CONTENTS
Monday 7 December 1998
Fairness for Property Taxpayers Act, 1998, Bill 79, Mr Eves /.Loi de 1998 sur le traitement équitable des contribuables des impôts fonciers, projet de loi 79, M. Eves
STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS
Chair / Président
Mr Garry J. Guzzo (Ottawa-Rideau PC)
Vice-Chair / Vice-Président
Mr Wayne Wettlaufer (Kitchener PC)
Mr Ted Arnott (Wellington PC)
Mr John R. Baird (Nepean PC)
Mr Jim Brown (Scarborough West / -Ouest PC)
Mr Garry J. Guzzo (Ottawa-Rideau PC)
Mr Monte Kwinter (Wilson Heights L)
Mr Gerry Phillips (Scarborough-Agincourt L)
Mr E.J. Douglas Rollins (Quinte PC)
Mr Tony Silipo (Dovercourt ND)
Mr Wayne Wettlaufer (Kitchener PC)
Substitutions / Membres remplaçants
Mr Marcel Beaubien (Lambton PC)
Mr Ted Chudleigh (Halton North / -Nord PC)
Mr Carl DeFaria (Mississauga East / -Est PC)
Mr Tom Froese (St Catharines-Brock PC)
Mr John Gerretsen (Kingston and The Islands / Kingston et Les Îles L)
Mr John Hastings (Etobicoke-Rexdale PC)
Mr Gerry Martiniuk (Cambridge PC)
Also taking part / Autres participants et participantes
Ms Michelle Lalonde, manager, tax design and legislation (property tax), Ministry of Finance
Mr Gerald Sholtack, senior counsel, revenue, office of legal services, Ministry of Finance
Clerk / Greffière
Ms Susan Sourial
Staff / Personnel
Mr Mark Spakowski, legislative counsel
.
.
The committee met at 0911 in room 2.
ELECTION OF ACTING CHAIR
Clerk of the Committee (Ms Susan Sourial): I call this meeting to order. It's my duty, honourable members, to call upon you to elect an Acting Chair. Are there any nominations?
Mr Gerry Phillips (Scarborough-Agincourt): I nominate Mr Arnott, and that along with his position he receive the pay of the existing Chair. I'm just kidding. I nominate him.
Mr John R. Baird (Nepean): I second that.
Mr Phillips: On the money or --
Clerk of the Committee: Are there any further nominations?
Mr John Gerretsen (Kingston and The Islands): He's the only person we trust around here.
Clerk of the Committee: No further nominations? I declare the nomination closed and Mr Arnott elected acting Chair.
The Acting Chair (Mr Ted Arnott): Thank you, members, for the honour of chairing the committee for the time being.
FAIRNESS FOR PROPERTY TAXPAYERS ACT, 1998 / LOI DE 1998 SUR LE TRAITEMENT ÉQUITABLE DES CONTRIBUABLES DES IMPÔTS FONCIERS
Consideration of Bill 79, An Act to amend the Assessment Act, Municipal Act, Assessment Review Board Act and Education Act in respect of property taxes / Projet de loi 79, Loi modifiant la Loi sur l'évaluation foncière, la Loi sur les municipalités, la Loi sur la Commission de révision de l'évaluation foncière et la Loi sur l'éducation en ce qui concerne l'impôt foncier.
The Acting Chair: Are there any questions, comments or amendments and, if so, to what section of the bill?
Mr Phillips: I'm not sure how you want to proceed, but if it's permissible I'd start with an overall comment that this process is really public policy at its worst, in my opinion. We received, I think, 25 to 30 government amendments late Friday. We had a one-hour briefing at 8 o'clock this morning, and now we're dealing with a bill that is going to have -- $15 billion of taxpayers' money is at stake here, and this is really a strange way to do business.
I also am disappointed that the minister wouldn't be here to present his bill and his amendments. With all due respect, I think we're owed that courtesy. This is the seventh property tax bill we've dealt with in the last 18 months.
I'm very disappointed that we had no public input. Frankly, it is, dare I say, obscene that when we're dealing with taxpayers' money like this, when we're dealing with something as fundamental as property taxes, we just shut the public out. I find it offensive and very upsetting. There is no logical explanation for it. I don't know how any government member can defend dealing with public policy in this way when we've shut the public out from any opportunity to have input to what is absolutely fundamental to them.
Furthermore, I have argued for a long while that we're setting property taxes by regulation which, to the layperson, is behind closed doors, by government fiat. What we should be doing is using an open, transparent process. Yet nothing could be further from that. Our caucus sent the minister a letter saying we find it extremely objectionable that nobody from the public had an opportunity to comment on this bill.
Just to express more of my frustration, at 8 o'clock this morning we were told to appear at a certain room for a briefing. There was no one there. The room was locked. The briefing did begin, but at least 10 minutes late. It's a very distressing way to deal with public policy and, I think, quite foreign to the way business should be done in Ontario.
That's my overall comment. We'll deal clause-by-clause with more specific comments. But just as an overview, no one can defend this process. No one can defend the fact that we will not hear from a single organization or individual in Ontario dealing with this enormously important bill. This bill was introduced on November 5, a month ago. We could have had ample opportunity for public input, but we've been denied that.
Mr Tony Silipo (Dovercourt): I also want to make a couple of comments before we get into the actual amendments. I think it's fair to say that this has been one of the most troubling files for the government to deal with. Therefore, I could understand their wish to get this thing over with as quickly as possible. But this has been an issue that the government has bungled time after time, not only by virtue of having to present seven different bills, each one trying to correct mistakes in the previous iteration, but also in the bill in front of us, Bill 79, with the kind of ludicrous situation of the minister, at the very time he announced the bill, having to indicate he would have to amend this bill to cover multi-residential units, which they forgot to include in the drafting or perhaps decided they should include after they drafted the bill.
It has been a continuing saga of mistake after mistake. We have in front of us this morning a letter, one of a number we continue to receive, from the regional municipality of Peel, indicating in no uncertain words that the region is opposed in principle to Bill 79 in its entirety. Lots of other municipalities and organizations feel the same way.
The government has decided to ignore that advice and the advice of others and to just kind of ram this through. I think it just adds insult to injury because of the government's hurry to get this thing done. We're in a position where we're dealing with clause-by-clause without the usual benefit of actually hearing from at least some of the municipalities and some of the municipal organizations that have to implement this legislation once it's passed, because it will be passed by the government. That's really unfortunate. It's bad law-making and it's bad policy-making, but I'm afraid it's typical of the way this government has handled this issue and, unfortunately, a number of others.
We will go through this process today in the shortened way that it's been set up by the government. We will end up with a piece of legislation that provides municipalities with some additional choices. But given that we're passing this legislation in December, it's going to continue to create chaos and confusion in the municipal world and in the real world when people deal with their property tax bills. I fully expect that this issue is going to continue to be alive and out there. Despite the number of bills the government has brought in, the situation has not been rectified. This is not the way to deal with real reform of the property tax system.
0920
Mr Baird: Just some comments on the comments of my colleagues. Obviously there has been a terrific amount of discussion on this over the last number of years. Leading up to these discussions this morning on clause-by-clause, there has been a good amount of consultation that the ministry, the minister, his officials, his office, that I, that other members of the government have had.
I can tell you some of the organizations we've met with: the Association of Municipalities of Ontario; the Ministry of Municipal Affairs and Housing; area treasurers; the cities of Cornwall, Chatham, Hamilton, Oshawa, Belleville, Toronto, London, Owen Sound; the townships of Saugeen and Smith-Ennismore; the GTCEC; the regions of York, Peel, Halton, Ottawa-Carleton and Durham; region of York staff; the Toronto Congress Centre; the Independent Power Producers' Society; the Toronto, Ottawa, London and Thunder Bay airport authorities; an expert panel from the Association of Municipalities of Ontario and others; the counties of Simcoe and Wellington; the town of Haldimand. A number of expert panels. I could go on and on: the United Way, the Canadian Council of Christian Charities, Lanark county, Renfrew county -- a terrific number of discussions and deliberations that may not fit the type of picture some of the opposition would like to portray.
I think you can see that there are a good number of areas where the government has listened, where it's presenting amendments based on some of those discussions, albeit not all the amendments that would be requested, which I suggest is not unusual in any government. The bottom line for the government with this bill is that we want to step in and ensure that small businesses are protected. There were a good number of tools in past legislation that were not always used. Some municipalities were good actors; they did use a good number of the tools. Others used none. We had a choice to simply sit by and do nothing and allow small business to be hard hit because their local municipality or upper tier chose not to use the tools.
I think I can speak for all my caucus colleagues that we simply were not prepared to sit back and watch small business not be protected. Small business is the economic engine of the province. A terrifically high percentage of the jobs, not just over the last few quarters but over the last three years, were created by small business. Small business led the way with 80% of the new jobs created in Ontario. They're an exceptionally important part of the Ontario economy, and that's why we're moving in to ensure that they are protected.
Mr Gerretsen: I would like to respond to what Mr Baird has just stated. I find it very curious that on December 2 a joint letter was sent by the Association of Municipalities of Ontario, the Association of Municipal Clerks and Treasurers of Ontario, the Municipal Finance Officers' Association of Ontario and the Association of Municipal Tax Collectors of Ontario, that clearly states in a summary page, called "Table of Contents" -- this probably summarizes better than anything else what is happening in this bill. I'll just read it into the record, if you don't mind. It states what Bill 79 does not do:
"Bill 79 doesn't cap tax increases at 10% in 1998. Bill 79 doesn't provide protection to small business. Bill 79 doesn't target properties hardest hit. Bill 79 doesn't recognize local efforts and local solutions. Bill 79 doesn't allow adequate time to make important decisions. Bill 79 doesn't address rebates to charities. Bill 79 doesn't cap business improvement area (BIA) levies. Bill 79 doesn't provide fairness for property taxpayers."
That's what it doesn't do, according to these four associations I've just mentioned. What it does do, according to them, is:
"Bill 79 imposes mandatory, inflexible and blunt solutions to manageable problems. Bill 79 increases ratepayer confusion. Bill 79 increases the complexity of the tax system and tax calculations. Bill 79 increases municipal costs. Bill 79 delays current value assessment. Bill 79 introduces further delays in tax billing. Bill 79 provides for standardized municipal tax bills. Bill 79 erodes gains in federal payments-in-lieu."
These are just summaries of what the bill does and doesn't do, which I think completely contradict what's just been stated by the parliamentary assistant.
Mr Phillips: Just a comment on Mr Baird's comment: With all due respect, you're suffering now from the arrogance of power. You say that these groups have met with the government. In a democratic society, we owe people the right to come before a public forum and express their views. When any government thinks they are dealing with the public behind closed doors, in private, and their views can be expressed only in private, we're in serious danger.
Believe me, the government is now caught in its own arrogance. If you want to deal with the government, you deal with them behind closed doors; you can't come in a public forum. You should all look in the mirror and recognize what's happening to you. I've seen it before. I say with a good deal of conviction that if you think you have consulted with people, and you think that people have had public input because you called them into your office, and that's democracy, you're badly mistaken.
I couldn't let those comments go by, because it's extremely serious when the public has no opportunity to participate publicly in something as important as this. You say, "We've met with them." I know what meeting can take place, and I know that people can be threatened behind closed doors. They are owed an opportunity to appear publicly and to express their views publicly, not behind closed doors.
Mr Baird: I don't want to go on all day responding to one after another, but I did want to make one comment with respect to the comments made by my colleague from Kingston. He referred to the table of contents of a joint submission by a number of organizations. I find it passing strange that it says "What Bill 79 does do: Bill 79 imposes mandatory, inflexible and blunt solutions to manageable problems." With the greatest respect, I don't think there are a lot of small business people out there who felt that their municipalities were managing this problem. That's the reason the government is stepping in to protect small business.
Over half of the municipalities didn't use any mitigation tools whatsoever. Clearly the problem was that many municipalities weren't prepared to even try to manage the problem. There were some out there that did. I take my hat off to the folks in Toronto, who used the 2.5% cap. I take my hat off whether they be in Halton, Wellington county, Ottawa-Carleton, where they made earnest attempts to deal with the issue.
I think it would be unfair of me to let it go unresponded to that these problems were not manageable. Simply put, a majority of municipalities were not prepared to manage them. We certainly are inflexible: You have to protect small business, and there's no flexibility there. I have no problem with that.
The Acting Chair: Thank you, Mr Baird.
I'd like to move forward to the various sections of the bill, and I'm sure there will be ample opportunity for members to debate and bring forward issues relative to individual sections of the bill.
Mr Phillips: Does the government have an opening statement, Mr Chair, an explanation?
The Acting Chair: Mr Baird?
Mr Baird: I believe the motion passed by the House just called for clause-by-clause.
Mr Phillips: Point made.
The Acting Chair: Dealing with section 1, is there any comment or debate relative to section 1?
Mr Phillips: On page 3, section 6 actually. I hope I'm not ahead of anybody.
The Acting Chair: We're dealing with section 1.
Mr Phillips: OK, I'm sorry.
The Acting Chair: Seeing no comment or debate on section 1, shall section 1 carry? Carried.
Is there any comment or debate relative to section 2 of the bill? Seeing none, shall section 2 carry? Carried.
It's my understanding that none of the parties has submitted amendments to any section of the bill up until section 13, so would it be amenable to the members to group the remaining sections from section 3 to 12 together and we can vote on them at once?.
So one vote, sections 3 to 12. Shall sections 3 to 12 carry?
0930
Mr Phillips: Mr Chairman, in section 6, is it the intent of the government under this section that municipalities may choose to let the 1998 taxes stand but adjust 1999 taxes to reflect the decrease or increase? In other words, will the changes that should have taken place in 1998 be built into the 1999 tax bill?
The Acting Chair: Is your question to Mr Baird?
Mr Phillips: Yes, I guess so.
Mr Baird: Section 6 of the bill?
