By Connor Lynch
RIDEAU LAKES — The provincial corporation that determines property values, which in turn affects property taxes, is set to roll out its latest farmland assessments this October, and preliminary numbers suggest the province is looking at a 60 per cent increase in assessments.
One of the Municipal Property Assessment Corporation’s valuation directors, Karen Russell, said that in one area of Kawartha Lakes, farmland was assessed at $2,100 to $5,100 per acre in 2012 but will likely increase to $4,400 to $8,000 per acre in the fall. She added that those numbers are in the final review so “they’re pretty close.”
Those increases could translate into farmers shouldering more of the municipal tax burden, as rural communities struggle to bring in enough money to coverrising costs.
“We’re facing so many challenges in rural communities,” in particular, stagnant or falling populations in “truly rural Ontario,” said Ron Holman, president of the Rural Ontario Municipalities Association. “That’s a struggle we constantly face. You don’t have real growth, so how do you cover your costs?”
In Holman’s community of Rideau Lakes, south of Perth, some residential assessments went down this year, and when assessments go down, municipalities need to raise the tax rate just to keep up, said Holman.
Farmers do have a built-in protection from taxes. Right now, the taxable rate for farmland in Ontario is capped at 25 per cent of the residential rate. The Ontario Federation of Agriculture (OFA) wants to see municipalities push it lower, so farmers don’t end up paying more of the municipal tax pool.
“Keep it proportional. If (farmers) were paying 10 per cent (of the total pool) before, we don’t want them to start paying 15 per cent,” said OFA policy researcher Ben LeFort.
Holman couldn’t say whether or not that was an option that municipalities had. “Each municipality would have to decide on its own.” Municipal tax bases are getting hit on another front. The loss of commercial and industrial properties mean the loss of the highest taxed properties in a municipality.
And for better or for worse, municipalities don’t have the option of going into debt to keep the tax rate proportional. The Municipal Act forbids municipalities from running operating deficits, where they need to borrow to pay for day-to-day expenses.
Not helping matters is the fact that residential properties in rural Ontario greatly outnumber farmland, which means they largely dictate the average value of properties in each area. Municipalities use the average value of property to determine the tax rate.
You can’t fault municipalities or MPAC for rising taxes, LeFort says. “MPAC’s hands are tied by provincial legislation. Legislation dictates how they do these assessments.”
With interest rates being at an all-time low, making it easier to borrow, high commodity prices that make good land more attractive, and an increasingly short supply of good farmland, farmland prices have been shooting up, said LeFort. And MPAC has to base its assessments on the market, he said.
MPAC will phase in the new assessments over four years.
