January 27, 2016

Tax variations raise a million-dollar question

As published in The Erin Advocate

Owning a house that is assessed at $1,000,000 can be quite a burden when it comes to paying property taxes. Councillor Matt Sammut raised the issue at the January 20 budget meeting, in a heated discussion about the impact of tax increases.

“Who is paying the brunt of it?” he asked. “If your home is valued at $400,000, and you get a 5% increase, that’s a couple hundred bucks, I can live with it. It’s the homes that are valued at 7 – 800, a million dollars in our community, that are getting killed, and we’ll continue to kill that group.

“You can just do a simple comparison right next door. You have a million dollar house in Caledon, you have a million dollar house here. Here, you’re paying about $12,000 in taxes; over there you’re paying about $6,000.”

Mayor Al Alls expressed shock at that statement, but after two hours of working on Erin’s budget, he said he would not argue about Caledon. Sammut suggested that he read the Toronto Star on a regular basis. Alls said, “I don’t need your lecture, Councillor Sammut, and I call you out of order.” At that point, he adjourned the meeting.

Overall taxes are known to be lower in Caledon, but a difference of $6,000 seemed like a major exaggeration. So I looked up the tax rates for Erin and Caledon, and multiplied them by a $1 million assessment.

It turns out that the tax bill for 2015 was actually $2,349 higher in Erin. That’s not small change, but it’s a long way from $6,000. Sammut acknowledged the discrepancy later.

“Yes, I exaggerated the variance in taxes as my goal is to motivate our Council that we must discuss fiscal sustainability and fiscal fairness in our community,” he said.

He has a long list of concerns, including high infrastructure costs, the undervaluing of rural homes in provincial assessments, tax credits for farmers and the high percentage of county taxes. Some communities have advantages under regional government, have more money to provide services, and have better internet, lower hydro rates and lower water rates.

The Town of Erin has little or no control over these issues, however, so they cannot be solved in the Town budget. Erin could slash its taxes by 80%, and residents here would still pay more than in Caledon.

Looking at the chart of what is paid in various communities, it is clear that Erin’s Town taxes are relatively low. Caledon residents pay 30% more (and get more services). But like others in Wellington County, Erin’s total taxes are much higher than in Caledon and Halton Hills.

This has nothing to do with efficiency. It has everything to do with population density and the massive commercial and industrial tax revenues generated in Brampton, Mississauga, Oakville and Burlington, which reduce the burden on residential taxpayers in Peel and Halton.

In addition, Wellington County Treasurer Ken DeHart says the chart illustrates a shift in property taxes from urban to rural communities.