Mr Phillips: Yes.
Mr Gerald Sholtack: Section 6 allows the assessment division to issue an assessment where a municipality chooses an optional class after the end of 1998 where the minister extends the time. It's a very technical authority to deal with a situation where the time to choose an optional class has been extended by the minister. If the municipality chooses an optional class, the assessment division will issue an assessment to apply that optional class to the municipality in 1998. That's the effect of the amendment contained in section 6 of the bill.
Mr Phillips: Just so I'm clear, a municipality could say: "It's going to take us a while to figure out our 1998 problems, so we're going to be maybe February or March before we get it done. We want the authority to go back to 1998 and establish some additional classes."
Mr Sholtack: Right.
Mr Phillips: Is there any time limit on how long they could apply for that?
Mr Sholtack: Not technically. The minister has the authority to extend the time into 1999, but the municipalities need to, of course, finalize their 1998 taxes. It would probably limit how long they would wait.
Mr Phillips: Just maybe to help me, because you're the expert on it, what is the expectation of how long it will take municipalities, from the day this bill is proclaimed, to be able to reissue their 1998 taxes?
Mr Sholtack: I guess it's difficult to really know, depending on the situation and how quickly they are able to review all of the options and decide which of the tools they wish to use.
Mr Phillips: I understand that, but I'm told it could be, in some cases, February. Is that fair to say? You see, what you're asking us to do is approve a bill that will create some more mess up there. You owe us, in my opinion, some idea of what the mess is going to be. If through what we're approving here the bills get put out in December, I'd like to know that. If it's going to be January, I'd like to know that. If it's February, I'd like to know that. Right now I'm of the opinion that we're going to be well into 1999 before the 1998 taxes can be reissued. We're going to be January or February in most municipalities.
Mr Sholtack: Certainly the ministries will be working with the municipalities, the Ministry of Finance and the Ministry of Municipal Affairs, to help them analyze the tools that are available and to use the provisions of this bill to redo their 1998 taxes.
Mr Phillips: But what do you think is going to happen, or what does somebody think?
Mr Baird: I think probably there will be some degree of difference by municipality. Obviously Toronto, where they used the tools, going back to the announcement --
Mr Phillips: I understand that, John --
Mr Baird: If the municipality had done their homework and had used the tools, it would probably be a lot less time than if they hadn't and had to go back a little bit further in their policy discussions.
Mr Phillips: Can anybody in municipal affairs tell us when they expect the average municipality will be able to get their 1998 tax bills recalculated and sent out?
Mr Baird: I think it would be on a municipality-by-municipality basis.
Mr Phillips: I understand that, but what do you think? What have you been told by the municipalities about when it will happen?
Mr Baird: I think it would be too much of a broad brush to say that municipalities as a whole -- I suggested Toronto will obviously require very few, if any, changes. Those few that they may require would be met rather expeditiously. I expect that in some municipalities where they did use some of the tools -- I'm thinking of Ottawa-Carleton or Halton or Wellington county -- it will be substantially less work. If you use none of them, it perhaps may take a little bit longer, but I think that will depend to some extent on the ability of the municipalities to make their policy decisions, what they're choosing to use, what are the pre-existing tools or combination thereof.
Mr Phillips: As I say, this is the government asking for approval and not telling us what the implications are. The government has gotten the municipalities and the Legislature into hot water for 18 months now by not telling us what's going to happen. My understanding from municipalities is it will be January or February before they can redo their 1998 tax bills. That's most municipalities. If I'm wrong on that, I'd like to know.
Ms Michelle Lalonde: I've heard from a number of municipalities, and their responses have varied. Some, yes, have said they choose to make these adjustments on their interim bills in 1999. That's their plan. Some municipalities that I've talked to have said they don't want any delay and will try and make the adjustments before the end of the year. It really will be, as Mr Baird mentioned, a municipal-specific circumstance, but I think it's fair to say that a lot of municipalities are looking at making the adjustments on their interim bill. Bill 79 does provide them with that ability if they choose to.
The Acting Chair: I think Mr Silipo wanted to make a comment.
Mr Silipo: On sections 7 and 8. May I?
The Acting Chair: Yes, you may.
Mr Silipo: It's really a question, again to Mr Baird --
Mr Baird: Section 7 or 8?
Mr Silipo: Sections 7 and 8. They deal with different parts of the same issue. I believe, if I've understood these sections, these are the ones where we have the extension of the appeal deadline for the assessments, which extends the deadline for appeals to December 31.
I just wanted to be clear in a couple of respects. First is that I gather that the minister has indicated that where the appeals are dealt with by way of review, as opposed to having to go to the formal hearing -- because I know that given the number of appeals that have been launched, the folks at the Assessment Review Board are trying very hard to sort out many of them by going through a review initially -- in those cases the $20 fee that is part of the appeal will be waived. Could I get some assurances that that will continue to be the case?
Mr Sholtack: The minister made that announcement and that would be the intention of the government. Where a settlement is reached with the assessment division on a reconsideration and no hearing is necessary at the ARB, the fee will be refunded by the ministry.
Mr Silipo: The other thing was just a question in terms of the deadline as it applies particularly -- and I don't see it in here, so I don't know where else it appears in the bill. December 31 is the deadline, but there was also a provision which I think brought it back to December 15 for notification between landlords --
Mr Sholtack: I think you're referring to the date that landlords have to notify their tenants that they intend to pass through.
Mr Silipo: I am, yes. Is that later on?
Mr Sholtack: That's later on, in amendments to section 444.1 of the Municipal Act.
Mr Silipo: OK, then perhaps I'll ask a question at that point.
0940
Mr Phillips: The reason for the later date for appealing your assessment is that no one understands, or few people understand, the impact of their assessment until they get their taxes. That's what the minister said, by the way. For those who were around here, that's what we said a year and a half ago.
Does that clause -- that is, 90 days after the notice required under the subsection is mailed -- mean that people have up to 90 days? Let's assume there's going to be some significant tax changes here. Do people have up until 90 days after they get their final tax bill?
Mr Sholtack: No. The amendment to section 35 refers to supplemental assessments, changes that occur during the year. A number of supplemental assessments were issued in October of this year. They have 90 days, or the later of 90 days or December 31, to file their appeal. The 90 days is the provision ordinarily applicable whenever changes are made under section 33 or 34 of the Assessment Act.
These could be improvements to a property; for example, someone has put an addition on a property during 1998. The assessment division will issue a supplemental assessment recording that change and imposing taxes for the rest of the year. Those are the kinds of assessments for which there's a 90-day period, and that's what that provision in section 7 of the bill refers to.
Mr Phillips: So even though some people won't get their real, final tax bill until January or February, which will be after the last date of appeal, that's just --
Mr Sholtack: These are fairly routine events where changes are made to property. Supplemental assessments are issued as a matter of course during the year.
Mr Phillips: I'm on the other issue, which is that the reason for changing it to December 31 was because it was finally recognized that people have difficulty understanding the impact of their assessment until they get their taxes.
Mr Baird: I think it's always a concern where people believe they can appeal their taxes because they find them too high. Of course, that's not a grounds for appeal; you can only appeal on the assessed value of your property. As you know, this is a concern going back many years, not just now. It's a bit of a red herring to say to someone that just because your taxes are too much, you can appeal to the ARB. Of course you can't; you can only appeal based on whether they have got the assessed value correct, not on the numerical value or quantity of your taxes.
Mr Phillips: But the explanation that was given for why we extended to December 31 was because -- and this is what the minister said -- in 1998, because of the new system, people could not understand the impact of the new assessment system until they got their tax bill. The minister is on record as saying that.
Mr Baird: We've certainly offered to go farther than is normally the case to give people more time to appeal, and that's through to December 31. We've gone much farther based on public request to extend it, and it has been extended. I suspect, though, for some you can extend it, extend it, extend it and there will still be those who find other reasons with which they'd like to appeal.
They can obviously appeal their 1999; that's not affected. They can still move forward and appeal the 1999. If they want to appeal it next year, they're still free to as well.
Mr Silipo: There's one question I forgot to ask earlier. Do we know how many appeals have been lodged to date with the Assessment Review Board on either or both of the residential or commercial side?
Mr Sholtack: I believe initial estimates have been up to 600,000. The latest estimates that I've heard were around 150,000.
Mr Silipo: The 150,000, that's total?
Mr Sholtack: Total.
Mr Baird: That's of over four million properties around the province. In some areas there have definitely been mistakes made; no one's perfect. In other areas they've been remarkably close, and I think it's important to acknowledge that. I did some spot checking in my own constituency and found it to be bang-on. Definitely there's the odd one where something's off, and there is a process where someone can seek to advance them. No one ever calls and congratulates you for getting their assessment bang-on. I think it would be a mistake not to acknowledge that they have done a good job in the vast majority of cases. There are some legitimate concerns, and there is a process to resolve those concerns, both informal and formal.
The Acting Chair: Are there any further questions or comments related to sections 3 to 12?
I'd like to call the vote on sections 3 to 12. Shall sections 3 to 12 carry? Carried.
I've received notice of a government amendment to section 13.
Mr Baird: I move that subsection 13(2) of the bill be amended by adding the following as a subsection of section 366 of the Municipal Act:
"Special reductions
"(16.4) An upper-tier municipality may, with the written approval of the Minister of Finance, set a tax rate for a property class that is lower than would otherwise be allowed under this section."
To speak to it briefly, amendments numbered 1 and 2 for the members are allowing upper-tier, and then in the second amendment lower-tier, municipalities the ability to reduce taxes if they so choose. If they have some extra money and want to target a particular class, they have the right to do that through getting approval at the Ministry of Finance.
I can tell you that there are so many, maybe a small number at this point that we're aware of, where they would like to reduce taxes and target those to a particular class. Obviously there's tremendous variation for commercial-industrial rates and even multi-residential rates across the province. Some municipalities seek to reduce. I think Owen Sound is one example where they certainly talked about it and perhaps may avail themselves of one of these two amendments.
Mr Silipo: Where do you envisage that the money would come from for these rebates or reductions? Is this a question of municipalities being able again to shift between different property classes, or is this to envision other situations than that?
Mr Baird: It could come from a whole host -- it's not shifting from residential but, for example, could come from assessment growth. Some municipalities, I think, could put a small 1% or 2% based on assessment appeal, so depending on the success or lack of in that case. I think Owen Sound is certainly one which wanted to target a particular class for reductions to make themselves more competitive, which is certainly something we would all applaud.
It wouldn't be taking from residential but it could be, you know, even booked into their budget for 1998. But Owen Sound is one example, I think, where they talked about potentially they would like to do it.
Mr Phillips: I was astonished we needed this. I've assumed that if a municipality chose to reduce its tax rate on commercial property or on industrial property or on multi-res, it was quite permissible to do that. Are you saying that if they use the 10, 5, 5, they can't reduce the tax rate over three years on any of these classes?
Mr Baird: The bill freezes the tax ratio to ensure there's no shift onto residential, and that's why these amendments numbers 1 and 2 are needed. I guess we don't want the residential ratepayer to pay for 10, 5, 5 and don't want the burden shifted onto them. That's why amendments numbers 1 and 2 are needed.
It would be naive to suggest that you're going to see a large number of 600-odd municipalities in the province want to target particular classes for tax reductions, but some may. Certainly I would applaud those who would be able to book the money to be able to do that as long as it didn't come from the residential base. Obviously, one of the fundamental foundations of the bill is that 10, 5, 5 can't be paid for affecting residential ratepayers.
0950
Mr Phillips: Let me put it in language I understand. If a municipality currently chooses to use the 10, 5, 5 under the new bill, for three years it cannot reduce the tax rate on commercial or industrial or multi-res, if it's using the 10, 5 and 5. Is that right?
Mr Baird: Not by going to residential.
Mr Sholtack: It applies to all municipalities. The tax ratios established in 1998 apply in 1999 and 2000. So there can't be any reduction in those tax ratios --
Mr Phillips: I said tax rate.
Mr Sholtack: But first the ratios are fixed, and the rates have to be set in the same proportion. That's the significance of tax ratios. This will allow a tax rate to be less than what the tax ratio would require it to be, where the municipality so desires and the minister approves.
Mr Phillips: My understanding of the bill is that the tax ratio is set and a municipality can reduce the tax ratio on commercial and industrial, as long as it doesn't fall below the fairness rule. I'm surprised we need this, because it seems to me any municipality -- Owen Sound could say, "We're choosing to reduce our tax rate on commercial." Why can't they do that?
Mr Sholtack: As I said, for the 1998-2000 period the tax ratios cannot be reduced.
Mr Phillips: I said rates, not ratios.
Mr Baird: But the rates are based on ratios.
Mr Sholtack: The rate is related to the ratio. You can't set a rate that is not in the same proportion as the tax ratio.
Mr Phillips: I'm going to pursue this a little bit. I'm a municipality. I've got my tax ratios and I say I want to reduce the tax rate on commercial -- the tax rate, not ratio. The previous bills all permitted me to do that, as long as I'm not falling below the fairness rule. I have no idea why we need this amendment. It seems to me it's already permissible.
Mr Baird: The ratios would be constant. You'd probably have to reduce residential at the same time to be commensurate with it. If you want to target a particular class, essentially these amendments would allow the minister to allow the ratios to be altered, as long as it wasn't paid for under the residential rolls. You can proceed now, but you can't target it towards a particular class because you'd have to reduce the residential in a commensurate way to maintain the ratio. The amendments here for the upper and then lower allow --
Mr Phillips: I don't believe that to be the case. I believe that in previous bills -- it says "tax rate"; it doesn't mention "ratio" here at all, just "tax rate." I'd just like to know, because it sounds to me like Bill 79, if you adopt the 10, 5 and 5, locks in your tax rates.
