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Kitchissippi shoulders unfair tax burden

Wed Oct 5, 2005 Miss Vicky 

I got my property assessment in the mail yesterday. According to the Municipal Property Assessment Corp, my house is worth 25% more than it was in 2003. 25%!!!!! It's more than doubled in value since I bought the house in 2000.

If I were the kind of person who likes to buy homes and flip them for a tidy profit, I'd be rejoicing. Indeed, I have some family members who are into this, and I can hear them now.... Sell, Vicky, sell! But I bought the house because I love it, and I love the neighbourhood. I've been fixing it up bit by bit (watch for kitchen renovation blog entries starting next week!), with the idea that I'll get plenty of use out of it before I decide to move. It's not just a piece of property to me, it's my home, and it's difficult to put a price tag on that.

Unfortunately, our municipal tax system is structured on the presumption that the market value of a property should determine the level of taxation (instead of, say, the level of municipal services provided to an area - not that that doesn't have its problems as well). Here's how it works, accorded to my limited understanding of what is an incredibly muddled process: regulations governing assessments are set by the provincial government. The Municipal Property Assessment Corporation (a non-profit, arms-length corporation) determines the value of your home by tracking sales of similar properties in your area. Tax rates are set by the city every year as it formulates its budget, and the amount you pay in taxes is based on the MPAC's assessment. There's a you can use to estimate the impact of your new assessment on your taxes.

Of course, we already know taxes will go up this year, as the city struggles with increased demand for services, the impacts of provincial downloading and the absence of additional sources of revenue. But it seems that folks in our 'hood will be paying more than others.....

Every homeowner has the right to appeal their assessment (you'll find info and forms on the MPAC website). Which is all well and good and I'll have to consider my options. They'd actually take into consideration the condition of my home, the lot, and so on. The thing is, the average increase in Kitchissippi ward is higher than other urban wards, and substantially higher than suburban wards. The average increase in Ottawa was 11.84%. Kitchissippi's average was 18%. Even if there was no local tax increase, we Kitchissippi folks will be paying that difference between the average and our assessments in additional takes. So in order to address this, would the entire ward have to appeal? There's a problem with the system here.

Tenants are going to feel it as well, as increases will be passed on from landlords - multi-residential unit assessments went up an aveage of 30%. Yikes! Seniors and anyone living with a fixed income could really suffer - and it's not like incomes are rising at the same level that the market value of homes are rising (I think the average collective agreement settlement is something like 3%).

Don't get me wrong. I think taxes are important and I have no problem paying them - even paying a little more in order to retain or improve services. But I do have a problem when some areas of the city pay a larger share of an increase because the real estate market happens to be hot.

The crazy thing is, property reassessments create no net revenue for the city. The city will reduce the overall tax rate based on the average increase in assessment. If your property assessement exceeds the average, then you're paying more, but this will not necessarily benefit the city. Our increase will be cancelled out by tax decreases in areas where assessments rose below the average. Kanata, for example.

And then there's the issue of commercial taxes...

As nutty as this system is, the Ontario Premier recently shot down the idea of a review - something folks have been calling for since the last round of assessments, when Ottawa saw a huge spike in assessed property values. Says he hasn't heard enough of a demand from the public and he doesn't want to break his "no new taxes" election promise. You know, the one that went down the drain when they cooked up the Health Premium scheme? Sigh.

Time to get on the horn to the
MPP, I guess, and start making some noise.

Some people were moved to reply

pinklitva Oct 5, 2005 01:58 PM said:

I am a bit worred that your kitchen reno's will include ripping out the built-in 1950's blender.....

[Edited By pinklitva Oct 05, 2005 01:59 PM]

Miss Vicky Oct 5, 2005 02:03 PM said:

I am afraid that the blender will no longer be in the kitchen. We need the cabinet space in our tiny 9x10 room. HOWEVER we will retain the appliance and reinstall it elsewhere, don't worry!

And we are retaining the 50s feel - boomerang formica and everything.

The Webgeek Oct 5, 2005 02:03 PM said:

the blender will live on (hopefully) in our basement bar...

when we build a basement bar, that is.

amckay Oct 5, 2005 02:46 PM said:

I do have a problem when some areas of the city pay a larger share of an increase because the real estate market happens to be hot

Yes, it is pretty wacky. Mine went up 18% which means a hike! Though in a just-as-wacky sort-of way, this system does represent a form of "pay according to your ability". The assumption I guess being (flawed as it is) that if you can afford to renovate your home, you can afford more taxes. Or if you can afford to live in a neighbourhood that is pricey, then you can afford more taxes. Nevermind the folks who have lived there forever, I guess.

