Increased assessments lead farmers to request decrease in residential tax burden

Bob Lefort, senior farm policy analyst with the Ontario Federation of Agriculture, spoke on how municipalities and counties across Ontario have been reacting to the reassessments. photo by Michael Erskine

MINDEMOYA—With tax assessments skyrocketing on agricultural properties, farmers across Manitoulin and the North Shore came to the Mindemoya community centre to listen to an Agricultural Information Day on the impact of the new MPAC assessments on farm land. The Manitoulin West-Sudbury Federation of Agriculture hosted the event, inviting all Manitoulin mayors, reeves, councillors and clerk-treasurers.

Bob Lefort, senior farm policy analyst with the Ontario Federation of Agriculture spoke on how municipalities and counties across Ontario have been reacting to the reassessments. OFA policy advisory committee member Jim Anstice acted as emcee for the event. Neil Tarlton, OFA member service representative, was also present for the meeting as a resource.

“This issue has really seemed to hit the North especially hard,” noted Mr. Anstice. “Hopefully, we will all learn about how we can go about tackling the issue this afternoon.”

Mr. Lefort took those attending through a general refresher on how municipal taxes work and the history behind how those taxes are assessed on farm property.

At one time in the past farm properties were taxed at the full residential rate, with the province rebating those taxes to the tune of about 75 percent back to the farmer. The process was streamlined (aka downloaded) to the municipalities, with the explicit promise that the province would make the process revenue neutral for the municipalities.

“That never happened,” noted Mr. Anstice.

Currently, Island municipalities base their agricultural property tax rate at 25 percent of the residential rate. Farmers pay full residential tax on their homes and a portion of their property, but the agricultural rate applies to the land that is being worked as a farm.

The percentage of the municipal tax burden that was supported by agricultural land taxes was historically about 0.8 percent, but with real property assessment re-evaluations and a spiralling increase in agricultural land values that farmers note is far out of whack with the agricultural earning power of the land, that balance has changed dramatically.

In North East Manitoulin, farmland current value assessment (CVA) has increased by 129 percent. Since residential CVA has dropped by 4.5 percent over the same period, the result is a double whammy for farms. The portion of the tax base supplied by farmland will rise from 0.8 percent in 2016 to a full 2 percent by 2020, an increase in farm tax burden of $82,000 in real dollar terms, that’s with all things staying equal, but with taxes trending upward the real dollar amount will doubtless be a fair portion higher.

Numbers vary across the Island, with Burpee’s farmland CVA increasing by a lesser 37.5 percent and residential CVAs dropping by 2.7 percent, with a $16,000 differential by 2020, but in all cases the differences will be placing a significant burden on farmers.

Since the downloading of the agricultural tax relief to the municipalities, the municipalities have the ability to vary the percentage of taxes levied on farmland from the current 25 percent of residential taxes all the way down to zero. Herein lies the solution that the OFA had been touting, with some significant success, to municipal and county governments across the province.

Mr. Lefort presented a chart to the Agricultural Day meeting that showed the adjustments to tax rates in each Island municipality that would be required to maintain the historical relative tax burden borne by agricultural property taxes.

Those rates varied widely by municipality, but by 2020, Burpee’s rate would drop from 0.23 in 2017 to 0.18, while the Northeast Town’s would drop from 0.18 in 2017 to 0.1 over the same period. Central Manitoulin’s would drop from 0.21 to 0.14; Gore Bay’s from 0.2 to 0.12; Sable Spanish River from 0.2 to 0.12; Assiginack from 0.19 to 0.12 and Tehkummah from 0.2 to 0.13 percent.

Mr. Lefort stressed that the reduction in tax rates would not be a tax break, but rather a realignment of rates to maintain the existing proportion of tax burden borne by agricultural land. “Farm property owners would still be paying more taxes every year,” he pointed out.

Ken Noland, reeve of Burpee Mills, noted that his municipality had taken the different tack of moving to challenge all of the MPAC assessments on farmland in their municipality.

It was the general consensus of farm owners that the MPAC assessments on Manitoulin Island farmland are far out of whack with what they could actually get if they sold their land.

The political challenges presented by a plan to reduce the percentage of residential tax rates paid by agricultural property were acknowledged by Central Manitoulin Mayor Richard Stephens among other municipal representatives at the meeting.

But Mr. Lefort pointed out that the OFA has had considerable success at the county level in southern Ontario with this approach. “Oxford County has moved to 0.22 percent, Hamilton has moved to 0.17 and Durham County has also reduced their percentages,” he said.

But further complicating the matter are the prices that agricultural property owners are receiving in sales across the North Shore, which are far in excess of the agricultural earning potential of the land. “The land is actually selling for more than what it is assessed at,” he said.

Mr. Gamble pointed out that the rising value of agricultural land has made it an attractive alternative to keeping money in the bank. “You can get one percent out of the Bank of Montreal, but a lot more by selling land on.”

Consensus on the best hope for rectifying the issue, other than a municipal tax rate adjustment, seems to be a mass application for reassessment on MPAC CVA decisions, it was noted.

The issue is taking on a provincial scale, concluded Mr. Anstice. “Hopefully, MPAC will sit up and take notice.”