city centre. You've touched on the impact on small business, and you've touched on the impact on seniors and other long-time home owners. Could you elaborate for us on other ways in which this is going to lead to urban rot, maybe a different way to ask this question is, is it leading to the destruction of our neighbourhoods?
Ms Lynch: Yes, I think it will. I'm speaking about the east end of the city of Toronto. Perhaps I could ask the members of the committee to please listen to this point -- this is very, very important -- as little people, we only have one kick at the can in front of you.
Our quality of life is that we suffer tremendously. We have the sewage from all of Metro in our backyard. Our children breathe the fumes from the Toronto sewage treatment plant. We have the highest incidence of asthma of all of Metropolitan Toronto.
When we think maybe we're getting a tax break and we only have little houses and our kids our sick and we're breathing the fumes from the burbs' effluent, I guess if we get a tax break, maybe we're not paying as much because we really don't think our properties are worth that, even though our real estate agent does.
I have to say to you, why should we stay in the city? Why should we stay and be subjected to the pollution of the several million people from the burbs who work downtown and create ozone at ground level? Why should we stay in the city and breathe the fumes from the large sewage treatment plant that treats all of Metro, and a variety of other negative impacts in our neighbourhood that come from being the host community to Metro in terms of jobs? Why should we stay there if you're going to tax us to death and have absolutely no regard for the real problems the neighbourhoods in the city of Toronto have? Our rate of crime in the east end of the city of Toronto is the highest in Metro.
If you turn businesses away and turn urban decay our way even more than it already is, no, we're not going to stay. Our neighbourhoods are going to fall apart. It's already tough for my neighbours to bring up kids there, and if you're now going to -- I should point out that in south Riverdale we're the poorest per capita urban area in all of Canada. Just because a real estate boom increased our property values, does that give you the right to tax us out of our homes? I don't think so.
1740
Ms Poole: Point well taken.
The Acting Chair: Thank you. I'm sorry, Ms Poole, we must move along. We're behind, so Mrs Marland please.
Mrs Marland: I'm just going to have one fast question and I know Mr Stockwell has one for you.
When you say, "Why should you stay?" Ms Lynch, is it not true that because of the impending impact MVA would have, your option of moving isn't a realistic one, that because of the sale of your property you just cannot recover your investment? Those options of moving away from all these things that bother are not real options any more, because who wants to buy your house and put themselves in the position you're in for the very reasons that you want to leave?
Ms Lynch: I can appreciate that remark, Mrs Marland. I think the government should know that myself and many others are liquidating our property. I can tell you that the house that's valued at $180,000-odd by the government's assessor sold for $140,000. People are bailing out. They're losing their investment. We don't want to stay. We can't stay if you're going to do this to us. It's not even going to be a question of not being able to sell; it's going to be a question of foreclosure.
Mr Stockwell: Just a quick --
The Acting Chair: I'm sorry, Mr Stockwell. I have to move along, and from the government side --
Mrs Marland: I gave my time to Mr Stockwell. That's why I was brief.
The Acting Chair: I said one question from every party.
Mr George Mammoliti (Yorkview): I'll do the appropriate thing and give my time to Mr Stockwell. I like the man.
Mr Stockwell: Thank you very much. I have a quick question. I appreciate that, the member for Yorkview.
Ms Poole: That's certainly relevant. I like him too but I'm not giving him my time.
Mr Mammoliti: Well, I wouldn't give you my time.
The Acting Chair: Okay. Can we get on, or I'll take your time.
Mr Stockwell: I have constituents in the city of Etobicoke who live, let's say, in New Toronto. New Toronto lives next to a jail. They live right next to a waste transfer station, they have no subways, they've got a streetcar down on Lakeshore if they want to walk all that distance and parks are non-existent. They're probably in one of the poorer areas in Etobicoke, I would suggest, and their taxes right now are in the neighbourhood of $3,000, $4,000, $5,000 and $6,000 per year, their frontages are 20 feet at best and they're living in two-bedroom bungalows.
Tell me what I do to go back to those people and explain to them why they're going to pay two, three and four times more in taxes than you and a lot of other people simply because we can't get a reassessment plan through? They're also single mothers, seniors and people on fixed income. Explain to me how I tell them, because they live in the palatial area of New Toronto, next to a jail, a waste transfer station with no parks, libraries or subways, that they have to pay 6,000 bucks a year?
Mr Joy: I could answer that. I think there are inequities. We're not saying there aren't and that all the inequities are in the city of Toronto. What's going to happen is that those people are going to pay less, which perhaps is right that they should, but people like Linda are going to be expected to pay for it.
Mr Stockwell: And under your plan they continue to pay more. Under your plan they're selling their homes or losing them, foreclosed on.
The Acting Chair: Mr Stockwell, I'm sorry.
Mr Stockwell: What do I tell them?
The Acting Chair: Mr Joy, please.
Mr Joy: That's my answer: These inequities will be looked at but you always have an example, and I think a small example. I don't think it's a major --
Mr Stockwell: It's everywhere. It's rampant.
Mr Joy: It is everywhere.
Mr Stockwell: It's rampant.
Mr Joy: Mr Stockwell, more in Toronto than anywhere else.
Mr Stockwell: It's rampant, they're overpaying, some people by $17,000 on a business for a 1,500-square-foot store.
The Acting Chair: Mr Stockwell, I'm sorry, but we must move along. Did you want to add something, Linda, in 30 seconds?
Ms Lynch: Yes. I just have a very quick comment. I would ask the government to peel away partisan politics and to take a look at the fact that the residents in the city of Toronto are not equitably represented at Metro. You are the only people who now legislatively can step in and help us, and I think what you have to do is take a look at the inequities of accountable elected representation at Metro council. The people who are sentencing the residents of the city of Toronto are not accountable to us. They come from other municipalities, so we can't have a dialogue with them, we can't talk with them and we can't hold them accountable.
I believe the province has a responsibility to step in when those kinds of inequities happen. We are shareholders in a corporation that you run. You run a corporation that has perishable goods -- us the taxpayers -- and I ask you and urge you to think. What have you got to lose by doing a full economic impact study and saying: "Metro, hold on another couple of months here, folks. We want to get all the answers. We want to know what the true implication is for the folks in all the cities that make up this region"? What have you got to lose by doing that?
The Acting Chair: Thank you, Mr Joy. Oh, I'm sorry. The parliamentary assistant will provide some clarification.
Mr Mills: I'd just like to clarify paragraph 4 of page 5 of your presentation. The government has not eliminated property tax credits to seniors. There's a process whereby seniors with less income get more and those with a higher income don't get any. I just want to make that correction.
The Acting Chair: Thank you, Mr Joy. As you know, members, we're running about 45 minutes late, so I would ask for your cooperation in order for us to meet our commitment.
SAVE OUR CITY INC.
The Acting Chair: The next group is Save Our City. Would you please identify yourself for the benefit of Hansard.
Mr David Payne: Good evening. I am David Payne, a director of Save Our City. We have Art Eggleton, a former mayor of the city of Toronto here. He is also a director of Save Our City. We have Richard Wookey, a Toronto businessman, who is a director of Save Our City, and Robert Brown, a member of Save Our City who has been very accommodating in the preparation of the written submission we're putting before you.
The Acting Chair: Before you start, I'd like to remind you that you have 30 minutes and if you would like people to answer your questions, please time yourself.
Mr Payne: Because we only have 30 minutes, Mr Wookey will not be referring specifically to the written brief. We hope you'll read that later. Mr Wookey will be taking up most of the oral time along with Mr Eggleton and, hopefully, half of our time we'll leave for questions.
Mr Richard Wookey: On behalf of Save Our City, I wish to thank you for this opportunity to address your committee.
We wish to clearly state our strong opposition to this legislation and the power it gives to Metropolitan Toronto. Our opposition covers three aspects: the real property reform, impact studies and assessment credibility, which is lacking.
I just want to tell you one small thing about Save Our City. We are an organization that was formed late in September as a coordinating body for strategic planning, research and information exchange among the many groups and organizations in the city. We have about 25 groups that we work with.
I'm going to depart from our brief, which you will all have. You are full of facts and figures, I'm sure, from many presentations that have been made, so I'd like to speak personally and from my long experience in the city. To do that, I have to go back quite a long way. Since most of the gentlemen on this committee and certainly all the ladies are extremely young, I'd like to go back 30 years and --
Mr Jim Wiseman (Durham West): Was that a comparative comment or a factual comment?
Mr Wookey: No, that's a factual comment. I'd like to go back 30 years approximately. Toronto, 30 years ago, was a conglomeration of neighbourhoods and a downtown commercial area and then this certain flight started towards the suburbs. This flight was in effect emptying some of the older areas of the city and at the same time developers were moving in and building apartment buildings and different kinds of businesses.
I got very involved in opposing, actually, a lot of the high-rise buildings that went into Toronto because I felt that a lot of the neighbourhoods and the life of Toronto were going to be affected adversely. I don't say there isn't a place for high-rise buildings, but it was just the way they were intruding into neighbourhoods.
At the time I had bought a house on Hazelton Avenue, which was a very old and decrepit area at the time, and one of the persons who I met there was a woman called Ellen Adams. She was Stephen Lewis's assistant and a highly intelligent and very motivated person. I got involved in the renovation of old houses and old buildings and I really enjoyed it. It was a very challenging thing because it wasn't very economic; in other words, you had to take a very long look.
1750
Just about three or four years after I had started my own activities, David Crombie was elected as mayor of Toronto and his great platform was that we should try and save, again, the neighbourhoods of our city and prevent people leaving the city. We all worked together. It was a wonderful experience actually, and I have to compliment the NDP in this sense, that most of the people I got the support from in those days were all very ardent NDPers. I didn't necessarily agree with most of their platforms but I did appreciate the tremendous support they gave and the dedication that they had to the betterment of the city.
Here we are in 1992 and we have something that's going backwards. A tremendous amount was accomplished. There was a tremendous betterment of the city. Toronto became actually an example to cities and countries all over the world. I myself have had over the last 25 years maybe 30 or 40 delegations that have come from Japan, from Sweden, from all kinds of places, that were interested in my own renovations.
Primarily they were interested because they wanted to know if it was possible to save old buildings economically. They weren't particularly interested in the buildings; they were just interested to see whether it was possible, because in Europe, for instance, a lot of the countries and a lot of the cities actually give you a tax break. For instance, Holland is a very good example. They'll give you 25- or 30-year tax moratoriums to be able to renovate and save the old structures in the cities to preserve the cities.
Today we have a situation which I think is extremely dangerous because this market value assessment is going to affect the future. It's going to affect the way people will view old buildings. Will they undertake to renovate old buildings? It's going to be a tremendous question as to whether they will because if you renovate an old building and your value goes up and you're immediately taxed more for that effort, it's going to be a disincentive.
I know that you've heard all the statistics on taxation, and you're going to get lots more. All I can tell you is that the city's a living thing and what is being proposed today is a disease and if you allow this disease to go in, it's going to be, I think, the long-term decline of the city. It's not going to happen overnight, but it's going to happen. I think you should not allow MVA to come in. There are other ways of readdressing the inequities in taxation. It could be a combination. Maybe it should be part value, part unit value, part the size of your lot, part the size of the building. But certainly it has to be studied, and nobody has studied this.
The other thing that I think is very important is that we have an unbalanced situation politically in Metro. You have the suburbs, which have something to gain -- not everybody in the suburbs because a lot of people are going to suffer in the suburbs, but on the whole have something to gain -- and they've got the vote. But Toronto supplies the majority of the budget. So what we are really having is taxation without representation, because we can never override that vote in Metro.
The other thing that I think is important for you to understand, to realize -- not to understand; I'm sure you understand, but to realize -- is that if you do put MVA through, and after all, it is the government's legislation which is in front of the Legislature at the moment and that's what we're talking about, then there have to be adequate safeguards put in to really control Metro. The safeguards that have been talked about have not shown up in the legislation.
Minister Cooke said this was not full MVA. How can it not be full MVA if somebody sells his house and goes on to full taxes? That is full MVA. I won't discuss the railway lands and things because we are here to try and represent an area of what we're discussing, but it does undermine the credibility that this is not full MVA. That's another point.
The third thing is that if this thing is put through, then it shouldn't be allowed to Metro to decide whether it's going to pass a bylaw in the future or not. I think it's up to the government to say. If there's going to be a cap and that cap's for five years, it should stick for five years and it should be government policy in the legislation. If the government is going to review the whole situation five years from now, it should be in the legislation that MVA cannot be implemented without parliamentary or Legislature approval.
They're really fundamental things here and I'm at a loss to understand why this thing has been shoved through so quickly. For the last two years, the assessment department has been making assessments on property. Why hasn't the government or why hasn't Metro, why haven't there been studies made so this can be brought forward and people can vote on something with some intelligent input? None of that has been done.
The last thing I would like to say is that the assessment has been so erroneous, I mean, it is so bad, that we need that to be reviewed. It isn't a question of a few thousand people being badly assessed; we're talking about hundreds of thousands maybe, and these assessments are absolutely, completely wrong. So a lot of this transfer of taxation has been based on assessments which are incorrect. If people are going to have to appeal these assessments, it's going to be a tremendously long process to get them heard.
I think these are the things you really have to review and think about and recommend to the government, because I presume that's your function here. Basically, that's all I have to say and I think Mr Art Eggleton might have something to add.
1800
Mr Arthur Eggleton: Thank you, Mr Chairman, members of committee. I'd like to tell you about a lot of reactions I've had to Toronto over the last few months. Since I stepped down as mayor of Toronto, I've been doing a fair bit of travelling and I've had an opportunity to speak in a number of cities throughout the world about Toronto, usually getting invited because they've heard so much about the city and how well it works.
They're particularly interested in the life and vitality in the downtown area because they know, for example, that in many of the cities in the United States, many of the cities in the world, there isn't that kind of life and vitality and safety and liveability that we happen to enjoy here. It's something that's not just for the benefit of the residents of downtown Toronto; it's a benefit for all the people in this whole region. Indeed, in terms of economic and social impact, Toronto and Metro Toronto are vitally important to this province and to this country, and I don't need to tell you that.
But here we are tinkering around with that success, not knowing what the impact of it is going to be because there haven't been studies done as to what the impact is. The impact isn't just on the basis of the scheme before you, with its caps that are attempting to ease and cushion the blow. Let's bear in mind that with these caps, particularly the ones for the commercial sector, where we're looking at 25% over three years, added to that is whatever the regular tax increases are. People out there are saying, "Oh, it's bad enough," but then on top of that they're going to have the regular tax increases, which sometimes have been 10% or more. We could be facing, in the commercial sector, for example, instead of 25% in three years, 40% or 50%, and there's more on top of that.
I note that one of the enterprises in the category of those that are not capped is the Parking Authority of Toronto. The Parking Authority of Toronto is a very vital instrument for these various strip commercial areas in terms of their customers being able to park there. These parking lots have always been money losers. They make money on the parking lots downtown, but now the parking authority is suddenly faced with its tax bill going from $6 million to $19 million. The result of that is that they're either going to have to close these lots that serve these small commercial retailers or they're going to have to go and ask them for more money to be able to keep that kind of service going.
There's more to it than meets the eye, and what is the impact of all of this? What is the economic impact for small business trying to crawl out of a recession? What is the social impact on this city? How is it going to affect the fabric of the downtown area? We don't want to become downtown Detroit or have any of the kind of social problems we've seen in downtown Los Angeles. We want to maintain the uniqueness of downtown Toronto and this entire metropolitan area. I suggest to you that we're tinkering with it without having these proper studies.
We've asked some business people, and in our submission there are some statistics which show the kinds of impacts. For example, the commercial strip along Bloor Street West, stretching from Madison westerly to Bathurst, contains over 125 neighbourhood service oriented retail businesses. The aggregate tax increase under full MVA for these struggling businesses exceeds $2 million. The increase, averaging in excess of $1,000 per month per business, cannot be justified or sustained by the business volume. Even with the capping, many of these people we've talked to indicate that it could effect as many as 200 jobs being eliminated through the shifting of the tax burden in the commercial class.
Then there are the malls, many of which are in the other area municipalities within Metro. Again, under Exhibit 2 in our brief, you will see a shifting of the tax burden. The anchor tenants, the big stores, benefit. The small stores have to pay a lot more.
We need these impact studies. We need to have real reform. I think we'd all agree that we should have reform of the property tax system. I would suggest to you that we should have reform of local government financing. We need to go further than just the property tax system. More should be based on ability to pay, not just on property taxes, and I think education is key among them.
But to do this, to go along the lines that are being suggested here by Metro, is just jumping from the frying pan into the fire. I think you should ask for these impact studies, both social and economic. Better still, let's do reform, real reform and let's do it now.
Mr Robert Brown: We're approaching, I guess, just about halfway through the half-hour you've suggested would be appropriate for this presentation. There's just one small area I think we need to reinforce and that is the fact that we are here before the province, before a provincial committee and this is an issue of provincial scope.
The municipal taxation policy for all urban communities in North America, particularly here in Toronto, is a fundamental strategic tool in the shaping of the structure and form of the community. The proposal that's been brought forward by Metro to you I think is in serious error in that it operates in opposition to a number of the other initiatives that are currently before not only the city of Toronto, but Metro itself and the GTA.
From what we can sense in some of the ministries in the province, the urban sprawl philosophy of the late 1960s and early 1970s, which sort of led us to believe that we should support the development of the nodes in Scarborough, North York and Etobicoke etc and that have led to the development of Richmond Hill, Markham and a number of the communities to the north, the east and west of Toronto may not be totally appropriate for the next generation of urban growth.
In actual fact, it is my belief that urban growth should be of a more intense form, and we've seen initiatives in the city of Toronto, such as the main streets, for intensification of the strips along Bloor Street, Eglinton, St Clair, King, Queen etc. We now have coming, through the Metro administrative process and political process, its new plan, which we understand is looking at further intensification of uses not only within the city but within Metro itself, and requestioning whether it's appropriate to continue the sprawl in southern Ontario that absorbs acre after acre of very valuable farm land. That continues to cause total provincial expenditures on infrastructure to be well beyond what the local communities can afford to sustain once they have moved into their particular residential communities.
That's why I think it's very important that this committee refer back to the minister and to the ministry serious concerns that should be there relative to this particular policy and how it operates in opposition to a number of other initiatives that are perhaps more appropriate for this decade and maybe for this generation of growth to come.
Mr Payne: I think that's all of our submissions if we have good questions --
The Acting Chair: I'll recognize one question.
Mr Wookey: May I just add one item? What Robert Brown just said is just the tip of the iceberg. In the United States today, there's a vast migration of people leaving the suburbs that has already been in place for the last two, three, four or five years -- a lot of them already left the inner cores of the cities -- going to the suburbs and from the suburbs going to smaller towns and villages and so on. Every time this happens, it leaves a big void somewhere else and I think that is something the government should look at very carefully.
Mr Payne: Questions?
The Acting Chair: Yes. Mr Mammoliti, Mr Turnbull and Ms Poole.
Mr Mammoliti: I'm first, am I, Mr Chair? I'd like to ask Mr Eggleton a question, if possible. Thank you very much, all of you, for coming, by the way. Mr Eggleton, congratulations on your appointment to the York Centre federal riding.