Ms Lalonde: It locks in your tax ratios, which is different than a tax rate. It locks in the ratios, but basically a municipality is free to deliver an overall budget cut to all classes if it wants, as Mr Baird mentioned. These provisions allow them, if they want to target a tax cut to particular classes -- if they've booked some money into their budget, for instance, they can target that money to a specific property class.
Mr Phillips: What bill prohibits them from doing that right now?
Ms Lalonde: Bill 79, right now, as a general principle, freezes the tax ratios that were adopted by municipalities in 1998 for the purposes of ensuring that this protection under Bill 79 does not affect the residential taxpayer.
Mr Phillips: That's the point I've been making all along. That is that previous bills -- not Bill 79 -- allowed municipalities, if they said, "We think our industrial rates are too high. We're going to reduce the tax rate" --
Ms Lalonde: Ratio.
Mr Sholtack: No.
Mr Phillips: I know you keep saying "ratio," but it's --
Mr Sholtack: Because the act says the rates on different classes must be in the same proportion to each other as the tax ratios that are established. That's why it's the tax ratio that determines the level of taxation on a particular class. The tax rate has to be set in proportion to that tax ratio. So if you want to reduce the level of taxation on, say, the industrial property class, you have to reduce the tax ratio, and the act does not allow that.
Mr Phillips: What act doesn't allow it?
Mr Sholtack: Bill 79 does not allow --
Mr Phillips: But all previous acts did, until Bill 79 came along.
Mr Sholtack: Yes.
Mr Phillips: So Bill 79 prohibits it.
Mr Sholtack: It's designed to prevent a shift on to residential property.
Mr Phillips: That's one thing it's designed to do, but it's designed to prohibit reducing taxes on industrial or commercial.
Mr Baird: But that would be wrong to say. It's designed to ensure the residential isn't bled off to commercial-industrial in relation to the 10, 5, 5. The 10, 5, 5 is a cap for commercial-industrial properties, and obviously we're proposing multi-residential. But we want to ensure the residential ratepayer is protected.
For those municipalities that would like to change the ratio and target to a particular property class, that's why we're bringing forward the amendments that would allow that, but they can't do it -- if you want to do it now, you have to do it at the same ratio with the residential. Municipality by municipality, some are better actors than others. Some on multi-res have a 4.5-to-1 ratio; others have a 2-to-1 ratio. The same thing for many commercial-industrial classes. Obviously, in Toronto the commercial-industrial ratio has been much different than is the case in Ottawa or in Lanark county. If a municipality wants to take the opportunity to target a particular class to make itself more competitive, it can do so, but it can't do it from the residential ratepayer.
Mr Phillips: With all due respect, I think you're trying to bamboozle us. I've spent a year and a half on this committee and I can remember the Minister of Finance saying, "This is designed to allow municipalities to reduce tax rates on commercial-industrial," blah, blah, blah. Now, I gather from what you're saying, Bill 79 would prohibit that, but with the written permission of the ministry you can do it. So maybe an unintended consequence of Bill 79 is that municipalities cannot reduce the tax rates on commercial-industrial without the written permission of the minister.
Mr Baird: They can. If they want to reduce the tax rates on commercial-industrial, they can. They're free to do it under Bill 79, but they have to do it equivalent with residential. If they want to target to a particular property class, these two amendments would allow that, but they can't be paid for out of the residential rate.
Mr Phillips: But on previous bills they could do it on whatever class they wanted to, as long as they weren't out of the fairness ratios. Bill 79 changes that.
Mr Baird: One of the cornerstones of Bill 79 is we don't want residential ratepayers to be affected by the decisions taken for commercial-industrial and multi-residential. I can appreciate there will be differences on that.
Mr Phillips: As far as I'm concerned, it's less than forthcoming.
Mr Silipo: Ironically, though, this amendment leaves the door open for the minister to approve not just differentiated ratios between classes, but also, going back to the question I raised earlier where you said, Mr Baird, that this money could come from assessment growth -- or it could come from a shift from the residential; there's nothing to prevent that from happening.
Mr Sholtack: This is only a tax rate reduction. The tax ratios remain the same, and by approving a tax rate reduction for a particular class, there's no increase in taxes on any other class. It is a one-time or an annual decision by a municipality. If they booked money for a particular class reduction, they could follow through on that. As Mr Baird said, Owen Sound has indicated it does have money it would like to target to the industrial property class. That is the only thing that can be done under this provision. There cannot be any increase in any other class.
Mr Silipo: No, I appreciate it's not an increase on any other classes, but the reverse isn't true, right? Which is that by allowing a focusing of the reduction of the tax rate on a particular property class, you are affecting the ratio. How are you not affecting the ratio? If you are providing additional relief to one property class in terms of the rate it pays, doesn't that in and of itself mean that proportionately the other classes, ie, the residential, are paying more?
Mr Sholtack: Not for the one year. For the one year there is surplus money, as it were, that the municipality wants to target to, say, its industrial class, the taxes remain the same on everyone else. That surplus is then targeted to that particular class. The other way to get rid of a surplus is to give everybody a tax decrease.
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Mr Silipo: Right. My point exactly. Without this amendment the municipality would have to provide that reduction right across the board to everyone -- residential, commercial etc -- right?
Mr Sholtack: That's right.
Mr Baird: There is obviously a public policy interest in looking at the ratios for commercial-industrial. One of the things the provincial government is following through on is a significant reduction in the business education taxes that are above the provincial average. Obviously, it's a real concern for many municipalities, particularly yours in Toronto, sir. If you look at Hamilton-Wentworth, it's a concern there. This gives some degree of flexibility to the local municipality to decide that if their commercial-industrial rates are too high and they want to take some action on it in terms of the climate for economic development in their communities, they have that right.
I think we would all agree there's pretty widespread support for reducing the C and I education taxes that are above the provincial average. I believe there's pretty widespread support, that that's a good public policy objective. This allows local municipalities to at least make application to target a tax set to a particular class. It may be at an obscene ratio, higher than it otherwise should be. When you look at the ratios around the province, it's staggering -- and you wonder why some areas aren't doing well economically and why some areas are doing better.
The Acting Chair: We're discussing Mr Baird's motion to amend section 13 of the bill. Are there any further comments or questions? I would like to call the vote on the amendment. Shall the amendment moved by Mr Baird to section 13 carry? All in favour? Opposed? The amendment carries.
Shall section 13, as amended, carry? All in favour? Opposed? Carried.
Moving now to section 14, I have received notice that there's a government amendment to the section.
Mr Baird: I move that section 14 of the bill be amended by adding the following as a subsection of section 368 of the Municipal Act:
"Special reductions
"(8) A local municipality may, with the written approval of the Minister of Finance, set a tax rate for a property class that is lower than would otherwise be allowed under this section."
To speak to it briefly, this is pretty much the same amendment, but applying to local municipalities as opposed to the upper tier.
The Acting Chair: Questions or comments relative to Mr Baird's motion? Seeing none, I'd like to vote on that motion. Shall Mr Baird's motion to amend section 14 of the bill carry? All in favour? Those opposed? The motion is carried.
Shall section 14 of the bill, as amended, carry? All in favour? Opposed? Carried.
Moving to section 15 of the bill, I have notice of a government motion.
Mr Baird: I move that section 368.0.3 of the Municipal Act, as set out in section 15 of the bill, be amended by adding the following subsection:
"Non-application of section
"(5) This section does not apply to a municipality with respect to which part XXII.1 applies if the bylaw that makes part XXII.1 apply was passed before the day the Fairness for Property Taxpayers Act, 1998 received royal assent."
To speak to this motion briefly, it's basically a special allowance for Toronto. This amendment would allow the city of Toronto to pass a bylaw to levy 1999 interim taxes before December 31, 1998, since they are not rebilling. Obviously, Toronto used the 2.5% cap and no significant changes are required as a result of the bill. As I understand it, Toronto typically sends out its tax bills in December and they are then payable some time in the latter part of the January. Because they don't have to make any real changes, this allows the city of Toronto to proceed as they normally would with respect to their 1999 bylaws and billings.
Mr Phillips: I gather this is designed to allow the city of Toronto to send out its interim tax bills for 1999 early, or on its normal schedule, and Toronto is the only one that can quality for this.
We've talked to a lot of municipalities that are similarly concerned about getting their 1999 interim tax bills out, many of which send them out in January, for cash flow reasons. They believe it's going to take them several weeks to get their 1998 taxes straightened around.
My question is this: Why would we not want to try and accommodate other municipalities? Why would this be a Toronto-only motion?
Mr Baird: I could speak to it briefly and then the officials may want to expand on it. There is the regulatory power under the bill, citing specifically section 370 of the Municipal Act which does allow the Ministry of Finance, after December 31, to make allowances for what you just requested. Obviously, Toronto is in a unique position, since they did use the tools that were announced in March and don't have the significant problems that other small businesses in other municipalities have had. So there is a regulatory power to do so after December 31.
Mr Phillips: What does a municipality have to do before it can qualify to send its interim tax bill out?
Mr Sholtack: The Minister of Municipal Affairs is authorized to make regulations to allow the council to send out an interim bill in the prescribed circumstances. The Minister of Municipal Affairs will be looking at each municipal situation to determine in what circumstances interim billing will be permitted. As you say, cash flow concerns and the state of their reconsiderations and the use of tools and how close they are to rebilling for 1998 -- all those circumstances will be set out in a regulation that may authorize interim billing before the 1998 recalculations are done.
The difficulty is, of course, if you sent out an interim bill based on 1998 taxes as calculated, it would cause a hardship where those taxes are going to be reduced, so the circumstances have to be looked at to determine what amount the municipality will be authorized to interim-bill.
Mr Phillips: Why wouldn't we just have one little paragraph that says the municipalities must get approval from the minister to do it? Why go through all of this?
Mr Sholtack: The feeling is that the circumstances have to be looked at, the ground rules have to be set for all municipalities and that's best done through a regulation.
Mr Phillips: That's my point. The government has put us through chaos with this stuff for 18 months and we keep being required to approve these things, and then our municipalities come back and say, "We can't even get our interim tax bills out." You say, "We need to lay out the ground rules for it," but there are no ground rules; they will all be done through regulation, sort of whatever the minister wants to do. I guess it's just my frustration with the public thinking that we're actually having some say in this thing.
What we're approving here is Toronto gets an exclusion and everybody else has to beg the minister to send out their interim tax bills. That's the way I read it. If somebody disagrees with that, let me know.
The Acting Chair: We're dealing with a government motion to amend section 15. Are there any further questions or comments relative to the motion? I would like to now vote on the amendment. All in favour of Mr Baird's motion? Those opposed? The motion is carried.
Shall section 15, as amended, carry? All in favour? Opposed? Section 15 is carried.
Section 16, I have no notice of amendment. Shall section 16 carry? All in favour? Those opposed? Carried.
I have no notice of motion to section 17. Shall section 17 of the bill carry? All in favour? Those opposed? Section 17 is carried.
I've received notice of motion by the government to amend section 18.
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Mr Baird: I move that section 18 of the bill be amended by adding the following subsection:
"(1.1) Subsection 372(11) of the act, as re-enacted by the Statutes of Ontario, 1998, chapter 3, section 21, is amended by adding, at the end, 'However, a bylaw under subsection (1) may provide that it does not apply with respect to payments in lieu of taxes.'"
To speak briefly to this issue, this gives the municipalities the ability to exclude PIL properties from any eight-year phase-in that they may choose to use. I believe Halton was one of the municipalities that had discussed this. In my own municipality there are a significant number of federal properties. I believe the city of Ottawa may get pretty close to 40% or 50% of their revenue from PILs, so it's obviously incredibly important.
This applies not just to the federal government but to the government of Ontario as well. Governments aren't a small business. They certainly have the capacity to pay their fair share of taxes.
This is an issue on which we worked very closely, not just with my colleague Doug Rollins, who represents Trenton, where they have the air base, but also Ottawa-Carleton, the mayor of Ottawa; the regional chair of Ottawa, Mr Chiarelli; the deputy mayor of Ottawa, Allan Higdon; the mayor of Gloucester, and representatives from the staffs of a good number of the municipalities, particularly in Ottawa-Carleton.
Mr Phillips: Is this the language that's been requested by the city of Ottawa or the region of Carleton?
Mr Baird: This particular amendment I believe deals with the eight-year phase-in. There have been a good number of very constructive discussions between Mr Watson and Mr Chiarelli and officials within the ministry.
Mr Phillips: Is this the language they requested?
Mr Baird: I don't know if it would be identical but it certainly goes very much in the direction of the discussions we've had with them.
Mr Sholtack: Certainly, that was what they wanted to be able to do, and the language gives them the authority to do that. They've asked for the power to be able to exclude PIL properties from the phase-in and this language will allow that to happen.
Mr Phillips: What's the policy logic of excluding presumably the taxpayers? As they said, there's one taxpayer and the taxpayer is going to fund this increase. What's the policy logic of saying to someone who's paying these things, "We think above 10% was too much for somebody else but it's OK for you"?
Mr Baird: I feel strongly on this. We're talking about commercial-industrial property. The whole purpose of having a phase-in period would be to allow a period of adjustment for those businesses, particularly small businesses, that would face increases. The provincial government and the federal government aren't a small business. They certainly have the capacity to pay their fair share, perhaps in a way that particularly a small business, a small enterprise, wouldn't.
Mr Phillips: So the taxpayers can afford this. Is that what you're saying?
Mr Baird: The provincial and federal governments aren't a small business. The case of a small business operator in Deep River or Trenton would be very different from that of an Ontario government property, for example.
Mr Phillips: AMO told us that there was some battle nationally to get the federal government to pay at the existing commercial rate, and now -- I may be wrong in this -- there is federal legislation that requires that. Is there any federal legislation that has to be changed to accommodate this? Does anybody know?
Mr Sholtack: No, I don't think so.
Mr Phillips: You don't think there is or you --
Mr Sholtack: There is federal legislation but it doesn't need to be changed to accommodate this.