It's wacky as hell if you ask me though. To me city services are pretty clear and we should be paying the same as everyone else who gets the same service. This is why I prefer to see my tax bill broken down as much as possible, with items for water, sewer, road maintenance, snow removal and so on and so forth. Realistically our tax bill should be several pages long with a fully itemized list of what we get from the city and what we pay for it. This would work in the city's favour too since it would allow them to advertise just what useful things our dollars are going towards.

As you note, the really stoopid thing about the current system is that it is revenue-neutral for the city. Even more reason why cities need a real and honest "new deal", which will allow them to control their own taxation schemes without having the province control it like this. There should be no need to call your MPP about your municipal taxes. But in crazy Ontario, there is need.

johnnycannuk Oct 5, 2005 02:55 PM said:

Mine only went up 8% this year (in Barrhaven).

Of course LAST year it went up 25%.

Property taxes are based on a dumb premise - the value of your house or property rather than your ability to pay. That makes them regressive.

I pay no more for my mortgage than I did 5 years ago. I also only make marginally more money. I am not responsible for the housing market, yet I am being penalized by it by paying too much in these kinds of taxes.

There really needs to ba a change that allows municipalities to raise money using wasy other than property taxes. Like get rid of the provincies and have a Federal-Municipal federation like the UK,with municipalities having the taxation powers now given to provinces.

This follows the principal of subsidiarity. Good enough for jane jacobs, good enough for me.

pinklitva Oct 5, 2005 06:57 PM said:

Gotta love that formica. Veerrrry nice choice.

amckay Oct 5, 2005 08:13 PM said:

We've got a big piece of our original yellow formica if you need it for anything. it's on the side porch for some time now - i haven't the heart to throw it away. it's pretty big last i recall but it's been buried behind other stuff so long now i almost would forget what it looked like if it weren't that our other counter has the same thing on it still.

Flanders Oct 6, 2005 10:07 AM said:

We're up 20% this year in our little corner of Champlain Park (and 76% since 1998)...An article in the Citizen today suggests that if your assessment is up by more than the 12.2% city-wide average, you can expect a tax increase of roughly half-way between the 12.2% and your own assessment increase.

And higher transit fares.

And more user fees.

And no discernable increase in services.

blue grama Oct 6, 2005 08:07 PM said:

Property tax, like all wealth taxes, both pays for services and redistributes (or rebalances) wealth. I would not consider it regressive, as jonnycanuck claims, unless you consider wealth irrelevant to your ability to pay. (You could, for example, mortgage the unused equity in your house to pay the increased property taxes.)

It's fine to argue for a user-fee or poll-tax approach, as amckay does -- this would increase transparency and accountability. But don't forget that we'd need a separate wealth redistribution tax on top of that... unless you want the move to user fees to be regressive.

I think it is worthwhile considering why real estate wealth is taxed, but not, say, stock market wealth or the net present value of pensions and annuities.

In my mind, complaints about increased property taxes can separated into two parts:
1) "I don't want to pay for all those artists / homeless layabouts / fat-cat beaurocrats;" and
2) "I'm newly wealthy, but I don't want my taxes to increase, so my kind of wealth shouldn't count."

Oh, and in Ontario, owner-occupied property taxes are STILL unfairly low compared to rental property taxes. So (mostly lower-income) renters are subsidizing (mostly upper-income) home owners.

In short, if your house doubles in value, don't complain to me!

Miss Vicky Oct 6, 2005 11:29 PM said:

I'm not really complaining - only pointing out the screwiness of the market-based approach, which is just scratching the surface of the property tax issue. I can afford the increase; don't get me wrong. But not everyone in Kitchissippi can. We have a hot real estate market here, which is an indication of the revitalization of our area. But should that be the basis of determining appropriate taxation? Is it really fair that property taxes in this ward will go up so folks in Kanata get a tax cut?

You're right about the effect on renters; it is an excellent illustration of the unfairness inherent in the system. There's also the issue of commercial taxation.

One of the big problems right now is the sheer weight of programs and services that now have to be funded by property taxes - responsibilities passed down by provincial and federal governments during the last decade of austerity and income tax cuts.

[Edited By Miss Vicky Oct 07, 2005 07:06 AM]

Flanders Oct 12, 2005 09:49 AM said:

I see where Clive Doucet has managed to get the Provincial Ombudsman to take a look at the assessments on behalf of Glebe residents...it may not lead to anything but at least he's trying...if only the same could be said for Kitchisippi's councillor...

Miss Vicky Oct 12, 2005 11:37 AM said:

Indeed, he's been strangely silent.

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