Mr Eggleton: Thank you.
Mr Mammoliti: We may be neighbours. I'm in Yorkview provincially.
Ms Poole: There's a happy thought.
Mr Mammoliti: Mr Eggleton, I'm going to have to agree with you in terms of the property tax structure and how we've got to perhaps look at that concept of the ability to pay in terms of the educational portion of property tax, but let's talk about York Centre for a second, let's talk about that suburb you're looking to represent federally as well and let's talk about MVA and how that particular suburb is certainly looking forward to the tax reduction that MVA would bring with it, Mr Eggleton. An estimated 80% to 85% of the businesses, as you spoke about, as well as the home owners and renters in that community, will benefit. They will experience a reduction. In Metro, 57% of the people will experience a reduction with the current proposal.
I have two question. First, don't you think the people in York Centre pay too-high taxes for their properties?
1810
Mr Eggleton: There's more than one way to bring about reform. If people are paying too much in taxes, whether it be in York Centre, downtown Toronto or anywhere in Metro, then reforms should be brought about so they don't have to pay higher taxes. There's no doubt about that.
I don't think this is a good reform. There's more than one way of doing this. Let's look, for example, at the unit assessment system. Let's see the kind of impact that would have. If you had smaller lots, smaller frontages, quite frequently you'd end up with people who would pay less.
I think reform is needed and that people, wherever they are, who are paying too much should be paying less, but I don't think the system that is being proposed is a fair and equitable system to start with. Secondly, you don't put up people's taxes and create the kinds of difficulties that it would for many parts of this metropolitan area.
Mr Mammoliti: The people in York Centre have been looking forward to a reduction for a number of years now. You're here in front of this committee asking us to pretty much put a halt to those reductions.
Mr Eggleton: I'm saying this is the wrong way to bring about that reform, but reform is something that should be done.
Mr Mammoliti: Ultimately, what that means is to put a halt to the reductions that people in York Centre are looking for and have been waiting for for a number of years.
Mr Eggleton: Why didn't you look at alternative systems years ago? The city of Toronto has certainly asked for a long period of time that alternative systems be looked at. There's been enough time for the members of this Legislature to propose that, so people who are deserving of reductions can get them.
Mr Mammoliti: This is a Metro proposal.
Mr Eggleton: Yes, and I'm saying it's a bad proposal. It's not reform at all.
Mr Mammoliti: People in York Centre suffer because of it.
Mr Eggleton: Let's give reform to all the people in the metropolitan area. Let's give a true reform not only of the property tax system but of the financing of municipal and local government. Let's do that, which is something that should have been done a long time ago, and then the people who should be paying less will indeed be paying less, but not at the expense of the fabric of this city, not at the risk of businesses going under. That's not a way to bring about reform at all.
The Acting Chair: Thank you, Mr Eggleton. Mr Turnbull.
Mr Mammoliti: Look at the businesses in York Centre that won't be going under, where there'll be a saving.
Mr Eggleton: Not all of them will. A lot of them will be going up everywhere.
The Acting Chair: Mr Mammoliti, please.
Mr Eggleton: A lot of them will be suffering as a result of it.
Mr Mammoliti: A lot of them suffer --
Mr Eggleton: You don't make other people suffer to bring about a reform.
The Acting Chair: Mr Mammoliti, your dinner will be cold.
Ms Poole: I say don't give him any dinner at all.
Mr Turnbull: Mr Eggleton, I completely agree with you that we should have proper reform of the tax system. There's no doubt about it that the present property tax system is badly skewed and there are some inequities, but this is not the way to fix it. It's my understanding that the city of Toronto, quite some years ago, asked for a review of the unit assessment system, and the government wasn't forthcoming in spending the money on that. Is that correct?
Mr Eggleton: That's right.
Mr Turnbull: How long ago was that?
Mr Eggleton: I couldn't tell you precisely. I think this has gone over three governments of three different political stripes, and we're still not able to get a proper study of the alternative system we recommended.
Mr Turnbull: Both North York and the city of Toronto recommended the unit assessment system, I believe.
Mr Eggleton: At one time North York was part of that, yes.
Mr Turnbull: You may be interested to know that the Fair Tax Commission's property tax panel has apparently studied the impact of market value and unit assessment using Pickering as a model. They compared it with the income tax rolls and they were able to establish that the unit assessment system was certainly not less fair than market value. Of course, the great advantage of it is that it would be considerably less to administer and it would be a stable system.
Mr Eggleton: I think a stable system is very important as part of this. It's too volatile a system that is being proposed, MVA, with values up and values down according to location.
Mr Turnbull: One of the problems you have when you have a committee meeting like this, as you well know, is the fact that people tend to have made up their minds before they come here. They're probably collectively protecting the turf of their people as they perceive it.
It's well known that I'm against market value assessment. In fact, it's the issue that brought me into politics. My concern is trying to persuade the people whose constituents have reductions -- understandably, they're fighting for those reductions; I don't blame them -- to understand the unfairness that is going to be created by this proposal. Is there anything you can offer for Mr Mammoliti, for example, to make him understand that while the present system is not fair, we're just replacing it with another set of inequities that we really could have addressed by going to unit assessment?
Mr Eggleton: I think it certainly deserves the kind of study that it has not been allowed to have up until now, and I think that kind of study should be done first; the impact studies I've talked about should be done first. Sure, there are some people who are going to benefit from the implementation of this, but I think too big a price is going to be paid by implementing this system, and that's why I think we need to look at the alternatives and not rush this through.
Mr Turnbull: You alluded to --
The Acting Chair: Mr Turnbull, I'm sorry. Ms Poole, please.
Ms Poole: I'd like to thank Save Our City today for the presentation, which I think in a very real way brought home some of the impacts of market value assessment.
First of all, in response to Mr Mammoliti's comments about the city of York and the impact there, perhaps he should also recognize that 35% of the businesses in the city of York will have the maximum 25% increase, plus other regular increases that come their way, so those businesses are looking at a 50% tax increase over the next three years. When you talk about inequities, the area that the former mayor of Toronto will hopefully soon be representing in the federal legislature will have its fair share of a devastating impact as well.
Two comments: First, Mr Wookey, you mentioned taxation without representation. It seemed to me that was a battle cry in the 1700s somewhat south of the border and it seemed to me they had a Boston Tea Party with that particular cry, "taxation without representation." You put the case very well, because one of the things the government does not seem to comprehend when it says it's protecting the city of Toronto by making Metro do a bylaw about the point-of-sale provisions is that Metro has voted three times that residents will go to full market value at the point of sale, and it will most likely vote a fourth time that way. So we are talking about people who have no representation on Metro, because the city of Toronto representatives are clearly out-voted. I really thank you for making that point.
The Acting Chair: And your question?
Ms Poole: My question relates to the lack of impact studies. Mr Mammoliti again was rambling on yesterday about a letter from the Liberal Minister of Revenue in January 1990 that went to Metro council about Metro's request to proceed. One thing Mr Mammoliti has not said was that in that letter it very strongly recommended to Metro that it do an impact study.
The question I have for you on the Save Our City panel is, are you aware of any impact studies on the economic impact, the impact on small business, the impact on the shift on top of small business, environmental impacts, social impacts, job impacts? Are you aware of any studies whatsoever that Metro has conducted in these areas?
Mr Eggleton: No.
Ms Poole: Are you aware of any studies that the provincial government, whether it be Conservative, Liberal or NDP, has conducted in this particular area?
Mr Eggleton: No.
Ms Poole: I suspect, given your knowledge of this particular area, that the reason you aren't aware of any is that they don't exist. I think it is totally irresponsible for this government to go ahead with this plan without any impact studies and then to say: "Well, it's an interim plan. So what if the city of Toronto is destroyed within the next five years? It's only interim, and it's not our fault; it's Metro's." I have a lot of difficulty with that.
The Acting Chair: Can anybody answer Ms Poole's questions?
Mr Payne: I will, just as a bit of closing comment. We're not aware of any impact studies that have been done; we've answered that. But I would just like to make one point. Personally, my taxes go down significantly under full MVA and I'm very much against it. I'm against it because I don't think my taxes are going to go down for very long when I watch the entire retail strip two blocks away from me go bankrupt under it.
Surely the issue of taxation is not simply: "If mine go down, I'm in favour of it. If it goes up, I'm against it." That's what responsible government is about: looking at larger issues. I suspect it should be done with an impact study. There are enough lotteries in the province of Ontario. Don't do it with my city.
The Acting Chair: Thank you, gentlemen.
1820
YONGE RIDGE HOMEOWNERS ASSOCIATION
The Acting Chair: Now we'll go to our last group of this session, the Yonge Ridge Homeowners Association. We are running very short on time, as you realize. You do have 30 minutes, but I'm asking you to be as short as possible.
Mr Jay S. Burford: I don't believe I'll take the 30 minutes. My wife would appreciate your comment about a "group"; she sometimes suggests I'm getting to be a size where I create a group. I don't think I'll tell her about it, all the same.
Good day, ladies and gentlemen. My name is Jay Burford. I'm president of the Yonge Ridge Homeowners Association. We're located in the northeast quadrant of Yonge Street and York Mills in the city of North York. I'd like to thank you for giving me this opportunity to address the committee. To start with, I'd like to state that we are in opposition to the market value assessment but we are not in opposition to fair tax reform.
I'd like to read to you a letter our association sent to Premier Rae and a number of the other members last week. It's a short letter, and I think it encapsulates some of our concerns.
"Dear Mr Rae:
"Regarding market value assessment in Metropolitan Toronto, the Yonge Ridge Homeowners Association has for some time attempted to analyse the impact of market value assessment on our members in the area of Yonge Street and York Mills Road. This analysis and the most recent decision of Metro council has revealed that:
"(1) Market value assessment is not tax reform, and its application should not be considered until the Fair Tax Commission has completed its studies.
"(2) The decision of Metro council is an abortion and its application will not reflect market value of a property in any way. The new formula proposed will only further distort an already inappropriate and unfair system.
"(3) Education taxes have not been considered in this scenario, and it is our belief that education taxes must be a part of the process to identify the application of fair taxes.
"The Yonge Ridge Homeowners Association begs you to stop the proposal of Metro council, and demands that a system of fair taxes be implemented only when all facts are known, thoroughly analysed and processed through an open public review mechanism."
"Yours truly" etc.
I'd just like to talk a little about some of those points.
Point 1: I understand that the Fair Tax Commission has sent down drafts. Why not wait the few weeks until they send down their final report and use the results from the Fair Tax Commission? I believe we're paying a lot of money to have them do a lot of good research, and I don't think it's inappropriate for the taxpayers to expect that you would want to use that before you make a major decision like this, allowing Metro to go ahead with this. I hope and I believe that they are looking at something like unit value. I keep hearing about this, that this is a fairer system.
Again, I want to point out, we are not against reform. We don't think the current system is fair, but we do not believe that market value assessment is any fairer. My understanding leads me to believe that unit value will lead to a fairer system.
On point 2, that it's not MVA and it's a further distortion of an already distorted system, when I look at the caps upward and downward, and I see them going partway in some instances and some homes but not for the other category, where they go to full market value immediately and, even worse, when a home is sold it goes to full market value immediately, all I can believe is that it's going to pit neighbour against neighbour and give us a totally unfair tax system, much worse than it is now. It's going to affect the property values of sales if you allow that clause to go through, as I think is fairly obvious to most people.
The other thing that bothers us is that the market value assessment as it's proposed by Metro is based on an all-time-high assessment from 1988. It doesn't make sense to us to use that. It may seem fair from a tax point of view, but it's hardly fair to the people in their homes, who had no control over that rising market value caused by speculation.
Point 3, education taxes: I believe that we must have not just a good education system in this province, but I believe as a business person that it's imperative we get a great education system. I also believe -- and this may be because I come from the school system of a number of years back -- but I was always taught that one of the things the provinces fought for was that education be a provincial responsibility. And yet I believe there's some abdication of that responsibility; a total abdication, actually. The education tax should not be at the municipal level, shouldered by the municipal taxpayers. You should not be required to pay for it more than once, if you own more than one property. We should pay for education; we should pay for a terrific education system, but each person should only pay once. I think you have to take the education system out of the municipal tax system and, again, I hope that's one of the things the Fair Tax Commission will look at.
I know that the effect of market value on cottage country has been to shift even more of the education burden on to city dwellers -- unfairly -- a second time. They already receive very little or next to nothing for their taxes in cottage country and yet they're asked to shoulder more of it with market value. Last week in the House the Honourable David S. Cooke, Minister of Municipal Affairs, said, "There is no place in Ontario where the differences in the market vary so significantly as is the case in Metropolitan Toronto." I believe the market value assessment system in cottage country is going to work very hard to make the differences just as significant in cottage country, where the beneficiaries do not pay, while those who do pay benefit very little. Saying no to market value assessment for Metro, the largest municipality, will be a clear message from the province that this tax is unfair and must be turned around.
What type of tax is it? I believe as a taxpayer it is a location tax, applying an unfair burden to an area that becomes popular, in, trendy. People who live there have no control over this speculative increase in value. Their ability to pay an increased tax and their consumption of services hasn't changed at all. As a matter of fact -- and I'm thinking of my area particularly now, where there are many seniors who are retiring and want to stay in the area. Their ability to pay may be reduced and their consumption of services is probably greatly reduced, but they desire to stay in that area: the area where they brought up their children; the area they know; where they're involved in their churches; where they're involved in their community.
We claim as a society that we want those people to stay there; we don't want the high cost of having them in homes or having them hospitalized. We say we want them to stay in their homes as long as they can and at the same time we turn around and set up a tax system that is going to tax them right out of their homes. It doesn't make sense to me; I don't understand. When they do wish to sell they'll be penalized. There's their retirement nest-egg that they thought would allow them perhaps to move out of the city, go into a home, move into smaller quarters and live in a gracious manner until their death -- something they should be able to do after they've worked hard all their lives. That nest-egg is going to be reduced by the spectre of full market value for any prospective purchaser.
It also seems to me that this tax is totally unfair, based on consumption. In the Yonge-York Mills area I believe there are small bungalows that pay $6,000, in an area without storm sewers and sidewalks and with rough roads. It's not related to the size of house; it's not related to the size of lot; it's not related to the services used; it's the effect, in many cases, of the monster home sales of 1988. The increased taxes will be raised even more by the effect of the monster home sales of 1988. I live in an area where many homes were bought, torn down, and monster homes were built -- all in speculation. That's going to raise the price in the whole area. But those people in those little bungalows don't have any more money to pay the taxes with. They didn't get any more money, because they didn't sell in 1988. Should they be punished for that? I don't think so; I don't think so at all.
The uncertainty of market value from one assessment to the next will leave them continually wondering how their taxes are going to go and whether they can stay there. I think that will drive many out, because they're trying to budget on a pension income and I don't think they'll be able to handle not knowing where their taxes are going. I believe you must look at a unit assessment system.
1830
To conclude, I urge you please to hold up Bill 94 until the Fair Tax Commission reports. Get all the facts, then have public reviews and talk to the people. I believe you must find a better tax system. I don't believe the current one is fair, but I don't believe that market value is the answer.
I urge you to look at your education. If it's a provincial responsibility, then let's find a way to make it a provincial tax and look after that, and take it out of the municipalities.
I believe that if you do nothing else, you must stop full market value at the point of sale on homes. I think that will create a totally unfair system and hurt so many people, especially the elderly, that I just can't believe you would leave it in.
Thank you again for allowing me to have this time. I hope I haven't taken too much of it. I tried to be brief.
The Acting Chair: Thank you for your presentation.
Mr Turnbull: Thank you very much for an excellent presentation.
You spoke about the phenomenon of monster homes going into York Mills riding, and specifically the area that you live in. Could you tell the committee a little bit about what happened in 1988 and expand a little bit on that?
Mr Burford: On some of the streets in our area in 1988, I'd say a half to two thirds of the homes were bought, torn down, and monster homes built there. It was a speculative aberration in the market, a bubble. Certainly many of the homes sold; many did not. Many were still sitting there and have sold now at much lower prices.
Certainly the biggest concern I have is not so much for the people who bought those homes but for the people who are still there in the smaller bungalows sandwiched between those homes. Their lots are going to be assessed at 1988 values, and in 1988 I don't think any value was given for the home; it was strictly the lot that was wanted to build the monster homes on. I think that's totally unfair to these people. They'll be taxed right out of their homes. In many instances they're retired or very close to retirement, and they just won't be able to afford to handle that sort of tax increase.
Mr Turnbull: I think it's fair to say that the area we're talking about went up higher than the others and came tumbling down more than the others.
Mr Burford: I believe that to be true. I'm not in real estate, but certainly from things I hear in the neighbourhood, it sounds like that is very much the case, that the prices went extremely high because we're close to the subway. It seemed like a desirable location: again, a location tax. Certainly prices, I believe, have come down significantly because, as I said, some of the builders got caught holding large homes. I think that kind of convinced some of the others this wasn't the time to be there.
Mr Wiseman: I have two quick questions. You say that education is a provincial responsibility. I can tell you that the trustees in my area would have a great deal of difficulty agreeing with you on that. If your implication from this is that the boards of education should be eliminated and the responsibility for education should be a provincial purview, I think you're looking at a major jurisdictional war.
The second thing I'd like to say is that I have a great deal of sympathy for the people who live in neighbourhoods with the monster homes. I think the culpability of that lies solely and strictly on the shoulders of the councillors who rezoned those areas or allowed whatever zoning bylaws to be ignored or to be changed to allow those houses to be built, changing the whole nature of the neighbourhood.
I think there's a second question in terms of another issue here: What protection do home owners have? What can you reasonably expect your local councils to do, given the zonings and the designations in whatever official plans they have? In terms of future battles, I think there are two major issues that need to be addressed in the ongoing quest for some tax equity.
Mr Burford: On the first question, I don't pretend to know enough to suggest whether the school board should be dropped. I'm suggesting that the taxation should come from the province because I understand the province implements a number of the programs and forces them on to the boards, like junior kindergarten in areas that don't want it; things that, as I understand it, pass through the province without the funding to go with them.
I believe the funding should come from the province and you should only be taxed once. As I say, I want a good education system, believe me. I think we need that in this country. That's probably one of the highest priorities I would give in this country but I don't have all the answers. I hope the Legislature can come up with some and maybe the Fair Tax Commission can come up with some.
On your second point, I agree with you that the local councils have to do something about the monster homes. I'm very fortunate, I believe, and I think most of our ratepayers believe -- it's not perfect -- but being in North York, I believe they were the first ones to step up to that issue. Our councillors did go to bat for us and they put in the strongest monster home rules that I believe are in the province, or were at that time. They brought in the first set. Certainly, when you have a problem, you're able to phone our councillor and she tries to get someone out there to fix it and negotiate it. They tried to put things in to stop some of the many problems and many of the complaints from the contractors who were building the monster homes. It's not perfect but at least we have some protection in North York, and I appreciate the fact that our council at least made an attempt.
The Acting Chair: Ms Poole.
Ms Poole: Quite frankly, Mr Chair, I'm very surprised that Mr Wiseman would bring up those points about removing education funding from the property tax system in such a way. It's obvious that he hasn't refreshed his memory and read the Agenda for People recently, because that's what the NDP government had recommended. But I guess he's forgotten all about that.