Mr Baird: It's probably dealing with three types of issues. The area that I'm most familiar with would be the federal government because I'm from Ottawa-Carleton. The federal government, for example, didn't pay the equivalent of the business occupancy tax in Ontario whereas they did across the river in Quebec. So if you had two essentially identical office towers, one on one side of the river versus one on the other side of the river, they would pay the equivalent of the business occupancy tax in Quebec whereas they didn't do that in Ontario. Obviously the same principle would apply. So that would be one.
The federal government has always said they wanted to be treated as a taxpayer like everyone else, but no other taxpayer in Ontario could get away with only paying 80 cents or 90 cents on the dollar. If you and I run a business and we don't like our assessment and we appeal it and we lose, that's too bad, whereas the federal government, if they're given an assessment of a property and they don't like it, they just refuse to pay it and will pay 80 cents or 90 cents and sometimes 70 cents on the dollar. They have the ability to dispute the assessed value that any other taxpayer wouldn't have.
Mr Phillips: So if the federal government is leasing space in a commercial building, what rate will they pay at?
Mr Sholtack: If the federal government leases space in a commercial building, it's the owner of the building who will pay the tax, and that owner would pay the regular tax that anyone else pays.
Mr Baird: But they wouldn't have paid --
Mr Sholtack: PIL properties are properties owned by a government.
Mr Phillips: OK.
Mr Baird: When you think of Ottawa, obviously the biggest one would be the Parliament Buildings, but you'd have everything from the National Arts Centre to museums to simple office towers.
Mr Phillips: It's a neat little cash cow for the province.
Mr Baird: For the municipalities.
Mr Phillips: Does any of this go to education?
Mr Sholtack: The federal PILs pay school taxes also, but there's a rule that most of the money stays with the municipality.
Mr Phillips: So none of it goes to education.
Mr Sholtack: Yes. The only education taxes are paid on defence bases, where there are student soldiers, and that money is then directed to the local school board. But ordinary commercial property -- school rates are not shared with the school board.
Mr Baird: I don't think there would be any rationale for this being a cash cow for the government of Ontario. We'd have to pay. We're a PIL player ourselves, obviously not to the same extent that the federal government would be, so I don't think it's a cash cow for the province. There was a degree of inequity in the past. I mentioned the examples in Ottawa-Carleton, where on the Hull side the federal government would have a building and essentially would be paying something equivalent or commensurate with the BOT, but in Ontario they wouldn't have had to pay that. That's bringing that equity to Ontario, whereas it pre-existed in Quebec. It is not chicken feed for the city of Ottawa, for the regional municipality of Ottawa-Carleton or for Gloucester; a little bit in Nepean, which I represent, but not a particularly high amount. Certainly in Ottawa, Ottawa-Carleton and Gloucester it's nothing to bat an eye at.
Mr Silipo: I just want to indicate that this is probably one of the few amendments that I could actually support. Until such time as the federal government decides to rectify the issue of transfer payments to provinces, particularly Ontario, I think there is good justification for saying to them that they ought to pay whatever the increases would be, as opposed to having those phased in over a period of time. So I have no qualms at all about taking that position.
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Mr Baird: If I could just put on the record that there has been a lot of work done by the Canadian association of municipalities on this issue and by a lot of municipal leaders in Ontario, and certainly the discussions with the officials at the Department of Public Works on this issue have been very constructive and we're hoping we can go forward and seek resolution. I know I spoke with Mr Watson and Mr Chiarelli just in the last few days on this issue.
The Acting Chair: Are there any further comments? Mr Baird has moved an amendment to section 18. Shall the motion carry? All in favour? Those opposed? The motion carries.
Shall section 18, as amended, carry? All in favour? Opposed? The section is carried.
I have received no notice of amendments to sections 19, 20 or 21.
Mr Phillips: I'm sorry. I was preoccupied there. Did we go through page 19?
The Acting Chair: We've just passed section 18.
Mr Phillips: OK, I'm fine. I'm OK.
The Acting Chair: Since there are no amendments to sections 19, 20 and 21, I am proposing again that we group those together as one vote, if there are no objections. We can discuss them.
Mr Phillips: On 21, the municipalities have been wondering when they'll be able to send out their own communications to their taxpayers and when the province will stop dictating to them.
Does section 21 mean that, unless they get written authorization to change it, municipalities have to send out the prescribed Ontario-government-ordered form and communication? Is that what that means?
Mr Sholtack: Yes.
Mr Baird: Yes.
Mr Phillips: For what reason? Why would we not allow municipalities to communicate with their taxpayers?
Mr Baird: Let's be very clear. The municipalities are always free to communicate with their taxpayers. They are always free to put something in with the tax bill. I think, if anything, the government allowed a terrific amount of flexibility this past year. We saw the problems that were perhaps no better illustrated than by the morning Mrs Lastman got her tax bill in the mail and your mayor's strong concerns as to whether it was readable. There was a terrific amount of latitude given.
Mr Phillips: But why would we not let the municipalities send it out? Why do we have to say, "Here is the form and you must send this form out exactly like this"?
Mr Baird: I think there is a value to consistency and uniformity.
Mr Phillips: What's the value? The taxpayer gets one notice. Why should it be that the province dictates what Halton or Peel say?
Mr Sholtack: I think you want a form that will be understandable by the taxpayers and a form that is uniform across the province, that explains the effect of the bill.
Mr Phillips: Are you saying that municipalities can't send something out that's intelligible to them?
Mr Baird: Mr Lastman certainly indicated in the strongest of terms that his municipality had trouble.
Mr Phillips: OK, I understand now. The municipalities can't do it properly.
Mr Baird: Mayor Lastman certainly indicated his concern.
Mr Phillips: I understand now. It's that you can't trust municipalities to get it accurately done.
Mr Baird: I certainly heard loudly and clearly that Mr Lastman had concerns.
Mr Phillips: They'll appreciate knowing that. Thank you.
The Acting Chair: Are there any further comments or questions related to sections 19, 20 or 21? I'd like to vote on those sections together now.
Mr Baird: Just one further thing to respond to that. It's obviously a permissive regulatory power. Nothing has been regulated yet, so there is obviously a desire to work with the municipalities to come up with an appropriate form.
The Acting Chair: Shall sections 19, 20 and 21 carry? All in favour? Those opposed? Those sections are carried.
We are now dealing with section 22. I have noticed that the New Democrats have an amendment to section 22.
Mr Silipo: I move that section 22 of the bill be amended by adding the following as subsections of section 442.1 of the Municipal Act:
"Eligible charities not to lose under part XXII.2
"(11.2.1) In making regulations under clause (11.2)(a), the Minister of Finance shall ensure that the net taxes payable by an eligible charity on property to which division B of part XXII.2 applies are no greater than the net taxes that would have been payable by the eligible charity if part XXII.2 did not apply.
"'Net taxes'
"(11.2.2) In subsection (11.2.1),
"'Net taxes' means the taxes payable by the eligible charity, including amounts the eligible charity is required to pay under sections 444.1 or 444.2, minus the rebate the eligible charity is eligible for under this section."
This amendment in our view would ensure that charities would not lose by virtue of losing the 40% rebate that was envisioned under the previous incarnation and the existing incarnation of the property tax system under Bill 16, and that they would not lose as we shift from that to the 10, 5, 5 situation.
In fact, AMO and the other organizations have pointed out in their brief the worry they have, at the very least, about the delays in the payments of rebates to eligible charities that this would cause. There now have to be some pretty complicated calculations done and this is going to cause some cash flows for many charities, which I certainly don't know how we could address given that the government has decided to go this route.
What we want to make sure happens is that, at the very least, the principle that was established in the previous bill, that is, that there would be a rebate of 40% of 1998 taxes for municipalities, still continues to be the case. What we're saying is, no matter how all this shakes down, this should not result in the rebates to the charities being any less than they would have been if this legislation had not been introduced.
Mr Baird: I just want to say at the outset, I appreciate the motivation of the member for Dovercourt and I think I understand where he's coming from.
I think there is a legitimate concern that the amendment could potentially overcompensate the charities in Bill 16, at least half of which was obviously designed to help small business to make up that portion of the 40% of their taxes that would have been based on the pre-existing BOT.
I believe the intent is to continue to protect the given in Bill 16 on the 40%. I just think there is a concern that there is a potential to overcompensate charities. I know the officials within the ministry got together on December 1 with the United Way, the Heart and Stroke Foundation and the Canadian Council of Christian Charities to discuss the rebate to charities issue, and under section 22 there is the ability to set regulations with respect to some of the issues he mentioned: cash flow, the instalments and how they are to be made and so forth. Maybe I could ask our officials to clarify.
Mr Sholtack: The intent of Bill 16 in providing for a rebate to a charity was that what was formerly the business occupancy tax was incorporated into the general tax rate so that the landlord would have to pay that and generally pass it on to the charity. So 40% was going to be about equal to the average across the province.
With the 10, 5, 5 cap, there is no business occupancy that is built into the taxes. So where a charity occupied land, an office, in 1997, the landlord would not be paying any BOT under the 10, 5, 5 cap. The portion would be subject to the 1997 taxes that the landlord paid, plus 10% if the property was going up or a percentage if it was going down, plus any municipal tax increases. Therefore, if a charity received 40% of the total taxes that the charity paid under the 10, 5, 5 cap, they would really be getting much more than what Bill 16 had intended them to get. That's the difficulty with the proposed amendment.
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Mr Silipo: Except that our amendment intends to ensure that overall the charities don't receive any less than they were going to. I don't think I'm hearing from either Mr Baird or the ministry officials that it's their intention that charities receive less than they were going to overall, because again we're talking about a pot which, while increases and decreases will vary from what they would have been before, once the 10, 5 and 5 caps are put on, the overall amount that is being gathered is the same.
Mr Sholtack: It may be a difficulty in understanding the intent of the provision as drafted, but it appeared to us that it was going to require the charity to receive 40% of the taxes they paid, which would have been the situation if part XXII.2 did not apply. That's the way we read the provision, that under part XXII.2 the portion occupied by the charity would not be subject to any business taxes.
The Acting Chair: Any further comments on Mr Silipo's motion? I'd like to move now to a vote. All in favour? Those opposed? The motion is defeated.
Shall section 22 of the bill carry? Those in favour? Those opposed? Section 22 is carried.
Moving now to section 23, I have received notice of a government motion.
Mr Baird: I move that paragraph 2 of subsection 442.2(13.1) of the Municipal Act, as set out in subsection 23(6) of the bill, be amended by striking out "clause (12)(c)" in the first and second line and substituting "clause (12)(a)."
It's a technical amendment to fix an incorrect clause reference.
Mr Gerretsen: When you say it's a technical amendment, do you mean it's a typographical amendment?
Mr Baird: Yes.
Mr Gerretsen: How many other typographical amendments are there in this bill?
Mr Baird: Three or four.
The Acting Chair: Any other questions or comments related to the motion? I'd like to now vote on the motion. All those in favour of the motion, please indicate. Those opposed? The motion is carried.
Shall section 23, as amended, carry? All in favour? Those opposed? Section 23, as amended, is carried.
We're now dealing with section 24. I've received no indication of motions by any of the three parties. Shall section 24 of the bill carry? All in favour? Those opposed? Section 24 is carried.
Dealing with section 25, I've received no indication of motions. Do you wish to make a comment, Mr Silipo?
Mr Silipo: I think this is where the issue I raised earlier falls. Am I right? The question of the landlord and tenant notice provision, the latter part of section 25. I just want to raise a concern on this.
I of course appreciate, and I think the government did what it had to do in extending the deadlines to the end of December. I continue to worry about the same problem we had even last summer, in July, when the first deadline came up and many people seemed to be completely unaware of it, that despite the fact that this deadline has been extended, and as I say, I appreciate the fact that it has been, given that we now are very close to December 15, or the 16th I guess, when this would apply, and that's the notice, we're talking here about the notice period for -- December 31 is the last day for appeals on assessments, but to allow tenants of commercial properties the ability to also exercise their right if they wish to have the assessment appealed, there has to be a notice provision for 15 days prior to December 31 for landlords to provide notice to tenants.
I'm just concerned that this is going to continue to cause problems in the sense that many people out there may still not be aware of it, because I don't think there's been any publicity that I have seen on this, either by the government or, here in my own municipality, by the municipality.
I want to raise that. If either Mr Baird or the ministry officials have any comments, I'd appreciate hearing them. I just have a funny feeling that despite the extension, this is going to continue to be an issue.
There is also the other related issue -- I don't know what the government intends to do about it -- which is that I'm hearing now of instance after instance where the landlord is going to the tenant and saying, "Here's what you have to pay me to compensate for the BOT transfer taking place." The tenants are basically saying, "It's not my problem, thank you very much." That leaves the owner of the property in a situation where I gather the only recourse they have is to treat that as unpaid rent and then to start to go through all the processes they would have to in their lease.
I just want to raise this. I think both of those issues are going to continue to cause some problems out there. I don't think it's necessarily a huge number across the province. I don't want to pretend that it is, but I think anybody who thinks that simply extending this is going to rectify the problem without any notification having taken place is fooling themselves.
Mr Baird: To speak to the first issue, and then I'll see if my colleague has a comment in terms of the operational issue you mentioned, you obviously have to set a deadline at some point. I think there's been a degree of flexibility on that deadline. I suggest that whenever the deadline is, there's going to be the odd case where someone would have preferred more time. I think that's by the nature of anything with a deadline.
I can perhaps point out that the deadline, of December 15 in this case, is only with regard to the 1998 taxes. There's still a significant amount of time for 1999, so it doesn't close the door for 20 years, as it might have in other areas of government where there have been deadlines. I'm thinking of one on education. That's just to cover the first one.
