OFA: Fix the farm property tax system in Ontario
By Mark Reusser, Director, Ontario Federation of Agriculture
The current farm property tax system needs to be fixed. To keep Ontario agriculture competitive, we need a fair farm tax system. And that’s why property taxation makes the list of one of four key issues the Ontario Federation of Agriculture (OFA) is talking about with candidates in the June 12 provincial election.
There are two fundamental issues about Ontario’s farmland tax system that OFA wants addressed by government – the process for assessing farm property and the farm property tax rate assigned by municipalities for farmland.
Farm businesses need a predictable and accurate system to assess farmland value for tax purposes. Ontario farmers need to know how property is valued to be able to make sound business decisions. The OFA is working with the Municipal Property Assessment Corporation (MPAC) to identify a range of new procedures that will lead to more accurate and fair valuations of farm properties. These assessments directly affect farm tax bills and must accurately reflect the farmland value.
The second issue involves the tax rate farmers pay for farmland. Most farms in Ontario are taxed at two rates. The farm residence plus one acre of land is taxed at the same residential tax rate as others in the same area. This tax rate reflects the services provided by the municipality for people including libraries and sports arenas.
The rest of the farm property is taxed at a lower rate – up to 25% of the residential tax rate – to reflect the fact that farmland doesn’t need or use the same level of municipal services as people. Farmland taxes support land-based services such as roadways and bridges, proper land drainage and policing. But they shouldn’t be used to support services for people.
Municipalities set the tax rate for farmland in their area. In most Ontario communities farmland tax is allowed to rise because of higher land values to cover shortfalls in municipal funding. That essentially means farmland is shouldering a tax burden for services that it does not use. This rising tax burden for farmers cuts into our ability to be competitive. Farmland taxes should only ever cover the cost of municipal services that farmland actually uses. And that means government must ensure rural municipalities are properly funded.
We are encouraged by some doors that are opening to the issue of adequate municipal funding, based on a recent meeting the OFA had with the Western Ontario Warden’s Caucus. Our organizations serve the same people and we have started discussions about unfair taxation of farms based on underfunded municipalities. The OFA is committed to working with this group to look for some possible solutions for both sides.
When taxes impair our ability to be competitive – and are used to cover services that farmland doesn’t use – something must change. We need a farm property tax system where Ontario farmland is only taxed for services for the land, and not for services to people.
For more information about a fair farm property tax system, and all OFA election issues, visit our provincial election site at GrowingOntario.ofa.on.ca