Mr Burford, thank you very much for your presentation today. You've really made a lot of well-thought-out points but I'd like to touch on two. The first is that you have pleaded with the government not to allow homes to go to full market value at the point of sale, and I think virtually every presentation we've received to date from city of Toronto residents, and city of North York residents for that matter, has made the same point.
I just wanted to let you know, because I wasn't sure if you were in the room earlier when it was discussed that we will be giving the government an opportunity to rethink its position and that I am proposing an amendment. I will be bringing forward an amendment which will continue to protect homes at the point of sale so that the cap is on. So really, this government has the majority and can do with this what it will but we will be giving it the opportunity to rethink it. I just wanted to let you know that.
The second thing you mentioned was actually in the form of a question. You talked about the Fair Tax Commission and you said, "Why not wait a couple of weeks for this report?" Quite frankly, it is a very reasonable suggestion, particularly because for two years we've heard this Fair Tax Commission touted and what it is going to do to bring forward all the research and the thoughtful thinking in the area of taxation. I guess the answer I would give to you is because --
The Acting Chair: Can we get a question instead of an answer, Ms Poole?
Ms Poole: Okay. Can I finish my sentence before I ask him the question?
Mr Mammoliti: Are you not going to let her continue to bash?
Ms Poole: It's not bashing; it's the truth. I don't think the government wants the Fair Tax Commission report. I've seen part of the draft that is out and it is very critical of market value and this whole plan. It is critical of market value as a system, so I suspect that is the real answer behind it.
Mr Burford, the question I would have for you today -- you've talked about these small bungalows paying $8,000 --
Mr Burford: Six.
Ms Poole: Sorry, $6,000. Is it your opinion that this plan will just simply trade one set of winners and losers for another set of winners and losers in that it will trade one set of inequities for another set of inequities?
Mr Burford: Yes, that is the case. As I say, I believe we do need tax reform. I believe there are inequities now but certainly nothing I see in this plan suggests to me that it's going to make it an equitable system at all. As a matter of fact, it appears it will make it more inequitable, especially when you get things like capping up and down and then full market value for other people, either the ones in the "other" group or the ones when you sell a home. To me, that just states right from the beginning that it's going to be an inequitable tax and it says it almost right out.
But again, don't misunderstand. I don't think the current system is right either, and I do agree that we need to have a reform, but this isn't it, from what I can see.
The Acting Chair: Thank you, sir.
As you know, we were supposed to be back at 7 o'clock, so there are 20 minutes left before our next presenter, the Tenant/Landlord Coalition for Equal Taxation. Are these people in this room? No. Is it agreed that we should end our recess at 7:15, that we should resume at 7:15? Agreed.
Ms Poole: Are the next presenters here?
The Acting Chair: No, they're not.
Ms Poole: That would be my only concern, if this is problematic for them.
The Acting Chair: Is it agreed? Agreed. Thank you.
Ms Poole: Can we say 7:15 sharp and start, regardless of representation?
The Acting Chair: Yes, 7:15 sharp.
The committee recessed at 1841.
EVENING SITTING
The committee resumed at 1918.
The Acting Chair (Mr Michael A. Brown): The standing committee on social development will come to order. Mrs Poole.
Ms Poole: Mr Chair, I have a motion that I would like to put before the committee. I don't want extensive debate on it, because I don't want to delay going into the public hearings, but I think this is a very important issue.
I hereby move that the Minister of Municipal Affairs be requested to attend the social development committee to answer questions on market value assessment at any of the following times: Wednesday, December 2, 1992, from 12 noon to 1 o'clock or 6 o'clock to 7 o'clock; Thursday, December 3, 12 noon to 1 o'clock or 6 o'clock to 7 o'clock; Friday, December 4, 12 noon to 1 o'clock or 5 o'clock to 6 o'clock; and then Saturday or Sunday, 12 noon to 1 o'clock, 5 o'clock to 6 o'clock.
I furthermore move that the Minister of Municipal Affairs be requested to confirm at the earliest possible opportunity which date he will be available for committee questions.
Just to briefly speak to this, Mr Chair, I've reiterated on a number of occasions --
The Acting Chair: Are there copies for other members of the committee?
Ms Poole: I'm sure there could be.
Mr Turnbull: I move that the question now be put in the interests of --
Ms Poole: You want me to put the question?
The Acting Chair: No, I want you to --
Mr Owens: Excuse me, Mr Chair, I'd like to request a 10-minute recess.
Ms Poole: Oh, come on.
Mr Mills: You caused it.
Mr Owens: The request is in order.
Ms Poole: What do you mean, I caused it?
Mr Mills: Of course you did. You know what you're saying.
Ms Poole: You caused it because you refused to have to your minister come.
The Acting Chair: Order.
Mr Turnbull: Is it not reasonable to ask the minister to come?
Mr Mills: This isn't good politics. We've got the public here.
Mr Turnbull: Is it not reasonable to have the minister --
[Failure of sound system]
Ms Poole: They are saying it is inappropriate for the minister to attend and answer questions of the committee.
Mr Owens: The vote was being called and I had requested --
The Acting Chair: There was no vote called. I did not call a vote.
Mr Owens: You requested that the mover of the motion put the question.
The Acting Chair: No, I didn't.
Ms Poole: He said no when I asked him.
The Acting Chair: No, I did not.
Ms Poole: He said no, he was asking me to comment.
The Acting Chair: No, there was not debate on the motion.
Ms Poole: I have provided here 10 different times when the minister could be invited to appear before a committee without inconveniencing or taking away from any of the public time.
I find it totally unacceptable that this government would refuse to have the minister attend. I find it totally unacceptable that the Minister of Municipal Affairs is ducking these questions to which we are owed answers and to which the people in Metropolitan Toronto are owed answers.
I would ask that this government support this motion. It is a reasonable one and it provides plenty of opportunity for the minister to come at his convenience. I'll tell you one thing: If these government members vote against this motion, that means it's a whole mockery of what they said about an open consultative process. It's a mockery of saying they're open government, and I'll tell you one thing: People will not accept it.
The Acting Chair: Further discussion?
Mr Owens: We're in recess.
The Acting Chair: Those in favour of Ms Poole's motion?
Mr Owens: I'd like to request a 10-minute recess.
The Acting Chair: It's a 20-minute recess.
Mr Owens: A 20-minute recess. Thank you.
The Acting Chair: Mr Owens has requested a 20-minute recess on the vote. The committee will reconvene at a quarter to 8.
Ms Poole: Mr Chair, would Mr Owens accept a five-minute adjournment, or now that he has the votes he needs --
The Acting Chair: That's the standing orders.
Ms Poole: Unanimous consent?
Mr Owens: I'll go for 10.
Ms Poole: You've got your members. Why are you doing this to the witnesses who are here?
The Acting Chair: Reconvene at 25 to 8.
The committee recessed at 1923 and resumed at 1933.
The Acting Chair: The standing committee will come to order. Mrs Poole has moved a motion that is before every member. All in favour of Mrs Poole's motion? Opposed? The motion's lost.
TENANT/LANDLORD COALITION FOR EQUAL TAXATION
The Acting Chair: Our first presentation this evening will be made by the Tenant/Landlord Coalition for Equal Taxation. Welcome to the committee. The committee has allocated 20 minutes for your presentation. The committee always appreciates time to ask questions following the presentation so, in your presentation, please govern yourself to allow some time. It's necessary for the Chair, under the orders of the committee, to be very strict with the time limits. If you'd like to introduce yourself for Hansard, you may start.
Mr Andrew Stewart: My name is Andrew Stewart. I'm a representative of the Tenant/Landlord Coalition for Equal Taxation. This organization was formed recently by Metro tenants and landlords. Being taxed equally is about the only issue which those for or against market value assessment or those for or against rent controls can agree. In the past month we've informed over 100,000 tenants in Metro of the inequity. We have now over 10,000 tenants who have actively responded to the organization, and landlords and property managers of over 100,000 units are also actively involved.
It is with some relief that this committee has been asked to review the proposed legislation as you better understand the basic facts with which tenants are faced. According to Statistics Canada, tenants earn almost half as much as home owners and have less net worth. While tenants represent over 50% of the population of Metro Toronto and over 30% of the province, they are not treated equally with home owners.
Under the Assessment Act, tenants in multiresidential buildings are taxed at a rate here in Metro Toronto at three and a half times those in houses. This is indisputable and it is not new. The province inherited this basic inequity in 1970 when it took over the assessment system and successive governments have allowed it to continue.
You have before you a request by Metro Toronto to allow a reassessment plan which requires amendments to three separate acts and the repeal of sections of another five acts. Yet nowhere do we see any attempt to deal with the fundamental inequity between tenants and home owners. Amazingly, the Assessment Act which perpetuates this incredible injustice remains unamended. This inequity costs Metro tenants $1 million a day. Over five years, this will amount to $1.8 billion. Which is the greater inequity here, $100 million between home owners or $350 million between home owners and tenants? Depending on whether one accepts the arguments of market value or not, one will accept or reject the $100-million home owner inequity as fact or fiction. But under any assessment system, whether it be market value or unit value, tenants pay three and a half times the taxes as home owners, or $350 million a year.
Is this committee aware that the province of Manitoba in the fall of 1991 announced that it will equalize the effective tax rates among all residential classes and that Metro council unanimously passed the following resolution: "the provincial government be requested to redress the current assessment that perpetuates inequities between home owners and tenants"?
I am a member of the property tax panel of the Fair Tax Commission, and in its report, which will be released next week, the panel recommends that "All residential properties should receive the same treatment for assessment purposes, regardless of their ownership and occupancy status. The assessment system should not favour one property type over another or one type of property tenure over another."
Does this committee honestly think that once these proposed amendments for Metro are passed, either Metro's resolution or the recommendations from the Fair Tax Commission will be implemented? Indeed, one of the Minister of Municipal Affairs' assistants said candidly that Metro officials directed the ministry to ignore the unanimous resolution. What kind of politics is at play here?
I'd like to proceed now on to a more technical aspect, which is the tenant pass-through mechanism. The tenant pass-through mechanism is in a shambles and is unworkable for the following reasons:
(1) Thousands of tenants will not be covered by the automatic pass-through provision. Neither Metro nor the province have estimated how many tenants fall between the cracks. Their attitude has been cavalier and misleading. We estimate that over 50,000 for-profit rental units are not covered by section 113 of the Rent Control Act. There are 21,185 rental units in duplexes and over 14,000 in three- to six-unit buildings. Furthermore, CMHC lists 10,000 condominium rental units which are not covered, but this estimate does not include condos privately owned and rented, which would account for many thousands more. There are thousands of tenants in apartments above stores or in basements which will similarly be left out. Finally, the rent register for buildings of seven units or more is not complete. How does Metro plan to keep its promise that all tenants will receive an automatic pass-through? Certainly the Ministry of Housing has no plan, nor is there anything in the proposed legislation before you to address this.
(2) Under the current legislation, tenants are expected to pay rent as if no tax decrease has occurred for the first half of 1993. Thus, landlords will overcharge by one half of the expected decrease for one year. On the other hand, tenants who are to receive rent increases due to higher reassessments get at least a one-year break, because the current legislation only allows landlords to file for extraordinary cost increases after the final tax bill has been paid. Thus, landlords will not be able to recoup the tax increases until 1994. As the increases and decreases occur in separate buildings, these inequities do not balance out. This unequal treatment on both sides is unacceptable to us.
(3) The registrar proposes that rents will only be decreased if the impact is at least $5 a month, or $60 a year. Are home owners similarly treated? Absolutely not. A dollar decrease for them is a dollar saved. Why should tenants not be treated equally?
1940
(4) Section 113 of the Rent Control Act is inconsistent with section 29 of the act, which permits operating cost increases and decreases. The method of allocating cost decreases through the rent register is based on a dollar amount, yet the rest of the act allocates as a percentage of rent. This inconsistency was not understood by David Braund, the rent registrar. Isn't it a little late in the day to educate those officials who are to implement the pass-through on the various clauses in the act?
I might add that when Bill 121 was before another committee, I'd also provided a brief on that as president of a tenants' association and mentioned the same problems, and these have not been addressed.
In conclusion, the current legislation before you is inadequate for a number of reasons. It maintains the current status quo in which tenants who are at the lower end of the income scale pay three and a half times the taxes of home owners. The pass-through mechanism does not cover at least 15% of all tenants in private rental accommodation and treats increases and decreases differently. The legislation should be amended to at least tax all residents of Metro Toronto equally, as requested unanimously by Metro council and as demanded by thousands of tenants.
I really think the basic issue here is that the legislation before you and this market value plan as proposed will serve as a roadblock to tenants in terms of making it much more difficult to deal with the inequity next year or the year after. As I have said, each day that goes by costs us $1 million, and that amounts to about $100 a month in rent per tenant in Metro Toronto.
I think that you, as a social development committee, should realize that some of the demand for food banks and other social agencies and their services will, of course, decrease if you actually deal with the affordable housing issue. This is an affordable housing issue and should be dealt with now while Metro has asked you to deal with it, because next year that resolution can be pulled and it's going to make it much more difficult to deal with it at the provincial level.
The Acting Chair: Thank you. We have approximately four minutes per caucus for questions. Mr Mammoliti has expressed an interest.
Mr Mammoliti: Let's talk a little bit about the inequity for a second. First of all, if this goes through, approximately 200,000 units out of the 350,000 units in Metro will experience a decrease in rent, if I'm not mistaken. In terms of the inequity, if we did what you've asked us to do, how many tenants would actually experience a decrease in Ontario? Because what you're asking is an Ontario-based policy, right?
Mr Stewart: Right. Out of 31 jurisdictions that the Fair Tax Commission looked at in terms of cities or regions, there were only two that actually had tenants paying less than the commercial rate, which is still much higher than the single-family residential rate. So if this was addressed, every tenant who is in a multi-res building which is seven units or more would experience a decrease in rent.
Mr Mammoliti: Do you have an average?
Mr Stewart: It all depends on jurisdiction. Here in Toronto it would be about $100. In Ottawa, they pay -- I think the inequity is about two times. Some inequities are more. I think Metro Toronto is the worst. Etobicoke is the highest on average, at a little over four times. But Thunder Bay, Sarnia, they all have the same problem.
Ms Poole: Thank you for your presentation tonight. I think you've laid out the issue very succinctly.
On page 1 of your brief you referred to the report of the property tax panel of the Fair Tax Commission. It is anticipated that this report will be out next week, and the panel recommends that "all residential properties should receive the same treatment for assessment purposes, regardless of their ownership and occupancy status."
I presume from this that this means you would equalize the taxes between single-family home owners, who are assessed at 2.2% of their value, and tenants of multiresidential units, which are assessed at 8%. Is that what the Fair Tax Commission is actually going to recommend, that the tenants would be brought down and the home owners would be brought up, that they would have one class for residential properties and that the two would merge?
Mr Stewart: Right. The Fair Tax Commission is very specific that it's talking about assessment and that the assessment would be equalized. There are other things they're talking about in terms of variable mill rates, which means they're putting the pressure back down on to the municipalities to be much more visible in any kind of tax policy where you're going to tax tenants maybe higher than home owners. Actually, the recommendation is that it would be for a limited period of time only, through a transition phase.
Ms Poole: You've asked a couple of questions in your brief specifically about the issue of whether tenants are going to receive their automatic pass-through and whether this legislation is fair to tenants. Two questions specifically you've asked: How does Metro plan to keep its promise that all tenants will receive an automatic pass-through? Secondly, why should tenants not be treated equally? That was a later question.
With your permission, I would ask the Minister of Municipal Affairs to answer these questions, since he's also a former Minister of Housing. It appears that's the only way we'll get any answers out of the minister -- with your permission.
Mr Stewart: Yes.
The Acting Chair: It's customary to just have the conversation with the presenter, but if the minister wishes --
Hon David S. Cooke (Minister of Municipal Affairs): Mr Chair, I've come to listen to presenters tonight and that's what I'd like to do. Perhaps if the member would like, at some point, since we are talking about Metro's plan, to put some of those particular questions to Metro.
Ms Poole: Mr Chair, this is totally unacceptable.
The Acting Chair: Ms Poole, the conversation is with the presenter.
Ms Poole: Through you, Mr Chair, to the presenter: I find the minister's comments totally unacceptable. This is out of Metro's hands at the moment. It is up to the Ministry of Revenue. It is up to this NDP government that if those factors are to change, if tenants are actually going to be equalized with home owners as far as the assessments on their properties are concerned, the only way it can happen is through legislation of this provincial government, this NDP government.
I say to the witness that I'm sorry you didn't get any answers to your questions today, but nevertheless, they're very valid questions that this government is going to be faced with answering, particularly if it wishes to continue to say it protects the rights of tenants. Thank you for your presentation.
Mr Turnbull: Mr Stewart, you bring forward a very important issue, one which I raised during debate on second reading, that the government is missing a historic opportunity to balance tenants' taxes with home owners' taxes. I can't think of a better time to do it. You've seen that we can't get any answers out of the ministry and the minister because they want to take the position that this is Metro's plan and they've got nothing to do with it. Yet it's quite clear that this government is an interventionist government and in many issues has intervened against the wishes of municipalities. Why aren't they doing it now for tenants?
In your position, sitting on the property tax panel of the Fair Tax Commission -- you talked about the study that will be out next week. My first question is, do you not think it would be reasonable that this government should wait and stand down all this legislation until after we've had an opportunity to read the report of the Fair Tax Commission? Do you believe there will be a significant impact if we were to take into account the recommendations of the Fair Tax Commission?
1950
Mr Stewart: I would hope they would wait until the Fair Tax Commission reports, because I think the recommendations that are made specifically to tenants, which I've been working on for over a year, are good recommendations. Just taking into account that one third of the panel is from municipalities across the province, one third is from school boards and one third from other property classes -- I was the only tenant on the panel -- yet they too felt that there was this inequity which had to be addressed.
They will recommend transition periods and mechanisms to make it much easier to implement this. I don't think we can expect to implement something tomorrow where home owners are going to get a significant increase in property taxes, but I think we should be moving towards that. I think that's where, by listening to the Fair Tax Commission, there is an elegant way of moving towards equal taxation, which we don't have now.
Mr Turnbull: Yes. I believe the Fair Tax Commission looked at other models. They used Pickering as an example and they ran against income tax returns, both market value and unit assessment. Could you tell me about the results of that?
Mr Stewart: Basically, they felt that market value was not a good indicator of ability to pay, nor was unit value assessment. I think the bottom line is that neither method is good if you're going to use, as your criterion of selecting an assessment system, ability to pay.
Mr Turnbull: Are they coming out with some definite recommendation as to what kind of model they would like?
Mr Stewart: No. In fact, they're asking for more studies to be made.
The Acting Chair: Mr Owens has a question.
Mr Owens: Just a quick question since we seem to have to moved into the Fair Tax Commission report. In terms of the report, what is the recommendation then to deal with the rather bizarre assessment process that currently exists between, for instance, office buildings and commercial properties, whether it's a store versus a mall and all the other permutations that seem to exist?
Mr Stewart: It's been a while since we looked at that, but I believe what they're planning to do is suggest that maybe there should be a subclassification so that you can make some adjustment for some of the perceived inequities in the methods of assessment between large office buildings and smaller strip malls and commercial stores.