Mr Sholtack: The issue with respect to the recovery of the business taxes in the taxes: I guess it's an education exercise of informing tenants that in the ordinary situation the business taxes the tenant paid in 1997 are now built into the 1998 taxes. I'm sure most tenants will appreciate that they're not getting a bill now for business taxes, so the landlord recovering those business taxes under a net lease is appropriate. I think most fair-minded business tenants will understand that, in view of the savings they're making in not paying business tax in 1998.
Mr Silipo: I don't want to belabour the point, but if you recall, at the time the government first announced the removal of the business occupancy tax, that's all the government talked about. That's all their PR stressed. They didn't talk about the fact that they were removing the business occupancy tax, but that they were shifting that amount of taxes on to the owners of the commercial properties. It wouldn't surprise me if there are business operators out there who are renting their premises who are saying: "You told us you were taking the BOT off. How come I have to pay now with increased property taxes?" It's one of those situations where the government's PR is, quite frankly, coming back to bite them, because this is what happens when you only tell half the story and people actually begin to believe it. Then you have to deal with the consequences of that. I think that's what the government is going to continue to find they're going to have to do.
Mr Baird: Maybe this is a potential target for some advertising.
Mr Silipo: It might be.
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The Acting Chair: We're still talking about section 25. Are there any further comments? I'd like to call the vote now. Those in favour, please indicate. Those opposed? Section 25 is carried.
Moving on to section 26. I'd like to vote on section 26, given the fact there are no amendments. All in favour of section 26, please indicate. Those opposed? Section 26 is carried.
Moving now to section 27, I received notice from the New Democrats that there is an amendment they wish to propose.
Mr Silipo: I move that section 27 of the bill be amended by adding the following subsection:
"(0.1) Subsection 447.3(1) of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, is repealed and the following substituted:
"Bylaw making part apply
"447.3(1) The council of a municipality, other than a lower-tier municipality, may pass a bylaw to make this part apply for 1998, 1999 or 2000 or any combination of those years with respect to property in the municipality that is in a property class designated in the bylaw."
What this amendment does, and the next amendment is in effect a consequential one to this, is that it would allow municipalities to apply the caps in any of the 1998, 1999 or 2000 years. Currently they have to do either all three years or nothing. We think that given the mess municipalities find themselves in, one of the options they ought to have is the option of only applying those caps on a combination of those years. If they wanted to let 1998 go by and begin in 1999, they could do that. If they wanted to do a combination, they could do that. It's trying to provide them with a little bit more flexibility given the lateness with which these changes are being implemented and the fact that some municipalities, looking at their own circumstances, might opt for a combination of solutions to this dilemma that might be different than what the government is contemplating.
Mr Baird: Just a question: Obviously this is with respect to 2.5% caps, so we're primarily talking about the city of Toronto. If I was a small business person, perhaps earning less than $80,000 a year, would this raise my taxes?
Mr Silipo: I don't know.
Mr Baird: Would this allow my city councillor to raise my taxes, if I was a small business person making less than $80,000?
Mr Silipo: I have no idea of that because, as you know very well, we don't know the relationship between earning power and property taxes; maybe one day we will. This simply tries to provide some flexibility to the municipalities. Given, quite frankly, the mess your government has created, I think it's important we provide municipalities with the widest range of tools possible to try and figure out how they can make the best sense out of a pretty bad situation.
Mr Baird: But essentially Bill 16 said that if you use the 2.5% cap on commercial-industrial, it's a hard cap, so it would basically freeze taxes in the commercial-industrial classes. This would open that up again, and for a lot of small business people who have now been able to count on not just Bill 16 but on Mayor Lastman and council's decision to freeze taxes for three years, would allow that to be reversed. A lot of small business people with incomes of less than $80,000 would have the potential at least to face tax increases above the 2.5% cap. Because council made a three-year commitment to that, they've been able to budget on that.
Mr Silipo: You're right, council made a three-year commitment, but council also, in Toronto at least, is now finding that as they deal with the next budget year, and I suspect the year after that is going to be even worse, they're going to have a really hard time as they see the full impact of the download on to their property tax base. They might regret having locked themselves into the situation they did.
I don't have any qualms about small businesses having their taxes kept at 2.5%. I thought that was a reasonable thing to have done in light of what would have happened to many small businesses. I also think the municipalities ought to have the ability, if they want to reopen that issue, to do so. I'm not telling them they should do that. That's an issue for them to address. Although I don't hear many Toronto municipal politicians today saying that they want to be able to have that flexibility, I wouldn't be surprised if six months from now some of them begin to scratch their heads and say, "My God, how can we justify putting all of these additional increases on to the residential side?" I don't think the last word has been said yet on whether the municipality here in Toronto is going to be able, for example, to carry on with its commitment to a zero-budget increase. They're going to have some pretty nasty choices to make for them to adhere to that promise made by Mayor Lastman and others.
I'm looking to provide them now, in anticipation of some of those problems, with some flexibility. If they think the scheme they've set up is the best one, then they'll continue that.
The Acting Chair: Any further comments related to Mr Silipo's motion? I'd like the members to vote. All in favour of the motion, please indicate. Those opposed? The motion is defeated.
I've received indication of a second motion by the New Democrats to this section of the bill.
Mr Silipo: I move that subsections 27(2) and (3) of the bill be struck out and the following substituted:
"(2) Subsections 447.3(5) and (6) of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, are repealed and the following substituted:
"When bylaws may be passed etc
"(5) Subsection 447.44(5) applies, with necessary modifications, with respect to the passing, amending or repealing of a bylaw under subsection (1)."
This is similar to the previous motion.
The Acting Chair: Any comments? Seeing none, we should move to a vote on this amendment. All those in favour of Mr Silipo's amendment, please indicate. Those who are opposed? That motion is defeated as well.
I've received notice of a government motion to amend section 27.
Mr Baird: I move that subsection 447.3(8) of the Municipal Act, as set out in subsection 27(4) of the bill, be struck out and the following substituted:
"Exempt property deemed not in classes
"(8) The commercial classes and the industrial classes both within the meaning of subsection 363(20) and the multi-residential property class shall be deemed, for the purposes of this part, to not include property exempted from the application of this part."
This amendment deals with the exclusion of property from the 2.5% cap and would ensure that farmland awaiting development that is classified as multi-residential is excluded from the 2.5% cap. Obviously farmland awaiting development already has a favourable tax rate.
The Acting Chair: Are there any questions or comments in relation to the amendment? I'd like to now vote on Mr Baird's amendment. Those in favour of Mr Baird's amendment, please indicate. Those opposed? The amendment is carried.
Shall section 27, as amended, carry? All in favour? Those opposed? Section 27 is carried.
Now dealing with section 28, I've received notice of an NDP motion related to section 28.
Mr Silipo: I move that section 28 of the bill be struck out and the following substituted:
"28. Section 447.4 of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, is repealed and the following substituted:
"Restrictions if bylaw passed
"447.4 Paragraphs 1 to 4 of section 447.45 apply, with necessary modifications, if the council of a municipality passes a bylaw under subsection 447.3(1) to make this part apply for a year."
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This amendment allows municipalities to opt into the 2.5% caps in any of the three years envisioned by this legislation, 1998, 1999 or 2000, and of course this is something that is looking forward from here and allowing, as I was making the argument earlier on the other amendment, municipalities the greater flexibility of opting in, not just for the three-year term but to be able to pick whether they ought to do that for one or all of those years or two of those years, for example.
The Acting Chair: Does anyone else wish to speak to Mr Silipo's amendment? We should vote now on Mr Silipo's amendment. All in favour? Those opposed? The amendment is defeated.
Shall section 28 carry? All in favour? Those opposed? Section 28 is carried.
Section 29: I've received no indication of amendments. Shall section 29 carry? All in favour? Those opposed? Section 29 is carried.
Now dealing with section 30, I've received notice of a government motion.
Mr Baird: I move that section 30 of the bill be amended by adding the following as a subsection of section 447.10 of the Municipal Act:
"Application to 1998, supplementary assessments
"(5) This section also applies, with necessary modifications, with respect to the frozen assessment listing for 1998 if a further assessment of a property could have been, but was not, made under section 34 of the Assessment Act for 1997 but the increase that would have resulted from that further assessment is reflected in the assessment set out in the assessment roll for 1998."
Briefly, this amendment allows increases in assessment made at the end of 1997 to be added to the frozen assessment listing for 1998. For example, if you had a parking lot in 1997 and a building was built on it, in terms of the 1998 taxes, you would just go back and basically deem that the building had been there for the calculation of the 1998 rate.
Mr Gerretsen: I'm just curious. This obviously was well known at the time the bill was first drafted, this kind of situation that you talked about where development takes place between one year and the next. Why would it not have been picked up at that point of time? It seems rather a fundamental thing.
Mr Sholtack: Most changes that occur during the year are the subject of a supplemental assessment and so they would have been picked up during 1997, but in many cases we discovered that they were just added at the end of the year and not made the subject of a supplemental during 1997. To clarify the application of both the 2.5% cap and the 10, 5, 5 cap we're making this amendment for the sake of clarity.
Mr Gerretsen: But the situation surely would have been known at the time you drafted the bill, that there was going to be additional assessment as a result of new construction etc. Why would your wording initially not have taken that into account? This isn't something that somebody brought to your attention at some point of time, unless the province really thought there was going to be absolutely no new assessment created over the next three years, that with everything they've done to the province, they've scared off any kind of development at all. But why --
Mr Tom Froese (St Catharines-Brock): Give me a break.
Mr Gerretsen: I'd like somebody to explain that to me. How somebody could not have picked this up when the bill was drafted is a little bit beyond me, and I want somebody to explain that to me. I don't think your explanation is -- you're saying why it was done and I'm asking why it wasn't done when the bill was first drafted because there's always new additional assessment every year, even in the worst of times. I guess nobody is going to answer that. Thank you.
Ms Lalonde: If I might respond, this is something we spoke about at a staff level with municipal representatives. There is a facility to pick up new assessment under existing provisions. This is another flexible provision to allow assessments to be picked up in another way that could prove to be faster and more efficient for the purposes of municipalities looking at the new tools in Bill 79. It's not that there weren't other provisions available in previous legislation, it's just that municipalities have asked for another flexible way to pick it up for efficiency purposes and that's why we proposed the amendment, it was for municipalities.
Mr Gerretsen: Thank you very much. I've got the answer now. It took me a while to get that, but I appreciate that.
The Acting Chair: Are there any other comments relating to Mr Baird's motion? I'd like to now vote on Mr Baird's motion. All in favour, please indicate. Those opposed? I declare the motion carried.
Shall section 30 of the bill, as amended, carry? All in favour? Those who are opposed? Section 30, as amended, is carried.
Moving to section 31 of the bill, I have received notice of an NDP motion to amend section 31.
Mr Silipo: I move that section 31 of the bill be struck out and the following substituted:
"31(1) Paragraphs 5 and 6 of subsection 447.15(1) of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, are repealed and the following substituted:
"5. The 1997-level taxes shall be adjusted by making the adjustments, if any, under a bylaw under subsection (5) in respect of changes in taxes for municipal purposes.
"6. The taxes for the property equal the 1997-level taxes, as adjusted under paragraphs 3, 4 and 5.
"(2) Subsections 447.15 (5) and (6) of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, are repealed and the following substituted:
"Bylaws, adjustments for municipal taxes
"(5) The council of a municipality, other than a lower-tier municipality, may pass a bylaw providing for adjustments under paragraph 5 of subsection (1) in respect of changes in taxes for municipal purposes.
"Adjustments must be equal
"(6) A bylaw under subsection (5) must ensure that the total adjustments under the bylaw are equal, for each property class, to the adjustments that would have resulted if the provisions referred to in subsection (8) applied."
I know that's perfectly clear. With these amendments, as you look at the wording needed to bring something into effect, it doesn't sound anything like what the result would be. This ensures that the 2.5% cap that has been put in place, or will be put in place, applies to assessment-based tax changes only. Throughout this whole debate, we have been consistent, I hope, in taking the position that while we believe that assessment-related increases ought to be limited, and we're glad to see the 2.5% caps brought in, we also think it's not appropriate for those caps to be applied on the overall tax bill, because that then simply shifts the burden on to the residential property taxpayers, and we think property taxpayers should be treated fairly and equally in that sense. This reiterates that position of ours, and the next amendment is essentially the same with respect to ensuring that the 2.5% caps would be applied only to assessment-based increases.
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Mr Baird: I'm surprised at this, that there is support, not just among the New Democrats but among the Liberal Party, for allowing the taxes on small business people in the city of Toronto to go forward.
Mr Silipo: Mr Baird, the last thing you can claim is to be supporting the small business people in Toronto or anywhere else when it comes to property taxes, given the fact that until your government was pushed into it, you were going to let a lot of them go out of business.
We're trying to be fair here. We're trying to suggest that in fact the mess you've caused is related to the new assessment scheme and that's where the caps ought to be applied. With respect to the normal increases in terms of the municipality's budget -- and this is not just a Toronto issue here; this presumably will apply in other places where people opt for the 2.5% caps as opposed to the 10%, 5% and 5% -- there should be a distinction between the normal budgetary increases that a municipal council goes through, and they are in the best position to deal with that issue in terms of how they pass that on, and we ought not to be simply shifting costs from one group to another, as the 2.5% cap in its present format would do.
Mr Baird: Those small business people fought for a 2.5% cap, Mayor Lastman and council endorsed that, and with that came a three-year tax freeze. The concern is that with all the tax cuts they've got from not having to pay the employer health tax for small businesses of under $400,000, this could try to tax back the 50% tax cut in the corporate taxes for small business. It's just not something the government supports.
The Acting Chair: Is there any further discussion? I would like to now vote on the amendment. All in favour of Mr Silipo's motion, please indicate. Those who are opposed? The amendment is defeated.
Shall section 31 carry? All in favour? Those opposed? Section 31 is carried.
Moving now to section 32 of the bill, I have received notice of an NDP amendment to section 32.
