Spike in house prices pressures municipalities to eye the farm tax rate
ONTARIO — Should trends continue, rapidly soaring house prices will end up shifting more of the annual property-tax burden onto residential properties and away from other property classes — including farmland — that haven’t shot up quite as fast.
In turn, this will undoubtedly create pressure on some municipal councils to “put their thumb” on the scale with an offsetting adjustment to the rate charged on farm properties.
This temptation was already seen earlier this year in Chatham-Kent, where the council mulled hiking the farm property class back up to the maximum allowable 25 percent of the residential rate. (This differential between property classes is known as the ‘ratio.’) Chatham-Kent’s ratio had been set at 22 percent for several years, in reaction to farm assessments that were rising faster than residential values pre-pandemic.
An OFA delegation persuaded the council to make no adjustment this year. OFA Senior Policy Analyst Ben Lefort explained it made no sense for the council to make such a move this year as assessed values used to calculate taxes date are pre-pandemic and are frozen until 2023 anyway. “What happens in the next 10 months or so is going to be significant in how this plays out over the next 5 or 6 years,” Lefort said.
Several municipalities currently have a farm property-tax rate lower than the provincial default of 25 percent. The OFA sent delegations to a rural municipalities a few years ago to lobby for a lower tax rate for farm properties.