The Acting Chair: Mr Wiseman, very quickly.
Mr Wiseman: Real quick. In the United States, in their cities, they have property tax, income tax and a commercial tax. Did you do any analysis of how that system would work and whether that was more equitable or fair than what we're looking at now?
Mr Stewart: You're asking whether we did it in the Fair Tax Commission? We looked at it briefly. I think we felt that the province should move away from its overreliance on property tax, but we did not recommend a municipal income tax. We still think the income tax should be the purview of the province.
The Acting Chair: Unfortunately, the time is complete. We appreciate your presentation to today. I'm sure all members will take careful note of it.
JUDY SMILEY
The Acting Chair: Our next presentation will be from Judy Smiley. As she's coming to the desk, I would ask, just to be helpful to the Chair, if people could indicate their wish to ask a question so that I can do the caucuses one at a time. It makes it easier to keep track.
Good evening. The committee has allocated you 10 minutes for your presentation. As you've seen, we appreciate some time to have a conversation with you. You may introduce yourself for the purposes of Hansard and begin.
Ms Judy Smiley: My name is Judy Smiley. I'm a tenant living in the city of Toronto. My chief concern with Metro Toronto's proposed market value assessment plan is that it does not rectify existing inequities between home owners and tenants.
I currently pay $2,500 a year in property taxes on a one-bedroom apartment because the building I live in is assessed on the basis of being a commercial property. However, as a tenant, my use of the unit is restricted to residential accommodation. In fact, under the terms of my lease, I'm not allowed to use my apartment for commercial purposes.
The assessed value of the building is based on its annual rent rolls. Under landlord and tenant legislation, 100% of the property tax bill can be passed through to tenants as a component of their rent. So in the end I'm paying 100% of a commercial tax rate for a purely residential unit.
However, if I were the owner of the same residential unit, my taxes would be much lower. I cite the example of a building on my block of comparable vintage and size which recently became a co-op. Residents saw their property taxes reduced by 60% as a result of being reclassified, even though no material changes were made to the building itself. If the same reclassification were applied to my building, my taxes would drop from $2,500 to $1,000 a year.
A tenant has to be somewhat of a detective to determine exactly what his or her property tax bill is because the tax is buried in our rent. Furthermore, there's no clear-cut mechanism in place to allow tenants to dispute their assessment as they're not owners of the property. I think most tenants would be astounded to find out that their homes are taxed at a rate as much as three times higher than the average home owner. The question is why?
Do we consume more services than home owners? This suggestion is ludicrous. Are we more able to pay than home owners? This suggestion is even more ludicrous. Most of the tenants I know are not tenants by choice. Being a tenant is a question of economics. On average, tenants have lower household incomes than home owners and are therefore not in a position to own their own homes, so why is our annual property tax bill three times as much as home owners?
Let's not underestimate the impact of this tax burden on tenants. The property tax bill on a $750 apartment would be lowered by over $100 a month if the effective tax rate were realigned with that of home owners. This means an extra $100 a month for food, clothing and other essentials in the pockets of lower income households.
As a group, tenants in Metro are overpaying by $1 million a day. Think of how far this amount would go to reducing line-ups at food banks and other social service agencies. It disturbs me that this inequity has not been addressed as part of the overhaul of the property tax plan. If market value assessment is an attempt to redistribute the tax burden, why has more than 50% of the population been left out of the equation?
Our attempts to have the municipality of Metropolitan Toronto address this problem as part of its overhaul of the property tax system did not lead to a satisfactory solution. While tax increases for tenants have been capped at 10% this move barely begins to rectify the gross inequity between tenants and other residents. Not until assessment rates for tenants match that of home owners can reassessment be achieved on a fair and equitable basis.
Metro has requested by unanimous resolution that the province amend the Assessment Act to redress the current assessments that perpetuate inequities between classes of residents. We now look to the provincial government to proceed with such amendments in order to force all municipalities to create one class of residential taxpayers.
The Acting Chair: Thank you.
Ms Poole: Thank you very much for your presentation. It reinforced what we just heard from Andrew about the unfairness to tenants.
There is one statement that's been made tonight that might be very misleading to you because it may be very confusing for you. When the minister was asked about his government's commitment to bringing in legislation or amending this legislation to ensure fairness for tenants, he said to me, "Go back and ask Metro."
2000
For the record, I want to state that assessment is a provincial responsibility. Metro cannot amend the legislation to bring fairness to tenants in this way; only the Minister of Revenue can do that. So I think it is incumbent upon the Minister of Municipal Affairs to commit to you and to Andrew and to the hundreds of thousands of tenants across Metro that his government will amend current legislation to equalize assessment so that tenants are treated fairly. I hope that the minister will give that type of commitment to you. I guess the minister wasn't listening, so you may not get that commitment.
Mr Mills: Now, that's a bright remark.
Ms Poole: It's true.
The Acting Chair: Order.
Mr Turnbull: Thank you for your remarks. We're kind of frustrated in the opposition benches at the moment. For the government that says it is concerned about tenants, it's missing this opportunity. It was requested by Metropolitan Toronto to look at this inequity, and it has done absolutely nothing. All they are doing is rubber-stamping this and sending it back to Metro. I'm hard pressed to believe there will ever be a better time to right this issue.
What I'm searching for from you, because I understand what you're saying so well and indeed I've commented on it in my debate in the House, is that I'm trying to find some way of making the government understand what it is doing to tenants in this respect. It's very difficult to formulate a question, because I'm in total agreement with you, as to what you would say to the minister if the minister were prepared to answer you. What would you ask him to do at this moment?
Ms Smiley: I'd like to ask for a commitment that this inequity is going to be rectified. It's my understanding that what really needs to change in the whole system is the assessment, and that's under provincial jurisdiction. As far as I understand, part of the reason that the province is looking at Metro Toronto's program right now is because it has asked for some changes to caps in various categories -- for example, the 10% ceiling on increases to tenants. If the assessment rates are not changed, there's no way we're going to be able to eliminate this inequity. Tenants are at 8% and home owners are at 2.2%; it's as simple as that. Until you've got one class of residential taxpayers, you're just never going to remove this gross inequity between tenants and landlords.
Mr Mammoliti: I just want to separate, for a second, property tax reform as opposed to Metro's proposal, the actual thing that we're talking about in these hearings, and how we feel about the proposal itself. I know that they're tied in, and I know that we've got to do something in terms of a provincial structure in property tax. What the Liberals are certainly proposing, from what I can see, is that we move in that direction right away, we perhaps implement what you're talking about and have the home owners make up the difference right away. I'd like to ask her another time how she would feel and how her home owners would feel about that if we did that right away as opposed to thinking about it and doing it constructively over the next little while.
Understanding what you're saying about property tax reform, and also understanding that 200,000 out of 350,000 rental units in Metro will experience a decrease in rent, how do you feel about the proposal in terms of renters?
Ms Smiley: We may be looking at 200,000 units that are going to experience a decrease, but as far as I'm concerned, when 100%, in other words the 350,000, are already overpaying, why aren't all 350,000 units experiencing a drastic reduction?
Mr Mammoliti: I'm just asking you to try to keep it separate, because it is separate. What you're talking about is reform to a provincial policy.
The Acting Chair: You may respond if you wish.
Ms Smiley: Once Metro's plan is in place, and we're looking at a plan that's a five-year plan to last until the end of 1997, my feeling is that nothing is going to be done in that five-year period if we don't speak up now. We're talking about a pretty massive change to begin with. In my experience, once it's put in place the issue's going to be dropped. If you're going to go through the whole process of making drastic reforms, and obviously certain people are going to be dissatisfied -- anybody who's going to end up paying more is going to be dissatisfied -- but if you're going to clean house, let's clean the whole thing.
The Acting Chair: We appreciate your presence here tonight. I'm sure the members will consider your remarks closely.
RAY MERKIN
The Acting Chair: The next presentation is from Ray Merkin.
Mr Ray Merkin: My name is Ray Merkin. I have two stores, one in Yorkville and one on Yonge Street. On November 3 my partners and I wrote a letter to the Premier of Ontario. I would like to read that now.
"Dear Sir,
"I am writing to you to protest against the implementation of MVA and the devastating effect it will have on downtown Toronto. I have no political affiliations; therefore I am not writing partisan propaganda but am putting forward the views of a concerned Toronto citizen and business owner.
"The present situation has evolved through many years of procrastination by previous Metro and provincial governments. However, this very procrastination has resulted in the growth of small, distinct neighbourhood communities unique to Toronto.
"They are the charm and allure of the city: They are the city. When the full impact of MVA is implemented, these communities will be obliterated. The future of Toronto, from Parliament to Bathurst, Lawrence to the Lakeshore, will be a sterile concrete monolith.
"MVA as currently proposed is not a fair taxation system and should be rethought. Further, any tax increases in this depressed business economy (even the interim totalling in just 25 months from now) will only deepen the recession and will not raise more income for either the city, Metro or the school system. It will only destroy the downtown core.
"You cannot allow this to happen. It is utterly irresponsible of your government to approve a plan whose social and economic repercussions are so poorly understood. I suggest a full public enquiry be held where fears such as mine can be raised and answered."
That was the letter faxed to the Premier on November 3. I do not know if members of the committee realize the crippling effect the recession is having on this city. With market value assessment, even the 10% added to the automatic 5% increase in business taxes, plus the same 15% added to the realty taxes on our net-net leases bring an increase of a few extra thousand dollars a year to small businesses. Where in God's name can we find this extra money?
During the past two years of the recession I have had to personally lend my business $18,000, and will I see it returned? There's an old English expression; it's very nice. It's "Not on your nelly."
2010
Members of the committee, and I specifically address -- I don't know which ones of you are the NDP, but people voted you in because we believed you represented the people. Well, which people do you represent? You have almost accomplished the financial genocide of the middle class. The people with money do not want you, and with the passing of market value assessment you destroy the very ridings of Toronto that put you in office. I beg you, please do not make the letters NDP mean No Darned Prosperity.
The Acting Chair: Thank you.
Mr Turnbull: I understand how emotional you must be about this. My wife is a small retailer, and indeed market value assessment is the very issue that brought me into politics.
One of the great problems we have with the present system and with any update of market value is that it assumes that because a building has a certain market value at a given point in time, somehow that business, when we're talking about a business, has an ability to pay X number of dollars of taxes. This is a fundamentally flawed idea. Indeed, many of the people who have been fighting MVA recognize that the present tax system is inequitable and have suggested that, rather than replacing it with another set of inequities, we fundamentally change it, and one of the alternatives that has been suggested is unit assessment.
Mr Merkin: What I suggest is that we have full public meetings and public inquiry to see which is the right way. I do agree. I have never said, ever, that we should have the taxes go down. This is a flawed system at the moment. It is totally flawed. It is going to destroy Chinatown. It's going to destroy it totally. Yorkville will be finished -- all the areas that exist in Toronto.
I've lived here for 40 years. This is my home, this is the city I love, and my God, I'll fight for it. I'll fight for this city, and I will not let it be destroyed.
Mr Owens: Well, sir, I happen to live on the other side of Victoria Park Avenue, and I have the people I represent coming to me and telling me that they're paying too much in taxes. But of course, that's not an issue here.
Mr Merkin: It's always an issue, but if we do look at certain facts and figures, the city of Toronto cannot even collect its whole taxes; 46% of the revenue supposed to come in from property taxes on September 22 had not been collected, and 46% of the total revenue coming into Toronto is paid out to Scarborough, to North York, to all the other cities around in Metro Toronto.
Mr Owens: Quite frankly, I think this argument that keeps going back and forth about "We subsidize you" or "You subsidize us" is a facile argument. We all use the same services. We all use the same transport system.
Mr Merkin: I entirely agree with Mayor Rowlands: "Get the city of Toronto out of Metro." It is the most sensible suggestion I've ever heard.
Mr Owens: Well, that's --
The Acting Chair: Mr Grandmaître.
Mr Merkin: I will endorse her and I'll put her back in again, if she runs on that platform.
Mr Grandmaître: First of all, I want to thank you for your compelling presentation, and I'd like to refer to your letter of November 3 addressed to the Premier and the fact that the Premier refers his correspondence to the responsible minister. Mr Chair, can I ask the minister to respond?
The Acting Chair: Mr Grandmaître.
Mr Grandmaître: I'm sorry?
The Acting Chair: Ask Mr Merkin.
Mr Merkin: No, sir, we had no response. This was faxed; it was not sent by mail; it was faxed.
Mr Grandmaître: But you haven't received any answer.
Mr Merkin: No reply.
Mr Grandmaître: Would you like an answer to your letter?
Mr Merkin: I think it would be extremely polite of the Premier to reply.
Mr Grandmaître: It would be what? I'm sorry.
Mr Merkin: Extremely polite, sir.
Mr Grandmaître: Would you like to hear from the minister this evening?
Mr Merkin: Yes, certainly.
Mr Grandmaître: Good. Mr Chair, can I ask the minister to respond?
The Acting Chair: The time has expired for this presentation. Thank you very much for appearing this evening, Mr Merkin.
FAIR RENTAL POLICY ORGANIZATION OF ONTARIO
The Acting Chair: The next presentation will be from the Fair Rental Policy Organization of Ontario, if they could come forward, please.
I believe your presentation has been distributed to the members. I would appreciate it if you would introduce yourselves for the purposes of Hansard. The committee is allocated 20 minutes.
Mr Philip Dewan: I'm Philip Dewan, president of the Fair Rental Policy Organization.
Ms Florence Geneen: I'm Florence Geneen. I chair the Fair Rental Policy Organization.
To begin, I'd like to thank the Chair and the members of the committee for the opportunity to appear this evening. As the public response to the hearings indicates, there is widespread interest in and concern about Bill 94, not least among landlords and tenants.
As the largest landlord organization in the province, with a majority of our 1,000 members having at least some units within Metropolitan Toronto, the whole MVA debate has been of more than academic interest to us. Fair Rental has never taken a position for or against market value as a principle, but we do have concerns about the specific Metro proposal.
I would like to confine my comments this evening to two issues related to the bill: first, the continuation of the inequitable property taxation of tenants and, second, serious problems and uncertainties in the way in which the MVA reassessment is to interact with the rent control system.
First of all, the tax fairness issue: We all know that in the pure economic sense, property taxes are more difficult to target than income taxes. Logically, this should mean that there is a special obligation when considering property tax reform to ensure that the results are progressive, not regressive.
In this regard, the current Metro Toronto proposal fails miserably. This proposal will simply perpetuate an unfair system which sees tenants' taxes at more than three and one half times the rate of single-family home owners, despite the fact that tenants have much lower incomes, on average.
On introduction of Bill 94, the Minister of Municipal Affairs -- I want to apologize. In the documents we distributed, we refer to the minister as not being here and clearly he is here.
Ms Poole: But not answering any questions.
Interjections.
The Acting Chair: Order.
Ms Geneen: The minister stated: "It's fair to say that the current tax system in Metro Toronto is unfair and that the proposed tax system only in a small way alleviates some of the unfairness."
The first part of his statement is unarguable. In terms of its treatment of tenants and of low-income Ontarians in general, the vast majority of whom are tenants, the property tax system for the whole province is unfair. Metro Toronto is merely the most extreme example. Whereas tenants in many other areas pay property tax rates 50% to 100% higher than those of home owners, in Metro the difference averages 263%.
However, the suggestion that Bill 94 will add even a small measure of additional fairness clearly does not apply to tenants. The legislation will enable Metro to enact a scheme which will tax single-family homes and condominiums at 2.2% of 1988 values, small apartments at 2.7%, commercial properties and retail stores at 4.3%, industrial property at 6% and multi-unit apartment buildings at 8%.
In other words, the poor immigrant family renting an apartment in St Jamestown will be paying a tax rate 86% higher than the Royal Bank for its golden tower and 263% higher than a wealthy family with a Forest Hill mansion or a well-paid professional with a luxury waterfront condo. So much for alleviating unfairness.
2020
When Metro council passed the MVA resolution, it also unanimously passed a companion motion which has been conveniently ignored by the government in the Bill 94 process. The motion stated that "the provincial government be requested to redress the current assessment that perpetuates inequities between home owners and tenants." The government is apparently proposing no action on this front.
All three parties in the Legislature, the governing New Democratic Party most vehement among them, have condemned regressive taxation policies in the past. Yet in terms of the dollar impact on lower-income Ontarians, this property tax inequity is far more regressive than, say, past increases in sales taxes which the various parties have so criticized.
The solution, though, is not to merely preserve the status quo, which is equally unfair to tenants. Those who would use the tenant issue to try to help kill MVA, with no real intention of reforming the system to treat all homes equally, are as cynical as the minister in his attempt to pay lip service to equity but allow Metro to implement a scheme which will institutionalize inequity and prevent any change for at least five years to come.
It is not only landlords and tenants who feel that both the status quo and the Bill 94 alternative are unfair. It's also the considered opinion of the very group the government itself asked to review issues of equity in the tax system.
As many members are aware, draft copies of the report of the Fair Tax Commission's working group on property taxation have been circulating for some time. The final version of the report, which is now undergoing translation, unequivocally calls for equal tax treatment of all forms of homes.
The report states:
"All residential properties should receive the same treatment for assessment purposes, regardless of their ownership and occupancy status. The assessment system should not favour one property type over another or one type of property tenure over another."
Why, then, is the government determined to proceed full speed ahead with Bill 94 without making a commitment to the essential reforms advocated in the Metro council resolution and the Fair Tax Commission report? Does it simply want to be able to say in a few weeks when the Fair Tax report is published, "Sorry, our hands are tied for the next five years"? Is it really afraid to commit to fairness in taxation by phasing out differences in residential taxation over 10 years, as even a Conservative government in Manitoba was willing to do in 1991?
Property taxes are the single largest expense any apartment building faces. Many tenants in Metro pay 25% of their monthly rent for property tax, though few realize it. If this government, if any of the parties represented on the committee, are concerned about the plight of low-income residents in Ontario or the affordability of rental housing, then there can be no excuse not to support the simple principle that all homes should be taxed equally, and if that principle is endorsed, then Bill 94 cannot proceed in its current form, nor can the status quo be preserved. A commitment to fairness in property taxation requires new legislation to eliminate the arbitrary and unfair distinctions between residential classes, not just for Metro but for all of Ontario.
The rent control equation: The second concern landlords have with Bill 94 results from the proposed interaction with the Rent Control Act, 1992. Section 113 of the Rent Control Act provides that where a reassessment occurs, resulting in a tax decrease, the rent registrar shall adjust the legal maximum rent in the unit to reflect the reduction in costs. But where there is a tax increase, no automatic pass-through occurs. The landlord must apply to rent control for an extraordinary cost increase, a process that is cumbersome, expensive and risky to the landlord, and entails at least a one-year delay during which time the landlord must bear the new cost without assistance.
As well, the owner must also hope that there are no other cost factors that year that have used up the 3% maximum allowance above the annual guideline allowed for extraordinary increases and capital. Since there is no way to defer an extraordinary cost claim to another year, even though this was promised by Dave Cooke when Bill 121 was first introduced, recovery for the tax increase will be lost for ever if the 3% allowance was already committed.