Mr Silipo: I move that section 32 of the bill be struck out and the following substituted:
"32(1) Paragraph 3 of subsection 447.16(2) of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, is repealed and the following substituted:
"3. The commercial and residential mill rates shall be adjusted in accordance with subsection (4) to reflect any changes in the taxes needed for municipal purposes from 1997 to 1998 for the property class the property is in.
"(2) Paragraph 2 of subsection 447.16(3) of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, is repealed and the following substituted:
"2. The adjusted commercial and residential mill rates shall be further adjusted in accordance with subsection (4) to reflect any changes in the taxes needed for municipal purposes from the previous year to the current year for the property class the property is in.
"(3) Subsections 447.16 (4) and (5) of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, are repealed and the following substituted:
"Municipal tax changes
"(4) The following apply with respect to the adjustments, under paragraph 3 of subsection (2) and paragraph 2 of subsection (3), of the adjusted mill rates to reflect changes in the taxes needed for municipal purposes for the property class the property is in:
"1. If the property is not in an upper-tier municipality, the part of the mill rates, as adjusted, that were derived from mill rates for municipal purposes shall be adjusted by the percentage change, if any, in the total amount to be raised for municipal purposes by property taxes from the previous year to the current year on property in the property class.
"2. If the property is in an upper-tier municipality,
"i. the part of the mill rates, as adjusted, that were derived from mill rates for upper-tier purposes shall be adjusted by the percentage change, if any, in the total amount to be raised for upper-tier purposes by property taxes from the previous year to the current year on property in the property class in the upper-tier municipality, and
"ii. the part of the mill rates, as adjusted, that were derived from mill rates for lower-tier purposes shall be adjusted by the percentage change, if any, in the total amount to be raised for lower-tier purposes by property taxes from the previous year to the current year on property in the property class in the 1ower-tier municipality.
"3. For the purposes of determining, under paragraphs 1 and 2, the percentage change in the total amount to be raised by property taxes from one year to the next year on property in the property class, the following apply,
"i. for the comparison from 1997 to 1998, the total amount for 1997 shall be determined using the taxes levied for 1997 on all the property that, for 1998, is classified in the property class and the total amount for 1998 shall be determined using the taxes that would be levied for 1998, if this part did not apply, on the same property,
"ii. for the comparison from 1998 to 1999 or from 1999 to 2000, the total amount for each year shall be determined using the taxes that would be levied for that year, if this part did not apply, on all the property that, for that year, is classified in the property class.
"Regulations
"(5) The minister may make regulations providing for decreases, in addition to adjustments under subsection (4), in the mill rates for properties prescribed in the regulations in the circumstances prescribed in the regulations and modifying the application of subsection (4) with respect to other properties in the same property class as the prescribed properties."
This is an amendment that follows from the point I made in the previous one, dealing with the 2.5% cap applying only to assessment-based changes.
The Acting Chair: There's your last amendment?
Mr Silipo: I'm sorry?
The Acting Chair: There's your last amendment?
Mr Silipo: That's it.
The Acting Chair: Is there any discussion related to Mr Silipo's proposed amendment?
Mr Baird: Again, this is another amendment that would allow businesses in Toronto to pay tax increases in 1999 or 2000, and I've got a real problem with that. Toronto council made the decision to freeze taxes for three years on the commercial and industrial classes. That has been part of the fight these small business people waged. I can appreciate that there's a difference of opinion between us. This is just basically enacting amendments 7, 8, 10 and 12. I'm interested in how the official opposition will vote, because the Liberals voted in favour of 7, 8 and 9 but then abstained on 12. So we'll watch this with interest, whether they want to see tax increases in the city of Toronto.
Mr Gerretsen: Since you're asking questions, let me ask you one. Are you saying, then, that any tax increases are to be paid for by the residential taxpayers in the years 1999 and 2000? Could you give me a direct answer on that, yes or no.
Mr Baird: I'm saying I trust Mayor Lastman and his commitment to hold the line on tax increases. He was able to do it in the city of Toronto. In Ottawa-Carleton, Bob Chiarelli is committed to doing it. In Nepean, they cut taxes. So, where there's the will, there's the way. If you want to freeze taxes or cut them, the leadership comes from the top; that's what it takes to make it happen.
Mr Gerretsen: So, you're in favour of less municipal services, then?
Mr Baird: I'm in favour of municipalities holding the line on taxes. In Nepean this year, 1998, they cut taxes by 2%. There was a significant debate whether they should have been cut by 5%. Ottawa-Carleton brought in a 0% tax increase, as did the city of Toronto. I applaud those hard-working municipal politicians who provide leadership in freezing taxes. People have hit the tax wall. They don't have any more money to pay. It's not a question that they don't want to pay any more money, it's that they don't have any more money to pay. That's why, whether it's Mayor Lastman in Toronto or Mayor Watson in Ottawa, I applaud those municipal leaders, of all political stripes, by the way, who have drawn the line in the sand and said they're not prepared to raise taxes.
Mr Gerretsen: You're great at making statements, but you're not answering any of the questions. If you feel the way you do, why the heck didn't the government just impose on municipalities that they couldn't have any tax increases for the years 1999 and 2000? Could you explain that?
Mr Baird: Gary Carr had a good private member's resolution on that very issue in the House not too many years ago.
Mr Gerretsen: I'm not talking about a private member's resolution; I'm talking about the government's position on this.
Mr Baird: I voted for a regional chair candidate who made a commitment to hold the line on taxes at 0%. I voted for a mayor who committed to keep taxes at 0%. I voted for a city councillor. They've all delivered.
Mr Gerretsen: Mr Baird, you're still not answering the question. I've got a very simple question: Why didn't the government come up with a bill to freeze all taxes at the municipal level for the years 1999 and 2000? That would certainly implement what you're saying right now.
Mr Baird: Certainly Bill 16 froze them on the commercial-industrial at 2.5%. I appreciate this difference of opinion. You and the Liberal party voted for three amendments to allow tax increases. I can appreciate that there's a difference of opinion there. I disagree. I'm not one of the people who support that.
Mr Gerretsen: Would you answer the question? Why didn't the government bring in legislation imposing tax freezes for municipalities for the years 1999 and 2000?
Mr Froese: Then you'd be complaining about that.
Mr Gerretsen: I'm sorry?
Mr Froese: Then you'd be complaining about that.
Mr Gerretsen: You simply refuse to answer the question.
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Mr Baird: The local municipalities have that flexibility. The local municipality in Toronto chose the 2.5% cap. One of the parts of the 2.5% cap was the tax freeze. We've cut taxes 66 times. If we can find the will to cut taxes 66 times, whether it's on small business, whether it's on income tax, whether it's on payroll taxes, we hope there will be municipal leaders who will do the same.
In this case, we're dealing with Mr Silipo's amendment. In the city of Toronto, Mr Lastman did have the leadership and the courage to hold the line on taxes in the residential area in the first year. I have every confidence that that leadership will continue in 1999 and 2000. Certainly there's a real hope in Ottawa-Carleton that we're going to be able to do the same thing. There are some councillors in Nepean who want to see a further tax cut this year. The 2% last year wasn't enough. They want to go sharpen their pencils again and see if they can deliver another tax cut. Certainly, if they can find a way to do it, I'm fully supportive.
Mr Gerretsen: I think you just put your finger right on it when you said you want to give municipalities more flexibility.
Mr Baird: But they chose that. Toronto chose the 2.5% cap. They chose it. One of the features of the 2.5% cap was that you had to freeze taxes. The Toronto city council supported that in pretty overwhelming numbers, as did the small business people who pushed for it.
Mr Gerretsen: You're great at making statements, but you don't answer any questions.
The Acting Chair: Any other comments relating to Mr Silipo's motion? We should vote on the motion now. All of the members who are in favour?
Mr Baird: Recorded vote.
Ayes
Silipo.
Nays
Baird, DeFaria, Froese, Rollins.
Mr Phillips: Abstaining. This bill is such a mess that it's non-fixable, and that's what the clerks and treasurers say.
Mr Froese: No amendment.
The Acting Chair: Order. The amendment is defeated.
Mr Phillips: If you look at the clerks and treasurers --
Mr Gerretsen: You don't even know what the bill is about; you haven't got a clue.
Mr Phillips: Finally we're hearing from the government members.
The Acting Chair: Order.
Mr Phillips: I wouldn't support this government's tax bills on a bet. You guys have screwed it up completely.
Mr Froese: You're not even putting any amendments through.
Mr Phillips: You've screwed it up.
Mr Froese: Yeah, right.
Mr Phillips: Completely.
Mr Froese: Give me a break.
The Acting Chair: I'd like to call the members to order.
Mr Phillips: That's not what I say; that's what the clerks and treasurers say.
The Acting Chair: Mr Phillips, please.
Shall section 32 of the bill carry? All in favour? Those opposed? Section 32 is carried.
Moving now to section 33 of the bill. I've received notice of an amendment by the government to section 33.
Mr Baird: I move that section 33 of the bill be amended by adding the following subsection:
"(2) Section 447.19 of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, is amended by adding the following subsection:
"Modifications, omissions from 1997 assessment
"(7) If any increases are made under section 33 of the Assessment Act to the assessment for the property for 1997, the uncapped 1998 taxes shall be what they would be if the corresponding changes were made to the assessment on the assessment roll used to determine the uncapped 1998 taxes."
This amendment is complementary to the one we passed three or four amendments ago. I used the example of a parking lot to the building. This would deal, for example, with a particular floor in a building that may have been missed in 1997 and allows the commensurate recalculation.
The Acting Chair: Any discussion relating to Mr Baird's motion?
Mr Gerretsen: It relates to Mr Baird's motion and also some of the earlier comments. I would just like to quote you one sentence from the letter dated December 2 from AMO, the Association of Municipal Clerks and Treasurers of Ontario, the Municipal Finance Officers' Association of Ontario and the Association of Municipal Tax Collectors of Ontario in which they state, "We believe that Bill 79 will not achieve the objective of providing fairness for property taxpayers and will create more problems than it solves." They basically recommend that you go back to the drawing board, do it right this time, get people involved right from the outset and hold some public hearings on it.
Mr E.J. Douglas Rollins (Quinte): How many times have you read that now, John?
The Acting Chair: Order.
Mr Gerretsen: Twice.
The Acting Chair: Order. Mr Phillips.
Mr Gerretsen: Why aren't you listening to these people?
The Acting Chair: Mr Phillips has the floor.
Mr Phillips: On the same comment, the organizations, the people who have to work with this, who understand this, are our municipal politicians, they're our senior municipal civil servants, the municipal tax collectors and the municipal finance. They've all looked at this thing and they say this bill "is an overreaction to a manageable number of property tax increases. Our evaluation is that it does not afford the protection for small businesses that it was intended to provide. Our associations are opposed in principle to Bill 79 in its entirety."
If you track the comments from these groups from the start, they have been the ones who had been warning us about the problems that the government is creating. So you want us to support a bill that the people who have the responsibility for making it work say is unworkable.
Not only are you creating a mess; you won't even allow the people who could perhaps fix this bill to come before us. They're required to sit behind closed doors and talk with the government. When the government members wonder why we in the opposition get upset, it's that this is the seventh mess that you've forced through the Legislature, and you are duly warned this is going to compound the mess.
Mr Baird: The one concern I have is when I hear this group has used the word "manageable." When I talked to small business people in Richmond who might have a small business in the Richmond mall, it wasn't manageable for them. When I talked to a small business person in Greely or in Manotick or Stittsville, it sure wasn't manageable for them. When the member for York-Mackenzie, Mr Klees, talks about the small businesses in his region, it wasn't manageable for them. I can appreciate there will be legitimate and honest differences of opinion about whether it's manageable.
The majority of municipalities didn't use any of the tools. Some of the municipalities at least made every effort, whether it was Halton or Ottawa-Carleton -- certainly Toronto, a 100% effort -- to use the tools the province gave them to a positive result for small business people. Other municipalities chose to do nothing; in fact, the majority of municipalities chose to do nothing. When a majority of municipalities choose to do nothing and the group that represents these folks says it's manageable, I think there's room for honest difference of opinion.
Mr Phillips: If Mr Baird would take the time to reread the submissions that these groups made, they said you were creating a mess, they begged you not to create the mess, and you created the mess. To blame them is wrong. They warned you about the mess and now they're warning you again you're creating another mess.
You create the mess, and Mike Harris and the group will live with it.
The Acting Chair: Any further discussion related to Mr Baird's motion to amend section 33? I'd like to now propose that we vote on Mr Baird's motion. All in favour of Mr Baird's motion, please indicate. Those who are opposed? The motion is carried.
We'll now vote on section 33, as amended. All in favour? Those who are opposed? Section 33, as amended, is carried.
I have received no indications of intentions to move amendments to section 34. I'd like us to now vote on section 34. All in favour of section 34? All those opposed? Section 34 is carried.
Moving now to section 35, I've received no indication of amendments to section 35. All in favour of section 35? Those who are opposed? Section 35 is carried.
Moving now to section 36, I have received indication of an intention to move an amendment to section 36 by the government side.
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Mr Baird: I move that section 36 of the bill be amended by adding the following subsection:
"(2) Subsection 447.30(1) of the act, as enacted by the Statutes of Ontario, 1998, chapter 3, section 30, is amended by adding the following paragraph:
"7. Paragraph 4 applies, with necessary modifications, with respect to the mill rate applied under paragraph 5 of section 447.21 to determine the taxes levied under paragraph 1."
This is an amendment coming from the city of Toronto with respect to adjusting the interim levy for the multi-residential class. This amendment would ensure that 1999 and 2000 interim levies for multi-residential properties equal 50% of the previous year's taxes.
The Acting Chair: Any comments or questions relating to Mr Baird's amendment?
Mr Silipo: Just a question as to why this is needed.
Mr Sholtack: The council of the city of Toronto was unsure as to whether the effect of 447.21, which describes the application of the 2.5% cap to multi-res, was clear enough with respect to how the interim levies are to be calculated. This amendment is to clarify the application of that to multi-res properties.