Consider the case of a landlord who made a necessary garage repair in 1990 which should have generated a 10% rent increase. The Bill 4 freeze prevented her from collecting any of the money. Now that the Rent Control Act is in place, she can possibly receive 3% above the guideline next year and in 1994, though when interest costs are factored in, the majority of the investment will be unrecognized.
However, a new dilemma would now be created by the MVA. If the taxes on her building go down, the rent will automatically be reduced. She will have no right to offset this decrease against her other costs, even though they were not recognized because of the cap. But if her taxes go up, she will have to apply for an extraordinary increase -- no automatic pass-through for landlords -- and because her 3%-above-guideline allowance has already been committed as a result of expenditures made long before either Bill 94 or Bill 121 was envisioned, she will be unable to recover a single penny for her higher taxes. That apparently is the government's idea of fairness.
Moreover, there is great uncertainty about how buildings will be impacted. Are changes in market value to be assessed on a building or a unit basis? Do equal-sized units which pay different rents receive the same increase -- a flat dollar amount per unit -- or different amounts, such as a percentage of rent? How many of the 132,000 or more units facing increases will be able to meet the threshold for an extraordinary application, given that the increase is spread over two years? We simply do not have answers on these types of questions at the moment.
Of course, it probably doesn't matter in one sense: The government has indicated that it intends to proceed with Bill 94 regardless of what anyone says before this committee. But it would be at least nice to know what we are up against, and it would be even nicer to think that the members of the Legislature would want to see the bill made as fair as possible for everyone.
Regardless of the instructions from Minister Cooke, I hope that the members of this committee will be willing to recommend that Bill 94 be dropped and that new legislation be developed to enshrine equity in property taxation for all Ontarians. The concepts of equal taxation for tenants and home owners and fairness in administration for landlords as well as tenants should not be foreign to our province.
Mr Owens: I don't like to think that anyone making a presentation before any committee in this place comes forward without a sense of purpose, and it's my view that we're listening to what has been said by your group and any other group that has presented here today and yesterday and will present in the future.
I think there's no disagreement from anybody we've heard today that the property tax assessment is completely wacko. There's no disagreement on any side of this committee or from any of the presentations.
The question I have is that in terms of the item under discussion today, our government has made strong commitments, whether it's the Fair Tax Commission, the education finance working group -- these are all issues that this government is looking at to address the long-term solution that's out there.
In terms of some of your comments with respect to the rent control and Bill 4 that preceded rent control, I have to say I'm at variance in terms of some of your calculations. First of all, the rate of inflation now is somewhere around 1.7%, so the 3% capital allowance that's there more than covers the rate of inflation. In terms of the automatic decrease under the market value assessment, unless the unit is at the maximum allowable rent, there will be no automatic decrease put into place.
2030
In terms of the commitment of this government to fairness, we've demonstrated that with the ongoing property tax commission. We had a sort of preview of the report here tonight. You folks have obviously seen a draft copy of recommendations. The issue with respect to education financing is not something that has been addressed by Metro council or any other municipality, and we've gone forward to start looking at the inequities around the financing of the educational system. Those are the kinds of things we're interested in.
We hear what you're saying and we've heard what each presenter has said, and it's our view that in some senses you're correct about the tax assessment. There are problems out there, and we're going to move forward and address those issues.
Ms Geneen: Can I respond to that? As a general point, as a landlord and as a citizen in the province, there's very little for me to feel there's been any sense of fairness. As a group who has been handed Bill 121 and Bill 4 and various other things, including probably Bill 94, I can't see why I would have any expectation of fairness.
The issue of listening: It's not just a question of hearing. What we were addressing is the fact that there seems to be no philosophical predisposition to making any kind of basic change here. The fact that we're all sitting in these rooms listening is really immaterial.
As a third point, perhaps you could do a little work on Bill 121. The rate of inflation has absolutely nothing to do with the 3%. We're talking about major capital repairs, huge concrete restoration projects etc, etc. Even in terms of operating costs, that has nothing to do with the rate of inflation; it's the issues of particular cost components such as property taxes.
Ms Poole: Thank you for your presentation tonight. It's quite refreshing to see tenants and landlords working together and perhaps undoing some of the damage we saw during Bill 4 and Bill 121. I'm glad to see you working together on this issue.
You make the statement in your brief, about Metro's motion, "that the provincial government be requested to redress the current assessment that perpetuates inequities between home owners and tenants." Then you follow it up by saying, "The government is apparently proposing no action on this front."
I would make an assumption from your comment -- please correct me if I am wrong -- that you understand that assessment is a provincial function, a provincial responsibility, and that the only way Metro's request can be redressed is through legislation by the Minister of Revenue to amend section 63 of the Assessment Act, which provides for the different classes. Am I right in assuming that you are aware this is a provincial responsibility?
Ms Geneen: Yes.
Ms Poole: I wish the minister shared that understanding. I find it quite appalling that the minister responsible for carriage of this legislation does not understand that the province has that responsibility.
The question I have for you relates to the Fair Tax Commission report. I believe Fair Rental is one of the participants on the working group?
Mr Dewan: Not on that working group, no.
Ms Poole: But you are a participant on the Fair Tax Commission?
Mr Dewan: I was a participant on one of the other working groups, which has finished its business. We did not have a representative. We requested an opportunity for both landlords and tenants to have some representation on that committee, and we were turned down.
Ms Poole: The request was denied.
The Acting Chair: Thank you. Mr Turnbull.
Mr Turnbull: Flowing from the questions from Mr Owens, who obviously doesn't understand what the 3% is for -- he demonstrated that -- I did a few numbers, just hypothetically. Do these sound right? Hypothetically, if an apartment costs $750 a month, in the course of a year that would be $9,000 in rent. Quite typically, apartments are paying three months' rent to taxes; in other words, that would be $2,250 a year. If they got a 10% raise in the taxes, that would be $225 or 2.5% increase in their overall rent, which of course you would have the right to pass through, provided you hadn't used the 3% for anything else by way of repairs. Does that sound right?
Mr Dewan: It sounds reasonable. I think the Ministry of Housing has indicated the average it expects is something around a 1.5% increase, but I've never seen any numbers; we're simply going on their word. We'd have to get the whole printout.
Mr Turnbull: We all know the old story of what the average person in this world is.
Okay. That equates to an $18.75 per month rise in rent as a result of that. This is something which, quite obviously, the government has an opportunity to rectify right here and now, but it is absolutely refusing to. Is there any way you could address this question of fairness? What do you think of the unit assessment system as a proposal to address the whole question of assessment?
Mr Dewan: In terms of the unit assessment discussion in the Fair Tax Commission report, I read it very briefly yesterday and I don't think Florence has seen it at all, so I don't think we're really in a position, as an association, to comment on it. But there are a range of alternatives that we think should be examined. Going ahead and locking us into a situation where nothing can be done for the next five years isn't going to do it.
We're not here to suggest a specific solution to the problem but simply to say the government should make a commitment, if it really believes the system is wacko, to quote Mr Owens, that there be a commitment to a fair policy that will treat home owners and tenants equally.
Mr Turnbull: The bottom line is that you want them to address this, that tenants ought to be taxed at the same rate as home owners.
Mr Dewan: Yes.
The Acting Chair: Thank you for your presentation. I seem to be in the chair every time you come, and it's always enjoyable.
FEDERATION OF ONTARIO COTTAGERS' ASSOCIATIONS
The Acting Chair: The next presentation will be the Federation of Ontario Cottagers' Associations. Good evening, sir. Would you introduce yourself for Hansard, and the position in your organization. You have been allocated 20 minutes by the committee. You've been here for a few minutes so you've seen the way we operate. I would just ask you to begin.
Mr Barry Mitchell: My name is Barry Mitchell. I'm the president of the Federation of Ontario Cottagers' Associations. I had hoped to have with me our executive director, Jerry Strickland, who has been very much involved in fighting MVA around cottage country over the past few years. Unfortunately, his car seems to have broken down and he won't be able to be with us, but I'll try to pass on to the committee some of the remarks he would make; we'll send them down and you can circulate them to the committee members.
In the few moments I have been waiting, it became clear to me that you've probably heard everything from everybody by now, one way or another. To some extent, I find myself in the odd position of feeling sorry for politicians. It must be dreadful to reflect on another week of this.
However, I would like to offer some perceptions based on the fact that cottagers have been fighting MVA for quite a few years now, and with some success. I think the experience of the people in Metro Toronto, when the initial proposals were made on market value assessment, was very similar to the kinds of experiences we have had in attempting to get straight answers on MVA: its impacts, the implications MVA would have. The Federation of Ontario Cottagers represents about 500 associations and about a quarter of a million cottages; that is about a million cottagers. That's a lot of people. But I think one of the false impressions that's often left about cottagers is the fact that they are alleged to be wealthy, and that's not the case.
2040
Cottagers choose to spend their recreation and vacation dollars in Ontario, and they are represented in all income groups in the province. The experience we have had makes us very unhappy with the compromise that the bill currently before you represents. It seems to us, as people have said many times this evening, that this is an opportunity to do the thing right.
Our concern is that passing yet another negotiated compromise will simply harden the position of many of the people in the ministry and other places who seem to want to have MVA continually introduced around the province, with implications and impacts that no one seems to be able to describe for us.
The point I wanted to make on behalf of our association is that we are unhappy with MVA generally. We believe the property taxes, as many people have indicated, are unfair. They do not measure the ability to pay. We think the tax reforms suggested at this stage of the Fair Tax Commission are likely important and should be done as soon as possible, but to move now in the way this bill suggests, in this rather unseemly type of compromise, is simply not good enough and is likely to prevent the reform we all want to see.
Ms Poole: Thank you very much for your presentation. I know you've been at this for a number of years and presented to a number of committees. I hope you haven't lost all sense of purpose that one day somebody will listen to you.
I was interested in your comments about cottagers. One of the concerns that people in my riding have expressed to me is that they pay very hefty education taxes in Metro Toronto, and they also pay it in their cottage properties, even though they don't get an opportunity to use those educational services. In fact, during the strike in the fall of 1987 -- I remember it well because I'd just been elected as a member -- one of the outrageous things was that people in the city of Toronto who were subject to that strike wanted to send their children to school in the areas where they paid cottage property taxes and they were denied that by the local municipality; they were refused.
The previous presentation we had from Fair Rental talked about the Fair Tax Commission report. They asked the question, why is the government proceeding with this before getting the results of the Fair Tax Commission report? They say, "Does it simply want to be able to say in a few weeks when the fair tax report is published, `Sorry our hands are tied for the next five years'?"
Do you feel that if the government does not wait for this report, if it barrels ahead with this market value assessment plan, it is going to impede the possibility of getting a response and an action out of the Fair Tax Commission recommendations over the coming years?
Mr Mitchell: That's certainly our suspicion and our fear. It baffles us, because we thought this government was intent on reviewing and reforming the tax system. It appears to us that those intentions, if sincere, are now going to be blocked by their own actions.
That certainly does disturb us, because it's apparent to everyone that tax systems are relatively inflexible and difficult to change. They raise a lot of emotion, they're hard for everyone to assess. Frankly, you cannot mobilize the general public for discussions on taxes in a detailed, technical way very often, and I think this next year might just be the opportunity to do that. Certainly people are mobilized, they're interested; they realize there are flaws in the current system. If the Fair Tax Commission report is acted upon and becomes the basis for discussions, I think there could be a very fruitful result, and it would be in the interests of all Ontarians if that were the case.
Ms Poole: Thank you for that response.
Mr Turnbull: Thank you for your presentation. I wonder if you could perhaps comment on the experience of what happened in the Muskokas after they brought in market value assessment.
Mr Mitchell: As Mrs Poole has suggested, there is an initial problem with property taxes that we have been concerned about for quite some time: the fact that Ontario relies upon property taxes to the degree it does; the fact that ability to pay is not measured by them. But when it's compounded by MVA, as it was in Muskoka, when cottagers were suddenly asked to pay increases of 100%, 200%, 400% and more, it certainly did cause a great deal of anxiety and real impact on individuals and families.
One of the things we have noted with interest is that when the initial proposals were quickly proven to be outrageous and unacceptable, people immediately began discussing various basing arrangements. This was never the case in cottage country. People paid huge increases; they had no choice because they were unable to mobilize people in the same way that the people in Metro were. So I think the passage of this compromise would be just another example of the inequities in the Toronto area.
Mr Turnbull: In fact, I believe that in the case of the Muskokas, when a whole bunch of the cottagers managed to get themselves inserted on to municipal councils up there to try and block the four-year reassessment, the government of the day then passed legislation to force the Muskokas to do a four-year update.
Mr Mitchell: Yes, I believe that's the case.
Mr Turnbull: So by passing this legislation now and suggesting, "Well, problems have gone away for five years," that's not necessarily the case.
Mr Mitchell: No, I think we'd be in for a series of reassessments over the next few years.
Mr Turnbull: I once heard it described as the salami method, and that is, you can't break a salami in the middle, but when you get a sharp knife and just slice away a little bit at a time, you still get to the same point. I guess the bottom line of all you've said is that we really should be waiting until the Fair Tax Commission report is out and we have a chance to study it, instead of this unseemly haste that the government has to get it out of the way one week before the commission is supposed to report.
Mr Mitchell: Yes, that's right.
Mr Wiseman: I'd like to raise an issue with you that really hasn't been discussed a whole lot, and it has to do with jurisdictions. I don't live in Metropolitan Toronto. I live in an area that has market value assessment and has had for some time. As a matter of fact, it was the community that was studied by the Fair Tax Commission.
I can tell you that my local councillors and regional councillors are very jealous of their position in terms of being elected officials and having autonomy to make decisions and are really quite defensive of any kind of involvement of the provincial government in any of the planning, taxation or any of these issues.
We had a brief a little earlier from some people who mentioned education taxes, and I raised the issue with them about jurisdictions and the trustees. I know my trustees would be really not too keen to hear about this jurisdictional battle between the provincial government and the regional governments. The Association of Municipalities of Ontario almost seems to have set itself up as a second provincial government in terms of its desire to criticize where the provincial government may have crossed these jurisdictional boundaries.
In terms of this stuff that we're looking at, this is Metro's plan. I mean, this is Metro's and we are called upon to pass it. Now you're coming here and you're saying to us, "Be big brother or be daddy and tell the little children down there at Metro council that they don't know what they're doing." Would you care to comment on what kind of jurisdictional battle you think that might create?
Mr Mitchell: I'm speaking now not so much as a representative of the federation, but I suppose I always assumed that the province had responsibilities for the welfare of the people in the province. When it becomes clear that one municipality or another is attempting to do something which does not appear to it to be consistent with good sense or good practice, then it is the responsibility of the province to take action.
That, of course, would vary with the issues, and there'll always be disputes between municipalities and the province when it's appropriate to intervene, but I think intervention is inevitable and often desirable. I think this is one case where it's desirable.
Mr Wiseman: What would you say then in terms of the setting of the precedents? We live in a democratic society. If we're going to turn around and second-guess the municipal councillors -- and I can just imagine the minister sort of chortling now because this has been an issue in my riding on a number of occasions -- what happens to the municipal election process and the accountability of regionally elected officials in the case of the municipality?
Where does their accountability to their electorate come in if they can, for example, in the case of strikes, look to the provincial government to pass legislation? Where does it come in that they have to act in an accountable way? Then where is the responsibility for the electorate to turn around and kick these people out if you don't agree with them?
2050
Mr Mitchell: Bear in mind what we're asking for is a reform of the current tax system. That's a responsibility that rests with the provincial government. It will always be the case that some municipalities are going to be caught at the moment when these reforms are going forward. This appears to be one of those moments.
I quite understand Mr Owens's concern about his own electorate. There are real problems in and around Metro, and inequalities and inequities, we're not denying that, but we think the fix, if you like, or the repair of these inequities should be one that's for the long term and should be done carefully, with some consideration. We fear that's not the case if this bill goes through.
Mr Wiseman: I still come back to this question of accountability and having to negotiate and to deal with locally elected officials. For example, one of the things that has come to me in terms of this whole issue is that it has not always been the case that the province has had this assessment responsibility. The province took it over, I believe, when Darcy McKeough was the minister back in 1969 and they were going to do market value assessment or they were going to restructure the assessment system then, and it's just sort of languished out there until it was resurrected in 1988 and has descended on us in this form.
Now we've got the Fair Tax Commission that is out there, but at the same time we also have before us this proposal by a duly elected body of a council. It's only the anomaly of history that has made it necessary to comment on it at all. That's the dilemma that I feel, that I face, in terms of where it is that my responsibility lies in my relationship with other elected officials, the trustees from both school boards and from my local and regional and metropolitan government. I mean, I'm not elected in Metropolitan Toronto; they are. They made this decision.
Mr Grandmaître: On a point of order, Mr Chair: Mr Wiseman has repeated this on a number of occasions, that this is a Metro baby. This is not a Metro baby, Mr Chair. Metro is asking for enabling legislation and this is --
The Acting Chair: Thank you, Mr Grandmaître. That's not a point of order.
Mr Wiseman: That's the dilemma.
Mr Mitchell: I don't see it as a dilemma. I think provincial politicians take their responsibility and Metro will take its responsibilities, and the electors will decide who they punish and who they favour.
Mr Wiseman: I think that's where the focus of the debate should be. I agree with you on that one.
The Acting Chair: Thank you, sir, for appearing before us today.
BUSINESS SURVIVORS ASSOCIATION
The Acting Chair: The next presentation will be from the Business Survivors Association. Good evening, gentlemen. The committee has allocated 20 minutes for your presentation. If you would like to introduce yourselves and the positions within your organization for the purposes of our Hansard recording, then you may begin.
Mr Laurence Cazaly: Thank you very much, Mr Chairman, members of the committee. I congratulate you and thank you for your patience. Nobody's asleep yet. I hope you won't do it in the next 20 minutes.
My name is Laurence Cazaly and my wife, Millie Wallace Cazaly, was the founder of the Business Survivors Association. She is travelling out of the country at the moment. She really wanted to be here but she couldn't get back in time, so I'm standing in for her. I have beside me Mr David Philips, who is also a founding member of the association. He is one of the owners of Mills and Hadwin, a substantial car dealership in north Toronto, and one of the reasons why he joins us is he feels he has a fair amount at stake here. He's been in business in Toronto for something like --
Mr David Philips: Seventy years.
Mr Cazaly: -- 60 or 70 years, or the company has anyway. He personally doesn't look that old.
Ms Poole: What's your secret of aging so well?
Mr Philips: Relax.
Mr Cazaly: Ladies and gentlemen, what I wish to say is this. The inept progress of the proposed Metro Toronto municipal tax reform is half comical and half tragically serious. Both the comical and the serious parts of this story suggest that the provincial government should amend Bill 94 to delete its contents entirely, to permit Metro council to do nothing until it has come to its senses.
Metro's advertisement in yesterday's papers finally admits what everybody already knew: market value assessment has got nothing to do with the value of your property. It's a formula. It's a civil servant's subjective opinion couched in terms to convey a false sense of accuracy and fitness.
So far, so bad. Then the next slip from reality was to choose 1988. Not only was 1988 a period when values were very high, we've all heard that before, but I know from personal experience that my own house went up in value by over 50% between February and November. You're looking at a lucky man; I sold mine in November, not in February.
The question then is, is the assessment in February 1988, July 1988 or November 1988, or, depending on what mood the assessor happens to be in, maybe he would pick one month one week and a different one the next. The fact of the matter is, actually, the variations in assessment can well be much greater than the variations that are being suggested for the actual tax variations.
Then, having started off on the wrong foot, some of the Metro councillors made a classic political mistake of trying to sell the idea by promising some money back to their supporters, and then they made the second classic mistake of assuming that they could suck the extra money out of the city business community. The federal government made mistakes like that about seven or eight years ago when it changed the federal budget and managed to get the tax decreases passed but then failed to get the tax increases passed because everybody likes to get money back, nobody likes to pay any more. You'd think that people would learn from experience and not do things like that.
Then, the next thing that happened was that when we started to find out what the new taxes were going to look like, some of the small businesses hardly making ends meet were being stuck with increases of over 150%. That looked kind of odd, so if you checked with city hall to find out whether those numbers were right, they said no, they weren't, they were actually 250%. They made a mistake the first time around and they jacked them up even further.
Again, I happen to know from personal experience of a small commercial building and a rather nice house, which have been assessed in the past at the same amount and are assessed now at the same amount and up until this year the taxes have been the same amount. The proposal under the new valuation was that the house would go up by something like 40%, which didn't look too bad; the commercial property, however, was going up by 250%, which is utterly ridiculous. So then I thought maybe at some point somebody around here decided to have a different mill rate for commercial than they did for residential. No. At least the person I asked said that wasn't the case, they were all the same.
Then I figured, after I'd made a few inquiries, there was a horrible truth here: no one had any idea why this happened at all. When we suggested that this mill rate had been adjusted, we were told it wasn't the case. These enormous increases were apparently hatched out by persons who are unknown. I can't find anybody who can tell me who the man is who did it. At this point, some people started to say: "This is madness. We've got to have a tax revolt," and my association was born.
2100
The politicians, having realized that their servants had made a hopeless mess of things, could have abandoned the matter and could have gone on to something better, but now with reputations at stake, they've come up with a marvellous new game called Snakes and Ladders Assessment.
Rule 1 is, if you find yourself at a ladder and the assessor has guessed your property is less, you don't go all the way to the top; you climb halfway up the ladder.
Rule 2 is, if you find yourself at a snake and the assessor guessed your property went down, you don't slip halfway down the snake; you go halfway up the ladder. You actually slip down only 10% from your present position on the board.
Rule 3 is to maintain the political concept that you mustn't be nicer to businesses than you are to people. If the business gets to a ladder, it doesn't climb up as far, but it slips farther down the snake.
Rule 4 is that if people are foolish enough to buy a house on a snake, they slip all the way to the bottom. But this may be modified. I'm not quite sure what the state of the art is there.
Rule 5 is, rule 4 is believed not to apply to business, but I'm not quite sure whether that's true.
Rule 6 is that rule 5 may not be true.
Rule 7 is that the game self-destructs in 1997. I think five years will be quite long enough to play a funny game like that.
Bill 94, apparently, is a bill to approve this new game.
Now let's look at the tragic side of this fiasco, if you will, please. There's a need right now for stability and the status quo. Toronto business is in a fragile state. You've heard it thousands of times. I have an appendix at the back just to show you what two little streets look like right now.
When business is down to its last resources -- I've almost gone broke four or five times in my life and I've learned how to recover -- what you do is, you don't make any changes at all. It doesn't matter whether the business is a large corporation or a mom-and-pop store; in a crisis the word is, "No change, no new expenses, no new equipment, no new staff, no new ideas; just total dedication to making and selling what you do best." You don't have time for anything else. I shouldn't be here tonight. I have a business to run. You shouldn't be here either. You should be getting on with governing the province.
Mr Mills: You've got that right.
Mr Cazaly: Right now all this discussion actually is, in fact, an attack on our stability. Metro has been living for 40 years with a system. It may be bad and maybe it should be changed, but they've chosen the precise moment to change it when nobody's got any time to waste debating the issue and nobody has the resources to have his business adversely affected.
This has resulted in enormous fear and anger and uncertainty. You can always tell when government isn't doing something well, because you get an enormous reaction like this. It doesn't matter whether you're right or wrong; people shouldn't feel this way.
One of the problems is that if you were a loser in the tax game, not only would your taxes go up, your property will be enormously devalued or made unsaleable. If you were a winner, you might find some sucker to buy your building before he discovered in the next round of assessment that he'd been moved over to the losers' list.
This thing gets redone every once in a while. You never know what you've invested in. Business thrives on stability. Before they invest, investors need to know the rules. Metro, in its thrashing around, has created an environment of uncertainty, destroying investor confidence and thus the very tax base that it needs to use to pay its bills.
We, the Business Survivors Association, have got one simple goal: We seek a moratorium on all tax base rule changes until the Metro area recovers some of its economic vitality. News looks like the United States is beginning to pick up. If they start picking up, then we get dragged in a piece. Maybe a year from now we'll have a little manoeuvring room. Two years from now, let's hope we will all have some manoeuvring room. Right now we don't have time. Like the public said about the constitutional debate, "Recovery first, political change later."
In addition, while we have this waiting period, the government can do a bit more thinking and digest some of the lessons learned, because there are obviously some very good ideas being thrown around. Then maybe a less divisive method of assessment can be realized. Mucking about with this silly concept just has to stop.
So how can my association achieve its goal? Well, Metro council could have achieved it for us by calling for a moratorium itself. They failed to do that. There were too many reputations chasing too many promises.
The provincial government is the next line of defence. Now you're in the hot seat. It would be a good solution to amend Bill 94 so that all its content is removed and it permits nothing; that would be a good solution to this problem.
In politics, as in life, there are moments when buying a little time can produce a benefit out of all proportion to the time lost. In this case, to require Metro's tax base formula to run from 1952 to 1993 or 1994 isn't going to look much different in the course of history from having it run from 1952 to 1992. In contrast, the destruction of our neighbourhoods by political meddling is likely to be irreversible. There's some serious damage going on out there.
As the last resort, we, the people, can achieve our goal. We can withhold our taxes until the spenders of those taxes start looking like responsible government worthy of trust. There was a time when people trusted their governments to behave sensibly. Those times must come again if we are to prosper. Nothing personal, gentlemen, but I'm nervous and he's frightened.
We do not underestimate the work involved in organizing a tax revolt. To put in place an organized withholding of taxes to the limit permitted by the law requires in a metropolis massive lines of communication kept in constant repair. Fortunately, we have equally massive resources. We have the advantage of having at our disposal a large number of storefronts and numerous professional salesmen to see that instructions are spread throughout the community. Realtors, for example, are on our streets daily and they can be motivated to distribute information to the storefronts, because of the dramatic loss of commissions as sales drop due to political uncertainties.
We have one thing going for us which can't be underestimated. We don't need to sell the idea that MVA and its bastard offspring must be destroyed. We have observed that there are only two classes of people that you see around: There are those who hate MVA and there are those who don't know anything about it. There seems to be no one whom we can find, except for a few civil servants and the politicians who invented it, who actually approve of it. We have already got calls from all over the province, from some people still fighting and others from people who've lost out and are now struggling to get MVA reversed. Unlike most political movements, we have no serious opposition.
Finally, we are survivors. We are not seeking popularity. We are defending our property and our businesses. We absolutely must have a stable environment in which to plan our future. We can't afford to lose. Unlike the politicians we are trying to educate, there are so many of us.
We've got a constructive proposal for you. We're not destroyers by nature. We are the foundation of our neighbourhoods. We want to live in a place which is prosperous and delightful and which can afford the things that make a metropolis sing. What's gone wrong in the last four years?
First, no one remembered that children use most of the municipal tax dollars. Children use all of the schools, much of the parks, the libraries and the arenas; they have a share of the roads and transportation; they share the police, fire and welfare, but children have no money. So when you start talking about fairness, the people who use most of the service can't pay for any of it at all. This is one of the reasons why it's not obvious what you should do.
Businesses, on the other hand, use less or none of these services. They certainly don't use schools and they don't use much in the way of parks or libraries. The idea that business should pay for raising our children may have merit, but the word "fairness" shouldn't be used in this context.
So one place to start is to decide, first, who should pay for the children. Looked at in that light, it begins to sound like general revenue or an income tax. In other words, it shouldn't be the municipalities at all that put up a lot of this money. It should come from the central source. I think all Canadians, in fact, want our kids educated and want them to have parks and things like that.
Secondly, no one remembered that the value of property has no relationship to the ability to pay. Often the reverse is true. Many businesses would like to purchase cheaper property, but if you're a retailer you must open your store where the customers are, whatever the price. Furthermore, a widow, for example, gets no benefit when her family home finds itself in a newly fashionable neighbourhood. The idea of having to sell one's home because the people next door cause one's taxes to rise is surely socially unacceptable.
Thirdly, our leaders forgot that governments know little about markets. Every government in Canada that bought into the private sector finished up with egg on its face, including the government of Ontario under the Conservatives, unfortunately. They should have known better than that. They tend to buy high, lose money and then sell low. The government of Alberta's just done the same thing. If you do something badly, why in hell don't you keep away from it?
Fourthly, and above all, property represents most people's life savings and the major part of business investment. Government must absolutely not muck about with its value.
2110
From this, we suggest the following:
(1) Look at non-property assessment for much of the tax base.
(2) To the extent that property is assessed, make the formula for homes a predictable one. Unit measurement is one system often discussed.
(3) For commercial properties, hook on to something that already follows the market. A fixed percentage of rent, for example, is sensitive to economic change but in a way that requires no judgement by government officials. The landlords and tenants fight among themselves about how much a business can afford to pay. They have a way of sorting that out, and then you just hook on to it and say, "Whatever he gets, I want 15% of it." It's a nice, simple formula and I'm sure it would work.
What do we want this committee to do? Metro has got itself into a silly mess. What it should do now is what governments used to do in the halcyon days of Ontario 25 years ago: nothing. Lay quiet for a while and then come up with something really good.
To cause Metro to do this, Bill 94 has to be amended to say substantially nothing, so as to permit Metro to do substantially nothing. Why in the devil can't you stay still? I'm fighting for my life and you can't help me one little bit. What we want the committee to do is to decide the best way to draft an amendment that has this effect.
What's the alternative? There is no polite way to say this. The thrashing around at Metro, first with MVA and then with Snakes and Ladders Assessment, has put our livelihoods at risk. This we cannot tolerate. This is a most serious attack, not so much on our money as on our secure business environment. You keep changing the value of our property and we don't know what it is or how we can plan. We need and must have responsible politics. If representation doesn't do the trick, turning off the money supply will.
We have talent. We have enthusiasm. We have a single, simple purpose, and we are the people of Toronto, almost all of them. Our message to our followers is simple: If you follow our instructions and hold back your taxes when we tell you, we will bring about a secure system that protects your home from political devaluation. This will be Community Project `93. Everywhere this has been tried, it's worked. Nobody's tried it on a place this size yet. But wouldn't it be simpler to amend Bill 94?
The Acting Chair: Thank you. I can permit one quick question, not a speech, from each caucus.
Mr Cazaly: Excuse me, Mr Philips, did you want to address the committee?
Mr Philips: I was just going to have a statement in regard to our business as it stands. We opened our doors in 1922. We survived the Great Depression, the Second World War, plus Chrysler's financial problems in 1979. We support local schools, churches, hockey, baseball, community events and services. We employ some 60 good people. We are like family. Due to the economic conditions and to avoid major layoffs, no one's received a wage increase in approximately two years.
We're civilized businessmen trying to make ends meet. We have had the employer's health tax thrown at us, GST, now the MVA. It's going to be capped, so they say, 25% over three years. What does that mean? Caps are made to be removed. There are no firm benchmarks in the future. If you were a landlord and you increased the rent on a tenant of yours by 25%, you'd have the government watchdogs all over you. Business has to know where it's going. You can't just turn around and change the rules in the midstream of a game, and the game is survival.
If we have to pull up our roots and leave the area, you won't receive any taxes from the vacant lot. You'll have some 60 people on an already overburdened unemployment line. It's not a great way to celebrate our 70th birthday.
MVA is the wrong tax at the wrong time. Business will always try to survive. Most business-oriented people are survivors. If council doesn't come up with some better type of solution, it's going to force the hands of businessmen in Toronto to cause a tax revolt. Let's try to avoid this. Let's have the provincial government prevent this. Let's come up with some new ideas that can solve everything. Let's get a study done on it. That's it. Thank you.
Mr Turnbull: Since I can only ask a very quick question, can you give me an idea of the people you know who are hanging on by their fingernails? Presumably, that's quite a lot of businesses. Of the people you know, do you think there'll be large numbers whom this will put over the edge?
Mr Philips: I strongly believe so, definitely. It would probably vacate most of Toronto.
Mr Cazaly: My wife is a real estate agent and therefore is used to going out on the streets and meeting people. I wish she could be here tonight, because she speaks from the heart and she understands these things on a person-to-person basis.
Obviously, there are some people going bankrupt because they don't know how to run a business well enough and these are hard times. That will happen, of course, but there are other people, one actually near you who's been in business for something like 50 years, and they've finally decided to give up. One day they just put a sign on their door which said "Gone." They were the competent people. They've been there for ages and ages. They're not doing very well right now -- nobody is -- but they needn't have gone. They just said: "You know, this threat is too much. I'm going to get out now. I'm not going to wait till next year till I've been sucked dry." It scared the hell out of them.
My wife owns a small commercial building. She can't rent half of it. She can't sell any of it. One of the reasons for this is that nobody is sure what the rules are going to be two or three years down the line. I gather that legally Metro can't bind any future council. There will be a future council at the end of next year, so whatever is decided now may not be the rules of the year after that.
Personally, actually because of what my wife has lost in real estate, I'm going to form a new business next year. I'm an inventor by profession and I'm going to start a new invention company. It won't be a very big one but it will be one. The possibility of my doing it in Toronto is almost remote. I don't want to live in a place where people are fighting all the bloody time.
I was here in the 1960s. I put all the little bits of marble on the Toronto city hall and I did most of the city hall square and other stuff like that. I and the people of my generation were doing the best things in the world in this town. It didn't matter what party we belonged to. It wasn't a matter of politics. It was just the enthusiasm that if you were really good, this is where you came and this is where you did it.
A lot of that's gone. If we can just do something to turn it around, you'd have done a bloody marvellous job. I don't care which party you're supporting; we can talk party politics later. Those sort of things are the fine-tuning of society, if you like, but right now there's a tremendous need for people to feel like Canadians, Ontarians and Torontonians, to be proud of that and to feel if they do something good then everybody is going to get rewarded.
The uncertainty that comes from all this stuff scares people away, and it's the uncertainty more than the little bits of money. Whether somebody gets $400 here and somebody else pays $1,000 there is the lesser part of the deal. It's the fact that you can't plan. You don't know what the rules are, and the rules are capable of being manipulated.
People are making mistakes, as I pointed out to you, and then correcting them and then adjusting them. Gradually, what Metro has been doing is sanding away all its original plans in the hope that it'll get to be so small that nobody will even notice it. Well, if they're not going to notice them, why don't you leave the bloody things where they are? It isn't going to make any difference to anybody anyway. Why do all this?
The Acting Chair: Thank you. We appreciate your presentation. Unfortunately, the time has expired.
Mr Cazaly: I'm sorry to have taken so much of your time.
The Acting Chair: Mr Mammoliti, your caucus will begin the next round of questions. Thank you very much for being here with us this evening.
Mr Cazaly: Thank you very much, Mr Chairman.
Ms Poole: Mr Chair, on a point of order: I believe each caucus was to have a question. I understand that time has run out but I would just like to say to our presenters that I thought it would have been impossible, after being at Queen's Park for 13 hours so far today, to be entertained by market value assessment, but they proved me wrong. You did entertain me.
Mr Mammoliti: Mr Chair, I could have asked my question in the time that she took here.
Interjections.
The Acting Chair: Order. Let's not start.
2120
ONTARIO PROPERTY TAX CONSULTANTS
The Acting Chair: Mr Keith Noble: Good evening, Mr Noble, if you would introduce yourself. The committee has allocated 10 minutes for your presentation.
Mr Keith Noble: Mr Chairman and committee members, thank you for allowing me to address your committee at this time. My name is Keith Noble and I am a resident of the city of Toronto. I make my living as a property tax consultant, and for the past 10 years I've been heavily involved in the assessment appeal process, representing taxpayers before the Assessment Review Board and the Ontario Municipal Board.
I'm here tonight to direct the committee's attention to what I perceive to be a very serious problem associated with the implementation of the Metro MVA scheme. There appears to be a serious flaw in Metro's market value assessment scheme presently seeking provincial approval. Under the Metro scheme, all current inequities will be maintained and thousands of new inequities will be created, but more important is the fact that the taxpayers will lose the right to appeal the basis of their taxation.
One of the fundamental principles of the property tax system has been and is the right of taxpayers to appeal the basis, which is the assessment, on which their properties are taxed. In fact, the Assessment Act provides for a property owner to appeal his tax assessment every year if he so desires. In 1993, under the Metro MVA proposal, most taxpayers in Metro will lose the right, a right they now have under law, to effectively appeal the basis of their taxation.
Why is this so? In 1993, under the Metro scheme, all Metro Toronto properties will be reassessed on 1988 market values. Ordinarily, property taxes are based on the assessed value of a property times the mill rate. Under full market value, many properties would face huge tax increases. Therefore, Metro decided to address the potentially devastating impact of MVA by capping tax increases and decreases.
As a result of capping, 1993 taxes, which ordinarily would have been based on the new 1988 market values, will instead be determined by the 1992 taxes paid. The 1992 taxes paid are now going to be described as the 1992 base tax, so it will be 1992 taxes paid, plus or minus a certain percentage, to equal 1993 taxes. Thus, from 1993 until 1997, and possibly longer, the 1992 base tax will be the primary basis for taxation for most Metro properties, not the new market value assessments.
Here is the crux of the problem: 1992 base taxes and the old assessments they are based on will no longer be subject to appeal. If a taxpayer discovers that his 1992 base tax is too high compared to similar properties, he will remain too high at least until 1997, and most important, the taxpayer will be forced to pay more than his fair share of taxes without the possibility of altering the situation through the appeal process.
Taxpayers will still have the right to appeal their new 1988 market value assessments. However, as assessments will no longer be the primary basis of taxation, an appeal may be nothing more than an academic exercise, because even a successful appeal may not necessarily lead to a reduction in taxes.
For a quick example, if we consider a property that under market value would receive a 50% increase and on appeal is successful in having this increase reduced to a 30% increase, there will be no reduction in taxes because of the capping effect. He will be paying 1992 plus 5%. The exercise of the appeal will be strictly academic.
Under the Metro scheme, all current inequities will be securely locked in place with no remedy possible through the appeal process.
Consider the following example of what could and probably will occur under the Metro scheme. There are three similar houses, all located in the same block. In 1992, two of the three paid $2,500 in taxes; the third, which paid $3,000, appears to have been inequitably assessed.