The Acting Chair: Any further questions or comments relating to Mr Baird's amendment to section 36? All in favour of Mr Baird's motion, please indicate. Those who are opposed? The amendment carries.
Shall section 36, as amended, carry? All in favour? Those who are opposed? Carried.
Moving now to section 37, I have a number of amendments. I'll call first on Mr Baird, who has indicated notice of intention to move an amendment.
Mr Baird: I move that subsection 447.36(2) of the Municipal Act, as set out in section 37 of the bill, be amended by striking out "section 447.39" at the end and substituting "section 447.43." This is just a typographical error.
The Acting Chair: Any discussion? Seeing none, shall Mr Baird's motion to amend the bill carry? All in favour? Those opposed? I declare the motion carried.
Mr Baird: I move that subsection 447.37(1) of the Municipal Act, as set out in section 37 of the bill, be struck out and the following substituted:
"Property that part applies to
"447.37(1) This part applies with respect to property in the commercial classes, the industrial classes and the multi-residential property class."
Just to indicate the purpose, this would be the issue of including multi-residential property classes. This is one of 11 amendments to add them. Obviously, multi-res are commercial-industrial, and many times they're operated by small business people. This is the start of 11 amendments to add them in, as the minister said he would when he introduced the bill.
The Acting Chair: Any further discussion to Mr Baird's amendment? Seeing none, I'll call the vote. All in favour of Mr Baird's amendment? Those opposed? The amendment is carried.
I want to advise the members that the next amendment in your package is a Liberal amendment, and I've been advised by the clerk that it is out of numerical order. It's technically, I believe, in order, but it's out of numerical order, so we're going to deal with it later on, after page 27 of your amendment package. We're going to set it aside and deal with it after we deal with an NDP motion, which you have as page 27 in your amendment packages.
The next amendment we will deal with is one that is proposed by the New Democrats.
Mr Silipo: I move that subsection 447.37(1) of the Municipal Act, as set out in section 37 of the bill, be struck out and the following substituted:
"Property that part applies to
"447.37(1) This part applies with respect to property in the commercial classes, the industrial classes, the residential/farm property class and the multi-residential property class."
This does in effect what Mr Baird pointed out earlier with respect to the multi-residential, but it also, and significantly, proposes that the residential and farm property classes also become subject to the caps. We understand and support the rationale for bringing multi-residential properties under the cap. We think the same rationale should apply to residential and farm property classes.
Mr Baird: Briefly to address that, this is one obviously on which there's been discussion before. When we dealt with Bill 16 I think you had the same issue. There are a number of tools for the residential class. Your phase-in is the biggest one. It's not a tool, for example, that I support in my own community. We had a fairly up-to-date assessment valued at 1988 valuations, so I certainly didn't support its being used in my community, but in Toronto we've had terrifically uneven assessments, some dating back to the 1940s, as I understand it. There's greater concern. That's why there is the option for an up-to-eight-year assessment.
Toronto council has spent a terrific amount of time dealing with this and chose the five-year phase-in. As well, I'd point out there are issues that relate to low-income seniors and the disabled under the existing legislation, and there are tools for municipalities to help mitigate these changes.
Mr Silipo: I've been watching the situation and experiencing it first hand in terms of constituents who have come into my office. By way of example, these are people who are having to pay, seniors and others, increases in amounts of $300-plus this year and some of them are looking at similar increases next year. It just boggles the mind that with all the tools that are there this is still happening.
I believe the simplest, most straightforward and fairest approach is to say, "Let's apply the same rules to all the different property classes." If there's a good rationale, and there is, for capping increases at 10% or 5%, as the case may be, or 2.5% under the other scheme for certain classes, then that same rationale should apply to all property tax classes and all property taxpayers.
The government has seen fit to extend that to multi-residential. We think they should go one step further and see the wisdom in extending that also to the residential and the farm property tax classes.
The Acting Chair: Any more comments to Mr Silipo's motion? We'll move now to vote on Mr Silipo's motion.
Mr Baird: Could I ask for a five-minute deferment of the vote?
The Acting Chair: A five-minute recess? Is that what you're calling?
Mr Baird: Yes.
The Acting Chair: OK, I'm prepared to grant a five-minute recess. It is now 11:32 and we will resume this committee's deliberations at 11:37. The committee is in recess.
The committee recessed from 1129 to 1135.
The Acting Chair: I'd like to end the recess and resume the meeting. We'd ask committee members to come forward and resume their seats.
I ask all those who are in favour of Mr Silipo's motion --
Mr Silipo: A recorded vote, Mr Chair.
Ayes
Silipo.
Nays
Baird, Froese, Rollins.
The Acting Chair: The motion is defeated.
The next amendment I wish to deal with is a government amendment.
Mr Baird: I move that subsection 447.37(2) of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following clause:
"(c) the multi-residential property class in a municipality if part XXII.1 applies with respect to the multi-residential property class in the municipality."
This is the second of 11 amendments to insert "multi-residential".
The Acting Chair: Is there any discussion on Mr Baird's amendment? Seeing none, I will call the question. All those who are in favour of Mr Baird's amendment, please indicate. Those who are opposed? The amendment is carried.
The next amendment I have is a New Democrat amendment.
Mr Silipo: I believe it's the same amendment, Mr Chair. It's the one we just passed.
Mr Baird: It should be noted that we passed an NDP amendment.
Mr Silipo: We just wanted to make sure that the commitment the minister made was actually going to be here in front of us, so we thought we'd put an amendment.
Mr Baird: A promise made, a promise kept, Mr Silipo.
The Acting Chair: Dealing with a government motion next.
Mr Baird: I move that subsection 447.37(4) of the Municipal Act, as set out in section 37 of the bill, be amended by striking out "the commercial property class and the industrial property class" in the fifth and sixth lines and substituting "the commercial property class, the industrial property class and the multi-residential property class."
The Acting Chair: Any discussion? Seeing none, I'll call the question. All those in favour of Mr Baird's motion? Those who are opposed? The amendment is carried.
Next I have an NDP motion.
Mr Silipo: I move that subsection 447.37(4) of the Municipal Act, as set out in section 37 of the bill, be amended by striking out "the commercial property class and the industrial property class" in the fifth and sixth lines and substituting "the commercial property class, the industrial property class, the residential/farm property class and the multi-residential property class."
This does the same as Mr Baird indicated on the previous amendment, but it inserts the important residential class for the reasons that I indicated earlier.
The Acting Chair: Any discussion?
Mr Silipo: A recorded vote on this as well.
Ayes
Silipo.
Nays
Baird, Froese, Rollins.
The Acting Chair: The amendment is defeated.
The next amendment I have is a government motion.
Mr Baird: I move that subsection 447.37(5) of the Municipal Act, as set out in section 37 of the bill, be amended by striking out "the commercial classes and the industrial classes" in the third and fourth lines and substituting "the commercial classes, the industrial classes and the multi-residential property class."
This is the third amendment dealing with the multi-residential class, to add it to the commercial and industrial assessment.
The Acting Chair: Is there any discussion relating to Mr Baird's motion? I'll call the vote. All in favour of the motion put forward by Mr Baird? Those who are opposed? The motion is carried?
I have an NDP amendment in front of me.
Mr Silipo: I move that subsection 447.37(5) of the Municipal Act, as set out in section 37 of the bill, be amended by striking out "the commercial classes and the industrial classes" in the third and fourth lines and substituting "the commercial classes, the industrial classes, the residential/farm property class and the multi-residential property class."
Again, this adds the residential and the farm property classes to the classes listed.
The Acting Chair: Any discussion relating to Mr Silipo's amendment? Seeing none, I'll call the question. All in favour of Mr Silipo's amendment? Those who are opposed? The amendment is defeated.
I have a government motion in front of me.
Mr Baird: I move that subsection 447.37(11) of the Municipal Act, as set out in section 37 of the bill, be amended by striking out "the commercial classes and the industrial classes" at the beginning and substituting "the commercial classes, the industrial classes and the multi-residential property class."
The Acting Chair: Is there any discussion relating to Mr Baird's motion? Seeing none, I'd like to call the question. All in favour of Mr Baird's motion, please indicate. Those who are opposed? The motion is carried.
Next I have an NDP motion in front of me.
Mr Silipo: I move that subsection 447.37(11) of the Municipal Act, as set out in section 37 of the bill, be amended by striking out "the commercial classes and the industrial classes" at the beginning and substituting "the commercial classes, the industrial classes, the residential/farm property class and the multi-residential property class."
Again, this adds the residential and farm property classes to the caps.
The Acting Chair: Any discussion? All in favour of Mr Silipo's motion? Those who are opposed? The motion is defeated.
Next I have a Liberal motion. This is the motion out of numerical order which we're now going to deal with at this time.
Mr Gerretsen: Section 37 of the bill, (section 447.37.1 of the Municipal Act):
I move that part XXII.2 of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following section:
"Halton exempt
"447.37.1 This part does not apply with respect to the regional municipality of Halton."
I am just initially saying that this is an amendment that the four Conservative members in the Halton area spoke in favour of and supported their regional council on and indicated in the Halton area that they wanted to see passed. The four chambers of commerce in Halton were in favour of this as well, because apparently the regional municipality of Halton has used the tools and has come up with what the regional municipality regards as an equitable solution to everyone. Since the four Conservative members from Halton were not prepared to move this as an amendment, we were, and we would just ask that everybody here support it.
Mr Froese: Why didn't you include Kingston in it?
Mr Gerretsen: Kingston didn't ask for it.
Mr Baird: There are a lot of municipalities, even a majority of municipalities, across the province that didn't use any of the tools. I think that caused a terrific amount of concern not just to the provincial government but obviously to small business people around the province. I think it's important that whenever we lay the blame we also recognize the good actors. I want to put on the record and recognize that Halton has really worked hard at protecting their small businesses and was a good actor in this process. I think particularly of the regional chair, Joyce Savoline, who deserves some credit. We're prepared to continue to work with Halton. We've had a good number of meetings with them already on this issue.
If this motion were to pass, though, there are some 200 businesses that would face, in some cases, significantly more than 15%, which is the number there, as I understand. We in the Conservative Party don't want to leave anyone behind. We want everyone on board and we want to protect every small business around the province. To pass this would basically leave those 200 small business people behind, and that's obviously of paramount concern since small business people are the economic engine of Ontario and they're helping drive those impressive job creation numbers we're seeing every month.
Mr Gerretsen: Just so that I'm clear then, the government does not support its own four Conservative backbenchers who are supporting this amendment. Would Mr Baird like to answer that? You do not support your own Conservative members in the region of Halton.
Mr Baird: I'm a big supporter of all four of those Conservative members. They're very good, hard-working members.
Mr Gerretsen: But not on this particular issue. You do not support your own members. I think the record should clearly show that.
Mr Rollins: Let the record be clear. The record will clearly show your statement on that.
Mr Baird: I should say that there are also a lot of businesses in malls in addition to the 200 that wouldn't be protected. It's important to put that on the record as well. That's obviously a concern. We want to ensure that not just the vast majority but everyone is protected.
Mr Gerretsen: I would like a recorded vote so that we will know whether or not the government members support the members of their own caucus.
Ayes
Gerretsen, Phillips, Silipo.
Nays
Baird, DeFaria, Froese, Rollins, Wettlaufer.
The Acting Chair: The motion is defeated.
Mr Gerretsen: I will pass the message along to the four Conservative backbenchers.
Interjections.
The Acting Chair: Order.
I have an amendment before me to section 37 of the bill which I understand is about to be moved by the government side.
Mr Baird: I move that section 447.38 of the Municipal Act, as set out in section 37 of the bill, be struck out and the following substituted:
"Frozen assessments
"447.38(1) Sections 447.5 to 447.13 apply as though they formed part of this division with the modifications in this section and such other modifications as are necessary.
"Minimum business assessment
"(2) If the business assessment for a property is less than 30% of the commercial assessment for the property, the business assessment shall be increased so that it is equal to 30% of the commercial assessment.
"Application of business assessment
"(3) Subsection (2) applies only to property in the commercial classes or industrial classes and does not apply to a property that was used exclusively for the parking of vehicles at the end of 1997."
Just to provide some explanation, members will recall that earlier we dealt with an amendment dealing with the eight-year phase-in and the payments-in-lieu properties. This is a similar amendment along that line.
The Acting Chair: Comments or questions? Seeing none, we'll call the question. All in favour of Mr Baird's motion, please indicate. Those who are opposed? The motion is carried.
Next I have an NDP motion to section 37 of the bill.
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Mr Silipo: I move that division A of part XXII.2 of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following section:
"Residential property
"447.38.1(1) Section 447.21 applies as though it formed part of this division with the modifications in this section and such other modifications as are necessary.
"Modification
"(2) Paragraphs 4 and 5 of section 447.21 do not apply.
"Extension to residential/farm
"(3) Section 447.21 also applies with respect to the residential/farm property class."
Again, this extends the 10, 5 and 5 caps to the residential/farm property class.
The Acting Chair: Any discussion? Seeing none, I'll call the question. All in favour of Mr Silipo's motion, please indicate. Those opposed? The motion is defeated.
I have yet another government motion to section 37.
Mr Baird: I move that section 447.39 of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following paragraph:
"0.1 Section 447.21, paragraphs 1, 2 and 3 (multi-residential property class)."
Mr Gerretsen: Could you give us the reason for that?
Mr Baird: That is one of the 11 amendments to insert "multi-residential property class" alongside commercial and industrial that the minister announced when he introduced the bill. I believe it is the seventh one of 11 to insert that in the bill in 11 different places.
The Acting Chair: Any further discussion? I'll call the question. All in favour of Mr Baird's motion, please indicate. Those who are opposed? The motion is carried.
I have in front of me another government motion.