Under 1988 market value assessment, all three properties are to be assessed the same, with resulting taxes of $4,000. However, in 1993, under the Metro scheme with caps on increases, taxes on the first two houses will increase from $2,500 to $2,625. That's calculated by the 1992 base tax plus 5%. The third house, which will increase from $3,000 to $3,150, using the same calculation, is anxious to appeal the apparent inequity between himself and his neighbours. Under the Metro scheme, he will be unable to do so. He will pay more than the other two houses for at least five years and possibly much longer. Incidentally, the same problem exists if all three properties received decreases instead of increases under MVA.
The situation becomes even more bizarre and unfair if one of the lower tax houses in the example is sold on or after January 1, 1993. If the Metro scheme is implemented, January 1, 1993, is a date not soon to be forgotten by vendors, purchasers and real estate agents. From this date on purchasers of single-family houses and duplexes will lose the protection of caps on increases and will pay full taxes based on 1988 market value assessments.
In our example, the taxes upon sale will rise from $2,625 to $4,000. The new home owner will be unable to successfully appeal the fact that he now pays much more than the other two houses because he is now taxed on the basis of 1988 market values, which are the same for all three properties. Thus, we have the obviously unfair situation of three similar properties all paying different taxes, one at $2,625, another at $4,000 and a third at $3,150.
If the unfairness of the situation is to be remedied, the taxpayer who was inequitably taxed to begin with must be given the opportunity to appeal the basis of his 1993 taxation, which is the 1992 base tax. As for the new home owner, the only fair solution would be to remove the provision in the Metro scheme that forces full market value taxation at the point of sale.
The intention of the Ontario Legislature that equity in taxation should be maintained, especially within neighbourhoods, is clearly laid out in subsection 60(1) of the Assessment Act. There are thousands of properties in Metropolitan Toronto today whose 1992 base tax is inequitable compared to similar nearby properties. If the Metro MVA scheme is to be put in place, provision must be made for these taxpayers to have the right to appeal assessments from which the 1992 base taxes were derived as long as 1992 base taxes continue to form the basis for property taxation. To do less would seem to violate both the spirit and intent of the Legislature as expressed in the Assessment Act.
By effectively removing the fundamental right of taxpayers to appeal the basis of their taxation, thereby maintaining all current inequities, and by creating a whole new set of inequities with the point-of-sale provision, all in the name of so-called tax reform, Metro's market value assessment scheme, as it now stands, certainly seems, at least to this observer, to make a mockery out of the concept of fairness in taxation.
In summary, I approached Metro staff with my concerns about this issue over a year ago. The fact that Metro has said nothing about this critical issue would make it appear rather obvious that it doesn't want to touch it in any way, shape or form.
In fact, as Mayor Trimmer said before this committee on Monday afternoon, appeals are not Metro's concern; they are a provincial responsibility. I recently raised this matter with senior policy staff in the municipal finance branch of the Ministry of Municipal Affairs and was told that the issue I am raising today was not considered during the drafting of Bill 94, the legislation currently before the House.
Mr Chairman, I urge you and your committee to take the steps necessary to ensure that the Legislature does not agree to any form of so-called tax reform in Metro Toronto without first protecting the rights of property taxpayers to appeal the basis for their taxation which, under the Metro scheme, would be the 1992 base tax. Those are my comments. Thank you once again for allowing me to address your committee.
The Acting Chair: Thank you very much, Mr Noble, for appearing before the committee today. Actually, we've used two minutes additional. The next presentation will be from John Dickinson.
Ms Poole: Is it possible for us to ask a representative from the Ministry of Revenue, at some stage over the next few days, to respond to the brief by Mr Noble? It appears that this would be quite a dramatic flaw in the legislation if indeed home owners would not be permitted to appeal.
Mr Mills: I had hoped to address that, but since there were no questions, I couldn't.
The Acting Chair: I'm certain that the ministry people will take note of that concern and respond to the committee at an appropriate time.
2130
JOHN DICKINSON
The Acting Chair: Good evening, sir. You've been allocated 10 minutes for your presentation to the committee. As you can imagine, the members always enjoy a few of those minutes for questions and answers. You may begin by introducing yourself.
Mr John Dickinson: First off, I'd like to thank you and the committee for allowing me this opportunity. My concern is possibly a little more personal than that of some of my predecessors in this place. I would like to comment on the experience I've had; I've supplied the secretary with details of the research work I have done.
I should tell you that within two weeks I turn 78. I'm losing my hair, my teeth and my hearing, my eyesight is failing and I've got Parkinson's. I can handle all of these afflictions, but market value gives me a little more trouble.
The city of Mississauga, in December 1985, voted to impose market value on its citizens. They acted in some haste, I think, and I question the quality of their judgement. It's caused a lot of concern and problems.
I bought my existing house in 1972, and I paid about $57,000 for it. My taxes were seven-hundred-odd dollars. They're now up to $4,300, which is a fair increase in that short amount of time.
Some 62.5% of my taxes go to fund education. In British Columbia, the government limits the contribution to 25%. They also have enacted laws that prohibit school boards from increasing their budgets. I wonder why we don't consider doing similar things here. My problem, I have to confess, is not really with municipal taxes -- they're at a reasonable level in Mississauga -- but the school board; this is something else again. But this is an aside from my real concern.
I've spoken to a few people in Queen's Park over the years, trying to get a hearing on my problem, which is this: You're familiar with this card, I hope; this is the card used by assessors when they call on a home. If there's nobody in, they leave the card. One day, July 3, 1986, I had a Mrs Williams from the Peel-Halton board come to my front door. I was down in the basement, and at my age I move a little slowly. By the time I got to answer the door, she was preparing to get into her car, and meanwhile had left this card in my box.
So I called her back and asked her what she wanted. She said she was from the assessment department. "Well," I said, "I had my house assessed in 1984 by Mr Valentine." "Oh," she said, "we're not going to assess it. We want to reduce your assessment." "Oh, how much?" She said $1,040. I said, "It will bring my assessment down from $46,400 to $45,360, right?" "Right." "Would you mind writing that on the back?" which she did. Her name was on the front of it, so there was no question about the quality of it and the accuracy of it.
A short while later I got a call from a group of concerned citizens -- they believed that I was a tax expert -- and they asked me to join their association. I disclaimed the expertise but agreed to help if I could, despite my physical limitations. Well, the first job I got to do was to go down to one of the hearings and get the names of the people who were appealing. It seems the assessment department wasn't able give us an extra copy of the people who were appealing. We found that strange.
In any event, I started to copy the names down, and a man came over to me and said, "What are you doing?" I said, "I'm copying these names down." "What for?" I said, "I'm with this tax group." "Oh? What's your name? Where do you live?" I told him. He tore the notice off the wall, pretty well threw it at me and said, "Here, take it."
Well, about three weeks to a month later, I got told by one of our committee members that my assessment was going up, and I tell you, it went up by $9,288. So being careful with a buck -- of course I'm retired; I have to watch my pennies -- I got out to do a little complaining and work of my own.
Our tax group was trying to do the same, and we had a hearing set up. We got there. I brought my blue card as the only evidence I had; I was learning the process. I submitted this to the hearing chairman, who looked at it and gave it to a man from the OMB, a Mr Schultz. He looked at it. The third guy was representing the Peel assessment department. He looked at it, gave me a big smile, handed it to me and said, "Well, a mistake was made." I said, "What was the mistake?" He just walked away. So I've been trying to find out ever since what the mistake was.
I've complained to the mayor. She arranged a meeting, which was held in my home. The chief assessor came out with one of his associates. I showed him the card. "This happened before I came here. I know nothing about it." No expression such as he would find out and let me know. He said nothing. The meeting was inconclusive; we got no results. I did ask a Mr Thomson, who was with him, to give me a list of comparables and a breakdown of the value on the card. I got a list of comparables, but that didn't do me much good because I have no authority to enter those homes, examine, question or anything else. Not only that; I don't think I'm competent to do so.
In any event, I did ask for the blue card. They ignored that. To this day I still don't know why my assessment was increased. I've tried and tried, but I don't seem to get anywhere. I think there's a serious concern here, a lack of -- what would you say? Ethics? How I get this investigated, I don't know, but I've come here to tell you that I'm an unhappy citizen, and there are quite a few of us.
I attended another hearing with another one of my neighbours, who was using a comparable house across the street, $124,000 on the assessment. His had been increased to $140,000. The same man who questioned me about the signature -- what's his name? It's my Parkinson's again; it's turning off my memory. In any event, he got up and said, "That house was reassessed the other day." The man with me was a tax consultant, and he went down to city hall. It had not been. This kind of nonsense has been going on quite a while. It certainly reflects very unfavourably on one or two people in the assessment department.
On this list I've given you, look at the two bottom items. One is a house at 1235 Ravine Drive. The other's on Jalna. They're within maybe 100 yards of each other. One lot is 115 by 135. The other's 125 by 270. The larger lot has the larger house, yet they're both paying the same taxes. One guy got an increase of $458. The other got a reduction of $2,252. One of my neighbours two doors from me got a $6,600 reduction. There's a group of them on there, as you will note. The minus signs are all reductions. I've showed mine as $1,040. It was then changed to $138,000 from $114,545.
I appealed. By this time, I had learned something. I went out and got a camera, started taking pictures, got a few maps. To anybody who's going to contest their assessment, this is the answer. I also have pictures with me. They work like a charm.
The man who was chairing the hearing that day couldn't argue with the fact -- here are my maps -- that I have the smallest lot in the neighbourhood, yet they were all assessed at $75,000. Why was this? This is because the city council waited too late in the year. They acted with undue haste: They had to bring in a bunch of assessors who didn't know the area; they flooded Mississauga, and there are all kinds of variations in judgement.
That's about all I can say about the problem, except to reiterate that I am grateful for this opportunity. If there are any questions, I'd be glad to answer them as best I can, if there is anybody concerned with unethical assessments.
2140
The Acting Chair: We're in the unfortunate position again that I can only permit one question. The government caucus has first chance at this.
Mr Mills: The question we had is not pertinent to this witness.
The Acting Chair: Ms Poole, quickly.
Ms Poole: Mr Dickinson, I want to thank you for bringing this to our attention. I understand from your comments tonight that you really got the runaround from the assessment department --
Mr Dickinson: In spades.
Ms Poole: -- you got the runaround from the Assessment Review Board, you got the runaround on appeal.
Mr Dickinson: At my second hearing I got a reduction of 10% in the land value, which is $7,500. When I got the correction in the mail, they'd reduced it another $500, so they exercise some authority without supervision. I expected it to be $7,500, and it turned out to be $8,000. They said, "We round out the figures."
Ms Poole: And all this runaround occurred in Mississauga, where you are assessed under market value assessment. So it really did not smooth out the system; it did not reduce inequities you had. It sounds like more problems than ever under that system.
Mr Dickinson: It increased my taxes, which I think was a matter of concern to me. I'm retired. I don't have an escalating income; it's fixed. What I'm learning is that about 40% of the houses that have sold in my general area are as a result of the people not being able to pay their taxes and having to move out. I think it's tragic. Many of them have lived there for 35, 40 and 50 years.
Ms Poole: So market value has been devastating for your area.
Mr Dickinson: Yes. There's a better way. I spent many years as a purchasing agent and I've never heard the system of a buyer and seller -- just automatically having the property change hands. There has to be something better than that. Obviously, supply and demand governs the marketplace, and I think it should govern the real estate market. If you're going to use market value, use it on the basis of what the house sells for. We have a number of great big homes in my area, but they're all assessed lower than the house sold for. I've got the details here.
The Acting Chair: Thank you, Mr Dickinson. We appreciate your coming tonight and making this very valuable presentation to the committee.
For members' information, on your agenda you'll see that Sunwise Investment Ltd is the next scheduled presenter. I am told they have cancelled, but if they are in the room, would they indicate so? No.
BEN PARR
The Acting Chair: Then Mr Ben Parr is the next presenter.
Mr Ben Parr: My name is Ben Parr. I live in the city of Etobicoke. I'm sorry the member for the area is not present tonight. I come as a private citizen, but I have been twice president of Thorncrest Homes Association and I am also president of the Craigleith Community Association, which is in Grey county, where county council had the wisdom to defer the county market-wide reassessment, under the leadership of our reeve, who was due for a substantial tax decrease but who could see the unfairness of the situation. That's been put aside for at least two years.
We all have no objection to paying our fair share of taxes, but what is a fair tax? A fair tax is a tax that is constant, predictable, based on ability to pay and in some way related to services provided and services used. In 1973 Mr Robert Craig, an Ontario government assessment officer, stated that real estate taxes are inequitable and weighted against the home owner when they are based on an assessment of current market value. The proposal before us ignores all of the foregoing principles and concentrates solely on a perceived property value.
The test of equity fails in a volatile real estate market as there will be major shifts as prices go up or down.
We are told that if we do not like our assessments we can appeal, but on what grounds? I got a real lesson tonight from Mr Noble's presentation. On top of that, the assessors state that a valid appraisal or an actual sale of a property by a willing seller to a willing buyer is not a basis for revision. In addition, I really, truly, deeply resent legislation and procedures which place me and my government as adversaries, not to speak of the neighbourhood conflicts which will be created.
Phasing in may make it more acceptable, but is a dog more comfortable having its tail cut off an inch at a time? I don't think so.
To apply full market value assessment at time of sale will increase inequities as similar properties will be paying disparate taxes. If this provision is applied both to properties with increased and decreased taxation, there will be a further spreading of inequality not to mention the impact expected on the real estate market.
My request is that this proposal be defeated and that the status quo be retained until such time as the report of the Fair Taxation Commission is received and considered, following which we will expect legislation to be drafted to base property taxes on factors other than an imagined market value.
I thank you for this opportunity to express my views.
The Acting Chair: We have opportunities for questions.
Mr Turnbull: I'm pleased you're here. One of the many problems I have with this scheme is the fact, as we've heard, that people in Mississauga were actually intimidated when they appealed their assessment. This is maybe even more sinister. We have broken the historic relationship between assessment and the taxes you pay, so that if you're getting a 10% increase in your property taxes because of the capping, and you know that otherwise it would be, let me hypothetically say, a 100% increase -- it may be 20, it may be 40, I don't know -- to the extent that you can only appeal your 1988 assessment and you know that the most you can get is 10% for five years' increase, most people are going to conclude that it's not worth appealing. So there may be many people who will de facto accept market value through this backdoor method. This is one of my concerns, and I wonder if you can reflect on that.
Mr Parr: We are frightened of this. We did a quick study of the effect in Thorncrest Village where 65% of the properties will have a tax increase, some of them in excess of $2,000. If you take 5% of $2,000, it really isn't a serious amount, so our advice to our people is to appeal their assessment by all means. But we are afraid they are going to look at it and say, "Why do we want to go through this?" It's a degrading experience. I've been to an assessment appeal court a couple of times and it's a degrading experience.
Mr Turnbull: Mr Dickinson's experience is a good example of that.
Mr Parr: I can relate to what happened to him.
2150
Mr Turnbull: The government would have you believe that it's protecting you against the point-of-sale clause, which it says it doesn't like, by asking Metro merely to pass a bylaw to put it in force. Since they already voted for the point-of-sale clause in 1988, 1989 and 1992, I hardly feel that asking them, for the fourth time, to pass that clause is any particular hurdle.
We have to burst this myth that the government is protecting you. The government is turning its back and doing a Pontius Pilate on this particular issue. What will be the effect if in your community you suddenly have a house which is sold and that person is paying substantially higher taxes? Are they not going to be awfully unhappy members of the community?
Mr Parr: I expect they would, and I expect they would have a valid basis of appeal.
Mr Turnbull: They won't, unfortunately.
Mr Parr: No, I'm afraid of that.
Ms Poole: Thank you very much for appearing before our committee today. You talked in your brief about the inequities that would be created if full market value assessment is applied to homes on the point of sale. I just wanted to let you know that I have put the government on notice that I will be proposing an amendment which would protect homes at the point of sale so that the protective cap is left on. What it will rely on is the members of the government making the decision about whether they are going to support this.
You've mentioned the inequities that would come about if the cap is removed at point of sale. Could you tell us how this is going to create inequities within your neighbourhood? For instance, if it goes to full market value in -- it's Thorncrest Village you're in?
Mr Parr: Thorncrest Village, yes.
Ms Poole: If one property, say your neighbour's, goes to full market value and yours is on the capped provision, what difference would that make in taxes in your particular situation?
Mr Parr: In my own particular situation, my tax increase is fairly nominal. I think it's about a 27% increase that I'm looking at. It would mean a 22% difference house to house on that basis. Right away the person coming in is going to be thinking, "Why should I be paying more for a house that's comparable to my neighbour's?"
I think this is a dangerous situation. It could create a thing where I've heard people talking today of tax revolt, tax withholding. I've had people talk to me about this up in cottage country. They're saying: "If this goes through, what do we do? Do we withhold our taxes?" I said: "That's one potential solution. I don't like it, but there may be no other way."
Mr Mammoliti: Thank you very much for coming down, sir. The people in my community have talked for years about the possibility of withholding taxes from the government. The people in my community are looking at a decrease when this comes through. They're actually looking forward to that decrease.
You talk a little bit about inequity. You talk about the flaw in this particular proposal. What about the flaw in the current system itself? I'll give you an example. In my community, we can't see why a person, for instance -- and I can give you a few examples of Forest Hill homes, homes that might cost $1 million, $1.5 million or $2 million, paying less property taxes than somebody in my particular riding that might have a 2,000-square-foot home and might be paying $3,000 in property tax. That's not fair. The system as it is isn't fair.
This system here would provide for a decrease for approximately 57% of individuals in Metro. If you were to ask me whether there is a problem, I would say yes. If you were to ask me which of the two I prefer, it's this one, because the majority of the people in Metro at least get a decrease in their property taxes. If you ask me whether we should concentrate on revamping the system, I would tell you yes, and I would be an advocate of that as I've been in the past, but that's going to take some time. In the meantime, I'm looking forward to giving some relief to 57% of the people in Metro, and I think they would appreciate it.
I guess what I want to ask you is, what are you going to say to Adidas, for instance, in terms of business in my riding which is getting a $17,000 decrease if this goes through? That's just an average. What are you going to say to them if the government puts a halt on this?
Mr Parr: My position on that would be that they knew what the game was when they came in. They knew what their taxes were.
Mr Mammoliti: They also knew they were paying a little too much compared to the Forest Hill homes.
The Acting Chair: Thank you, Mr Mammoliti. Thank you, Mr Parr. We appreciate your coming here this evening.
CONCERNED BUSINESS PEOPLE AND PROPERTY OWNERS, CHINATOWN DIVISION
The Acting Chair: The next presentation comes from the Concerned Business People and Property Owners, Chinatown Division. Good evening and welcome to the committee. The committee has allocated 20 minutes for your presentation. You may begin by introducing yourself and indicating your position within the association. We're ready to go.
Mr Tony Yu: Formerly I prepared my speech for 10 minutes because that's what I'd been told, so it's not going to be 20 minutes.
The Acting Chair: There's more time for questions then.
Mr Yu: No problem. My name is Tony Yu. I'm the director for the Concerned Business People and Property Owners, Chinatown Division. Members of this committee and Mr Chairman, thank you for the opportunity to express my concern about the negative impact that Bill 94 will have on the economy on behalf of Concerned Business People and Property Owners, Chinatown Division.
Today I stand to make the most important speech of my life. I have the opportunity to convince the standing committee on social development to stop Bill 94 and consider changing the assessment system we now have, because it dates back to some 250 years ago. At that time, the need of society and the complexity of the economy were different from today's, therefore this assessment system should be changed.
With the present system, two properties exactly the same located in different parts of the city but with identical services would have two different tax rates and two different market values. In other parts of the city, two vastly different properties on different-sized lots which have significantly different services could end up paying the same tax.
As for my location at 285 Dundas Street West, the building was renovated three years ago and the property tax went from approximately $2,000 to $6,000, and three years later from approximately $6,000 to $14,000. The owner has been penalized to make the neighbourhood nicer. Meanwhile, next door's owners did not renovate their property, yet their property tax went from approximately $2,000 to $14,000. They have been penalized for not making the neighbourhood nicer. Therefore, this assessment system should be changed.
With today's rental properties, commercial and residential, property tax is passed on to the occupant by the owner. Many low-income earners and those businesses that are struggling out of this recession will face homelessness or bankruptcy because the leaders of our society fail to recognize that market value has no relationship to income or ability to pay, and I must not fail to mention that business tax is the same. Thus, it creates millions of dollars in back taxes, and therefore this assessment system should be changed.
It is true that property value must be brought up to date, but not with the present assessment system. There are some properties paying as little as $800 to $900 in property tax in Metro, but you must take into consideration that many residential and commercial sites had their property value increased a couple of years ago. It is wrong to increase those properties' value again. The government should at least look at other options. Perhaps it might be more fair to reassess those lots on an individual basis and upgrade those property values accordingly. I should also emphasize: Leave those properties that were reassessed a few years ago alone.
2200
Scarborough residents are paying higher property tax than those in Metro. That is most unfortunate. We must acknowledge the fact that the residents in Scarborough had full knowledge of the property tax prior to their purchases, knowing that they could afford it and make that decision by choice, unlike the residents in Metro. Many of them had bought their properties long before high taxes came into place. Today they are paying high property tax, not by choice. Now it has come to the point that business tax, property tax, personal tax and many other taxes have nearly exceeded their personal or business revenue. The consequences of this effect goes in a cycle.
Many will be unemployed, businesses will shut down, landlords will neglect their properties because no rents will be received. In turn, the government will lose that portion of tax revenue and more strain will be placed on government resources due to the unemployment. What will the government do then, I ask you? Increase taxes again? If so, then we are heading towards the inevitable economic nightmare in this country.
The prime objective of any type of taxation is to create productive programs and to pay for government administration costs without hindering the survivabilities of their citizens. Unfortunately, due to high taxes, this system does not allow people to live a normal standard lifestyle. For every dollar we make, over 50% of our dollar goes toward taxes. If that's not extremely high taxes, I don't know what is.
The government should not increase taxes every time it needs more money for its uncontrollably high expenditures, especially when the country is still in a recession. Not only this standing committee, the leaders of this country should take notes from average households and businessmen on how to tighten their belts in an economic time like this.
At this time, I would like to add that a few of my friends I have known for many years have just recently lost their jobs. Most of them have been working at the same company for many years, but due to the economic downfall the company had to downsize. They were caught in the crossfire.
If this present government had enough hindsight to try to prevent this tragedy, more people would be employed again. Extra money could be generated and the government would reap the benefits. Instead, what the government is saying is: "We need money. Since we don't have a solution to the problem, let's bleed the people some more, take some more money from them and increase tax some more. Why not? What are they going to do?" Well, what about the people? Does this government really care about them? How will they survive? Will they be able to keep their houses or businesses or lose them to the government?
One of my friends who has recently lost his job is now trying his hand at selling real estate, even though he was trained to be an engineer. With Bill 94, the real estate market will come to a standstill. Do you think a prospective buyer will attain the property when there's a full implement on the property tax for the new occupant? Even with 10% tax increase each year and 5% for a third year, it is still counterproductive for the economy at this time. Please allow time for us to heal from the recession and to rebuild our economic stability.
In closing, Mr Chairman and members of this committee, please take into strong consideration what this Bill 94 will do to the economy and the citizens. I hope this public hearing will result in the cancellation of this bill and a fairer assessment system will be put in place of it.
The Acting Chair: Thank you. Mr Mammoliti has at least one question.
Mr Mammoliti: Again, I want to keep the property tax plan, in terms of this government anyway, separate from the proposal that's in front of us. I want to tell you that many of us are looking towards reform, many of us want to reform property taxes, but it's separate from this issue, in my opinion. This is a proposal that's coming from Metro. This is what Metro wants. They've asked us to implement it. In my opinion, if we do anything but, it'll set a very dangerous precedent at the provincial level.
I want to talk about something you said on page 2, "We must acknowledge the fact that the residents in Scarborough had full knowledge of the property tax prior to their purchases." Sir, when I bought my home in North York, and Scarborough is comparable, it was worth $255,000. I looked at a comparable home downtown at that time. It was approximately $350,000 to $400,000. It was affordable, sir; it was affordable to me. I couldn't afford to live downtown.
When you talk about how we knew the property taxes were that high up in North York or Scarborough, I think you should acknowledge the fact that it's a little more expensive downtown as well, as I would acknowledge. You have it hard, no question about it, but property taxes should be fair. In Scarborough and in North York they're paying a little bit too much in property taxes and this plan would allow for a decrease for a lot of them, the majority of them, and they're looking forward to it. It's not to say that nobody understands your particular concerns.
What would you have to say to them, to the people who are looking forward to this decrease, the people who couldn't afford a home downtown because of their financial situation and are paying more taxes up there and looking forward to this decrease? What would you say to them after I've explained this to you?
Mr Yu: For one thing, the people I know who bought the property in Scarborough, and Unionville for that matter, knew that in property taxes they were going to have to pay $3,000 a year, as a matter of fact. But compared to the price they were paying downtown, they were getting a much nicer area, bigger land; the house is bigger than in Toronto.
Ms Poole: Smaller mortgage.
Mr Yu: Yes, smaller mortgage. But they know they are going to pay $3,000.
Mr Mammoliti: Yes, but keep the property taxes aside. Forget the value of the home for a second.
Mr Yu: I cannot do that. This is the whole issue here.
The Acting Chair: Perhaps, Mr Mammoliti, you would permit Dr Frankford to ask a question.
Mr Yu: This is the whole issue. This situation was created by the government. As a matter of fact, I'm happy for them if they get those decreases, but you also have to understand the amount of decrease they're getting and the amount of increase we're getting downtown. What would you say to the people who will be paying $300,000 in property taxes? What would you say to them, from $30,000 to $300,000?
Mr Mammoliti: I'd say to them --
The Acting Chair: Order. Dr Frankford.
Ms Poole: George, we don't want to hear your answer.
Mr Robert Frankford (Scarborough East): Thank you, Mr Chair.
Mr Yu: He asked a question. Please allow me to finish the answer, Mr Chairman.
The Acting Chair: It's his colleague.
Mr Yu: I would appreciate it.
2210
Mr Frankford: I really wanted to pick up on the same observation, and I'd like to compliment the witness on at least acknowledging the difference in Scarborough, because we really seem to have spent the evening listening to people who have taken a very Toronto-centred, literally, point of view, and you do note that the property taxes are higher, so I suppose I could really give you the opportunity of continuing with what you were saying.
Let me point out that basically we are talking about equity, as my colleague, Mr Mammoliti, says, that there are striking imbalances. To go back historically, we are dealing with quite low taxes because the assessment was done many years ago, and then the suburbs were built more recently. If this is the system that we are supposed to be dealing with, it would seem obvious that it is an inequitable system. I think that it's untenable, and we've heard from Mayor Trimmer, referring to possible tax revolts by the people who feel that they are unfairly overassessed. Would you like to just carry on with what you were saying?
Mr Yu: Yes, I would, thank you. The benefits some people in Scarborough and North York are getting from the decreases compared to the increase from downtown, you lose in the long run. Okay? The government is going to lose in the long run. The people who are going to pay high taxes in Toronto end up either shutting down the business or losing their homes. They end up on welfare, unemployment. Where is that money going to come from?
Mr Frankford: I think I should finish. But with respect, savings of revenue in Scarborough will go into the economy of Scarborough or of Metro, so this cannot be a totally losing game. It's a readjustment game.
Mr Yu: That is a debatable point, though.
Ms Poole: Thank you very much for your presentation this evening. You've just made a very valid point. You said government is going to lose in the long run.
Mr Yu: Yes.
Ms Poole: Government's going to lose if businesses shut down. They're going to lose if jobs are lost. They're going to lose if the city of Toronto is not kept viable. So thank you for raising that point of view. I really have difficulty when Dr Frankford mentions the fact that what we've heard from is the Toronto-centred point of view. Earlier in your comments you made a point that I think he should have paid attention to. The health of Metro depends on the health of the city of Toronto.
Mr Yu: Yes
Ms Poole: I think you made that point very well.
I get the impression from your brief that you believe a lot of businesses and small businesses in the city of Toronto are right on the verge right now and that this plan will be the straw that breaks the camel's back.
Mr Yu: Yes. For instance, in my case, I just started my business the beginning of this year and, as you know, when you start the first year of a new business, you'll be lucky to break even the first year, let alone make a profit. I've been going without pay myself since January to keep this operation going, to pay my staff. Even with this 10% increase next year, it's that 10% I don't have. Okay?
It's entrepreneurs like myself who built this country. If you take away the tool they need, which is the amount of profit they need to make from business, they cannot do anything; they cannot build Canada, and that is one of the points I'm trying to make.
You benefit one area, then you break the other, so you're not really solving the problem, you're just moving the problem, shifting it back and forth, like robbing Peter to pay Paul. The problem still remains, and about three or four years later, when the government doesn't have enough resources to pay for the unemployment and welfare -- I'm sure some of the businesses will go to Scarborough but it definitely will not be 100% or 80%.
When the government needs more money at that time, what are you going to do? Raise the taxes? Well, you definitely cannot raise the taxes in Metro, because nobody has any money to pay. Where are you going to go? You're going to go to Scarborough, North York, Mississauga. You guys are going to be next, after we die.
Ms Poole: Do you realize that when you said a 10% increase next year, that is only the increase due to market value, that in addition to that you will have all the regular increases that would come about? Because there have been increases at the board of education, increases in Metro spending with the welfare rolls blooming, things like that. You're probably looking at a 15% to 18% total increase over the next year, not just 10%.
Mr Yu: Well, close to 20%. You have to consider the business tax too. A lot of people fail to mention business tax. As your market value goes up, your business tax goes up too. My business tax went up 130%. That's no relation to what I can make from cutting hair. With the business tax and MVA, I have to make that extra $10,000 right now in today's economy. You know, $10,000 may not be a lot of money for some people, if you're making $56,000, and I understand most politicians are exempt from taxes, but if you have to pay taxes, then you will see this whole thing from a different perspective.
In my business I can make $80,000 a year, no problem. But out of that $80,000, right now I've got about $83,000 in expenses, including taxes and rent and all that. If I only had to pay maybe $30,000, I'd be laughing, I'd be happy: I'd make $50,000 in a year. But I'm making $83,000 a year and I'm still in the hole. So there's a problem.
Mr Turnbull: Mr Yu, you make some good points. Tell me something. Would it not be fair to say that irrespective of where your business was, whether it be downtown or Scarborough, you would probably expect to have the same number of customers come in per day into that store?
Mr Yu: Generally speaking, yes. But the hairdressing industry is a little different. When you find someone you like and trust with your hair --
Mr Turnbull: I understand that. Would you be able to get more money by operating downtown? I'll tell you what I'm leading to. I'm saying that the relationship between the value of the building and how much you can earn is absolutely not there; there is no relationship. If you're in premises which had this balloon factor in 1988 in downtown Toronto, you weren't able to earn more money than in Scarborough, but because the building was worth more, you're being taxed more under this system.
Mr Yu: Not only that, but you have to add that in downtown there's no parking space. I have a lot of customers. I've got a new shop in Scarborough; I have to have a parking lot. "It's so hard to get down to your place, Tony." I'm losing that part of the business. Maybe many years ago, that was true. When you're downtown, you should make more money and you should have more business. But nowadays it's different.
Mr Turnbull: So the idea of basing the tax for businesses on the property value of the premises they're in is rather a silly notion.
Mr Yu: The property value in downtown is higher. It's because it's downtown, and you've got more traffic; when there's more traffic around that area, that value is going to be more. But that was, as I said, many years ago. You have that traffic, but people are not going to stop. They're just going by, because there's no place to park. The traffic is there, but the business is not there.
Mr Turnbull: So going back to my favourite subject, unit assessment, if you had unit assessment, where the same size of store in two different areas of Metro would pay the same amount if they were exactly the same size, that would be more equitable, wouldn't it?
Mr Yu: That would be definitely much better than the system now.
The Chair: Thank you for coming this evening, even though we're a little tardy in having you present.
2220
RICK WELZEL
The Acting Chair: The final presentation, Rick Welzel. Good evening, sir. You have the opportunity of batting cleanup this evening.
Mr Rick Welzel: It'll be my pleasure.
I have attended the public deputations twice in Metro hall. I've had extensive consultations with various Metro councillors on a one-on-one basis. The conclusion of those meetings is that they are blaming the mess on the province, and the province is blaming the mess on Metro. Then we have a chairman, Mr Tonks, who is absolutely obsessed with bringing in market value at any cost whatsoever, and I say at any cost: a man with a total obsession to bring in market value.
I am speaking to you, Mr Chairman and members of the social development committee, to express my opposition to Metro's approval of the inflated fantasy market value assessment. Also, I support fair property taxation. Commercial properties should be taxed on their size and nature, but your proposed market value assessment plan is totally out of whack with any reality.
I do not support a proposal that has such a negative impact on our small and medium business sector. I also cannot support the existing proposals because, should Parliament decide to implement commercial tax increases at 25% over three years, such a cap would only be temporary; I say "temporary" because the province has given us no assurance otherwise. I address this also to Mr Cooke. Does that address the problems of long-term economic stability and the devaluation of properties?
Also, how could small business absorb a 25% increase in the midst of the worst recession since the 1930s? If a shortcut to tax reform is taken, the results will be devastating, and I underline "devastating." Higher taxes will make the inner city a less attractive place to live, which consequently will accelerate in the suburbs. Work and families will move out, stores will close and more businesses will leave. I don't think that is the intention of the provincial government.
The Toronto and provincial tax base will shrink. The inner city will begin to decay. Just look at what happened to those once-powerful cities in the United States. When market value was implemented, taxes were raised and crime and social unrest escalated. I ask the Chairman and members of the committee to put a hold on the implementation of the MVA shame, these proposals with more flaws in them than leaves on a tree.
I'd also like to remind you, representatives of the public, that you were voted into office to make responsible and decisive decisions regarding the future of all of Metro and the province. I do not want MVA to force small business owners to abandon their businesses or their employees. I am positive, members, that you don't want that either. I do believe that we must achieve a solution which will result in a fair and workable reassessment tax system which will not destroy small or medium-sized business or devalue real estate.
Furthermore, in our turbulent economy and our uncertain political climate, we must recommend long-term workable solutions, which are not there in the current amendments. Business can only operate on long-term solutions.
May I make recommendations to the social development committee?
(a) Government should protect the business community and jobs by demanding a comprehensive and objective economic impact study of the Metro MVA shame. Implementation of the shame should be put on hold at least until that study is complete. The province should also carry out a study of alternatives to MVA, emphasizing alternatives which support the long-run viability of our economic base. That approach would avoid needlessly putting more people out of work.
(b) We need a fair tax structure to stimulate the investment climate for small and medium-sized businesses. Small and medium-sized businesses are the backbone of our Metro and provincial economies. Under those proposals presently before you, it's not in there.
(c) We need a tax structure to put people back to work instead of putting them out of work. These MVA proposals, so far accepted by Metro, will definitely put people out of work and will put nobody to work. What it will do to our investment climate -- we have the Premier running around in the world, your Premier and my Premier, looking for investors to come invest in Ontario. With what we are trying to do here, believe me, no person in his right mind would come to Ontario or to Metro Toronto to invest in anything. I don't think people are aware that what really happens here is that under this proposal, originated full of flaws in Queen's Park, will actually kill the very thing it was created for.
Let me tell you what it will do. It will erode the provincial tax base. I can give you an example. Let's say this proposal becomes law. As a small business person, I would pay an additional $20,000 in real estate taxes. I will be able to afford them, but what will happen is that I will pay this now to Metro Toronto. There will be no more money going to the provincial government and there will be no more money going to the federal government. So we erode, with those proposals, the entire tax base. So the very thing it was supposed to be creating, it will actually destroy.
Furthermore, since our investment climate is as bad as it is, now we're going even further, now it becomes really deadly. What are you people going to do five years from now? You will not get any money from businesses. Moreover, businesses cannot just leave overnight, so they will just be flexible. The money will go to various and it will go to Metro. There will be very little corporate taxes; there will be very little other taxes. On top, there will be no new investment. So you basically will see only more businesses, under this proposal, moving out and out and out.
I'm a private citizen; I'm not a politician. I was never involved in any political party. I'm not biased. I got involved because I personally feel that somewhere down the line either all of us are sleeping and nobody is waking up -- we have to sit together and discuss it; we have to work together. I don't know what contest that is, the Metro contest? This was the biggest circus I've ever seen in my life. It would make the David Frost show look like a pussycat against it. What was at stake? The future of our province. Some people have the notion that this has only to do with Metro and a few boroughs. There may be some problems in the tax system which are there, but this is not the route to go, gentlemen, absolutely not. I am deeply concerned.
The Acting Chair: Thank you. We appreciate your presentation. The members will note that the time set aside for Mr Welzel has expired. Thank you very much for coming this evening.
Ms Poole: Mr Chair, just before we adjourn, earlier we had a presentation which made very strong statements that people would be denied the right of appeal under this legislation. At that time I requested a response from the ministers of Revenue and Municipal Affairs. I wonder if the committee could have an indication from the minister or staff from Municipal Affairs when we could expect to have this information. I think it's vital to the work of the committee.
Hon Mr Cooke: When you want an answer to that question, the ministry can provide an answer to the question. Somebody from the ministry can provide it tomorrow.
The Acting Chair: The minister has indicated that the response can be provided tomorrow. In light of the heavy committee hearing schedule, though, would it be acceptable to have it in writing? That's fine? The minister will file tomorrow.
Ms Poole: Mr Chair, might I suggest that when we get the material in writing, if there are questions that stem from it perhaps we can arrange for 15 minutes at a time that doesn't interfere.
The Acting Chair: I suspect we could probably arrange something after we see whether something needs to be arranged.
Ms Poole: Thank you, Mr Chair. I'm happy with that.
The Acting Chair: I indicate to the committee that tomorrow we will be starting at 9:30. The clerk has undertaken, at the request of Mr Owens, to provide a list to each of the caucuses of the witnesses who will be appearing tomorrow. Mr Arnott will be delivering to Mr Owens, Mr Grandmaître and Mr Turnbull a list of the presentations for tomorrow.
The committee is now adjourned. Tomorrow morning at 9:30, same place.
The committee adjourned at 2231.