Mr Baird: I move that subsection 447.42(2) of the Municipal Act, as set out in section 37 of the bill, be amended by inserting, after "section 447.11" in the eighth line, "paragraph 3 of section 447.21".
Again, that's dealing with the multi-residential issue.
Mr Wayne Wettlaufer (Kitchener): Could we have a recorded vote on this, Mr Chair, please.
Ayes
Baird, DeFaria, Froese, Rollins, Silipo, Wettlaufer.
The Acting Chair: The motion is carried.
I believe the next amendment in your package is an NDP amendment which is identical to the one we just passed; therefore, it is out of order.
Mr Baird: The government has adopted a second NDP amendment, for the hard-working member for Dovercourt.
The Acting Chair: I have next in front of me a government motion.
Mr Baird: I move that subsection 447.44(2) of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following paragraph:
"3. The multi-residential property class".
The Acting Chair: Any discussion?
Mr Wettlaufer: Recorded vote.
Ayes
Baird, DeFaria, Froese, Rollins, Silipo, Wettlaufer.
The Acting Chair: The motion is carried.
Next I'll call on the NDP.
Mr Silipo: I move that subsection 447.44(2) of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following paragraphs:
"3. The residential/farm property class.
"4. The multi-residential property class."
This again inserts "residential/farm property class" into the equation of the classes to be covered under the caps. I'd like a recorded vote on this.
The Acting Chair: First of all, is there any discussion related to Mr Silipo's motion? Seeing none, I'll call the question.
Ayes
Silipo.
Nays
Baird, DeFaria, Froese, Rollins, Wettlaufer.
The Acting Chair: The motion is defeated.
I have yet another government amendment to section 37.
Mr Baird: I move that section 447.49 of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following subsection:
"Multi-residential property class
"(3) For property in the multi-residential property class, the 1997-level taxes shall be determined by applying the 1997 residential mill rate to the total assessment in the frozen assessment listing."
The Acting Chair: Is there any discussion?
Mr Wettlaufer: Recorded vote.
Ayes
Baird, DeFaria, Froese, Rollins, Silipo, Wettlaufer.
The Acting Chair: The motion is carried.
I'd like to call on the New Democrats.
Mr Silipo: I move that section 447.49 of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following subsection:
"Residential property
"(3) For property in the residential/farm property class and the multi-residential property class, the 1997-level taxes shall be determined by applying the 1997 residential mill rate to the total assessment in the frozen assessment listing."
Again, this adds the residential and farm property classes to the mix to be covered under the cap, as per the previous amendments.
The Acting Chair: Is there any discussion relating to Mr Silipo's amendment?
Mr Silipo: Recorded vote on this too, please.
Ayes
Silipo.
Nays
Baird, DeFaria, Froese, Rollins, Wettlaufer.
The Acting Chair: The amendment is defeated.
Next I have a government motion.
Mr Baird: Do you want to start it now? I'm open in terms of your direction and that of the committee -- this is a large amendment -- whether we want to start it now or start it at 3:30. I'm in the committee's hands. I have no problem with --
The Acting Chair: We have about three minutes before 12 o'clock, by my watch.
Mr Gerretsen: This is such a wide-ranging amendment that it will take much longer than that.
The Acting Chair: Do you think you can read it into the record in three minutes?
Mr Baird: No.
The Acting Chair: It's my understanding that the closure motion says that we have to shut down the committee at 12 o'clock. If that's the case, I'll put the committee into recess and we'll resume sitting to deal with this issue after routine proceedings this afternoon.
The committee recessed from 1158 to 1531.
The Vice-Chair (Mr Wayne Wettlaufer): We shall continue. We have in front of us an amendment, a government motion, on Bill 79.
Mr Baird: I move that section 447.51 of the Municipal Act, as set out in section 37 of the bill, be struck out and the following substituted:
"Determination of phase-ins
"447.51(1) This section governs the determination of the phase-ins for 1998 tax changes.
Cases in which phase-ins determined
"(2) Phase-ins shall be determined for a property as follows:
"1. 1998 tax increase phase-ins shall be determined for a property if the uncapped 1998 taxes for the property are greater than the unadjusted 1997-level taxes for the property.
"2. 1998 tax decrease phase-ins shall be determined for a property if the uncapped 1998 taxes for the property are less than the unadjusted 1997-level taxes for the property.
"Determination of 1998 tax increase phase-ins
"(3) The 1998 tax increase phase-in for a property for a year shall be determined in accordance with the following:
"1. For 1998, the 1998 tax increase phase-in shall be 10 per cent of the unadjusted 1997-level taxes or such lesser amount as would be necessary to increase the unadjusted 1997-level taxes so that the unadjusted 1997-level taxes equal the uncapped 1998 taxes.
"2. For 1999, the 1998 tax increase phase-in shall be five per cent of the unadjusted 1997-level taxes or such lesser amount as would be necessary to increase the unadjusted 1997-level taxes, as increased by any 1998 tax increase phase-in for 1998, so that the unadjusted 1997-level taxes equal the uncapped 1998 taxes.
"3. For 2000, the 1998 tax increase phase-in shall be five per cent of the unadjusted 1997-level taxes or such lesser amount as would be necessary to increase the unadjusted 1997-level taxes, as increased by any 1998 tax increase phase-ins for 1998 and 1999, so that the unadjusted 1997-level taxes equal the uncapped 1998 taxes.
"Determination of 1998 tax decrease phase-ins
"(4) The 1998 tax decrease phase-in for a property for a year shall be determined in accordance with the following:
"1. The tax decrease phase-in for the year shall be the percentage, determined under paragraph 2, of the difference between the unadjusted 1997-level taxes and the uncapped 1998 taxes.
"2. A percentage shall be determined for the purposes of paragraph 1 so that the total of the 1998 tax decrease phase-ins for the year for all the properties in the property class in the municipality equals the total 1998 tax increase phase-ins for the year for all the properties in the property class in the municipality minus the prescribed amount, if any. In this paragraph, if the property is in an upper-tier municipality, 'municipality' means the upper-tier municipality.
"3. For the purposes of paragraph 2, the commercial classes shall be deemed to be a single property class and the industrial classes shall be deemed to be a single property class.
"Definitions
"(5) In this section,
"'unadjusted 1997-level taxes', for a year, means the 1997-level taxes determined under section 447.49 for the year; ('impôts au niveau de 1997 non redressés')
"'uncapped 1998 taxes' means, in relation to a property, the following taxes, adjusted, in accordance with the regulations, in respect of reductions in taxes for school purposes and changes in taxes for municipal purposes:
"1. If this division applies to the property for 1998, the taxes for municipal and school purposes that would have been imposed for 1998 but for the application of this part.
"2. If this division first applies to the property for 1999, the taxes for municipal and school purposes that would have been imposed for l998 if the property had been assessed and classified for 1998 as it is for 1999 and this part did not apply.
"3. If this division first applies to the property for 2000, the taxes for municipal and school purposes that would have been imposed for 1998 if the property had been assessed and classified for 1998 as it is for 2000 and this part did not apply ('impôts de 1998 non plafonnés')
"Regulations, tax change adjustments
"(6) The Minister of Finance may make regulations providing for adjustments, for the purposes of the definition of 'uncapped 1998 taxes' in subsection (5), in respect of reductions in taxes for school purposes and changes in taxes for municipal purposes.
"Different adjustments for different classes, etc
"(7) Regulations under subsection (6) may provide for different adjustments for different property classes, municipalities and properties.
"Modifications if assessment is increased
"(8) If any increases are made, under section 447.10 as it applies under section 447.38, to the assessments for the property in the frozen assessment listing for 1999 or 2000, the unadjusted 1997-level taxes and the uncapped 1998 taxes shall be determined as follows for the purposes of the application of subsections (3) and (4) to the year and to subsequent years:
"1. The unadjusted 1997-level taxes shall be what they would be if the corresponding increases were made to the assessments in the frozen assessment listing used to determine the unadjusted 1997-level taxes.
"2. The uncapped 1998 taxes shall be what they would be if the corresponding increase were made to the assessment on the assessment roil used to determine the uncapped 1998 taxes.
"Modifications, omissions from 1997 assessment
"(9) If any increases are made under section 33 of the Assessment Act to the assessment for the property for 1997, the uncapped 1998 taxes shall be what they would be if the corresponding changes were made to the assessment on the assessment roll used to determine the uncapped 1998 taxes."
The Vice-Chair: Any discussion? I'll put the question. All in favour? All opposed? Carried.
The next amendment is a government motion.
Mr Baird: I move that subsection 447.52(2) of the Municipal Act, as set out in section 37 of the bill, be amended by striking out "subsection 447.58(1)" at the end and substituting "subsection 447.47(1)".
This fixes an incorrect subsection reference.
The Vice-Chair: Any discussion? All in favour? Opposed? Carried.
The next amendment is a government motion.
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Mr Baird: I move that section 447.33 of the Municipal Act, as set out section 37 of the bill, be struck out and the following substituted:
"No phase-in under section 372
"447.53 Section 447.29 applies as though it formed part of this division with such modifications as are necessary.
"Interim levy, local municipality
"447.53.1(1) Section 447.30 applies as though it formed part of this division with the modifications in this section and such other modifications as are necessary.
"Multi-residential property class
"(2) The following apply with respect to the multi-residential property class:
"1. The taxes to be levied under paragraph 1 of subsection 447.30(1) shall be determined by applying a mill rate to the total assessment in the frozen assessment listing and not as provided under paragraph 2 of subsection 447.30(1).
"2. Paragraph 4 of subsection 447.30(1) applies, with such modifications as are necessary, with respect to the mill rate applied under paragraph 1.
"3. Paragraph 7 of subsection 447.30(1) does not apply."
The Vice-Chair: Discussion? There being none, all in favour? Opposed? Carried.
The next amendment is an NDP motion.
Mr Silipo: I move that section 447.53 of the Municipal Act, as set out in section 37 of the bill, be struck out and the following substituted:
"No phase-in under section 372
"447.53 Section 447.29 applies as though it formed part of this division with such modifications as are necessary.
"Interim levy, local municipality
"447.53.1(1) Section 447.30 applies as though it formed part of this division with the modifications in this section and such other modifications as are necessary.
"Residential property
"(2) The following apply with respect to the residential/ farm property class and the multi-residential property class:
"1. The taxes to be levied under paragraph 1 of subsection 447.30(1) shall be determined by applying a mill rate to the total assessment in the frozen assessment listing and not as provided under paragraph 2 of subsection 447.30(1).
"2. Paragraph 4 of subsection 447.30(1) applies, with such modifications as are necessary, with respect to the mill rate applied under paragraph 1."
This adds the residential and farm property classes to the mix, as we discussed earlier today.
Mr Baird: As we discussed earlier today, we already had this debate with respect to the residential component of caps in the same spirit of the motion.
The Vice-Chair: Further discussion? All in favour? All opposed? Defeated.
The next amendment is a government motion.
Mr Baird: I move that subsection 447.57(2) of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following clause:
"(c) the multi-residential property class in a municipality if division B applies for the year with respect to that property class in the municipality."
This is just one of the amendments to insert the multi-residential class with the commercial and industrial.
The Vice-Chair: Further discussion? All in favour? Opposed? Carried.
The next amendment is an NDP motion.
Mr Silipo: I move that subsection 447.57(2) of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following clauses:
"(c) the residential/farm property class in a municipality if division B applies for the year with respect to that property class in the municipality;
"(d) the multi-residential property class in a municipality if division B applies for the year with respect to that property class in the municipality."
Again, this is adding the residential and farm property classes to those categories of property taxes that should be protected by the cap.
The Vice-Chair: Further discussion?
All in favour of the motion? All opposed? It's defeated.
The next amendment is a government motion.
Mr Baird: I move that section 447.60 of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following subsection:
"Multi-residential property class
"(3) For property in the multi-residential property class, the 1997-level taxes shall be determined by applying the 1997 residential mill rate to the total assessment in the frozen assessment listing."
This is the last one with respect to the multi-residential property class.
The Vice-Chair: Further discussion?
All in favour? Opposed? Carried.
The next amendment is an NDP motion.
Mr Silipo: I move that section 447.60 of the Municipal Act, as set out in section 37 of the bill, be amended by adding the following subsection:
"Residential property
"(3) For property in the residential/farm property class and the multi-residential property class, the 1997-level taxes shall be determined by applying the 1997 residential mill rate to the total assessment in the frozen assessment listing."
Actually, this is also on my part the last attempt at including the residential and farm property class under the classes to be protected by the cap.
The Vice-Chair: Further discussion?
All in favour? All opposed? Defeated.
The next amendment is a government motion.
Mr Rollins: Excuse me, Chair, I think we need to pass section 37.
The Vice-Chair: Sorry. Thank you very much, Mr Rollins. I went too fast on that.
Shall section 37, as amended, carry?
All in favour? Opposed? Carried.
I'm not attempting to railroad this. Now we're into section 38. There are no amendments to section 38. Shall section 38 carry?
All in favour? Opposed? Carried.
Section 39, we have an amendment, a government motion.
Mr Baird: I move that clauses (b) and (b.1) of the definition of "education funding" in subsection 234(14) of the Education Act, as set out in section 39 of the bill, be struck out and the following substituted:
"(b) from tax rates under division B other than tax rates for the purposes of paying a board's share of the costs of rebates under sections 442.1 or 442.2 of the Municipal Act or paying rebates under regulations under section 257.2.1 of this act,
"(b.1) from taxes under part XXII.1 of the Municipal Act or division B of part XXII.2 of the Municipal Act other than taxes for the purposes of paying a board's share of the costs of rebates under section 442.1 or 442.2 of the Municipal Act or paying rebates under regulations under section 257.2.1 of this act, and"
This amendment would exclude the portion of the education tax rates used to fund charitable and municipal rebates from the definition of "education funding."
The Vice-Chair: Discussion? I'll put the question.
All in favour? Opposed? Carried.
Shall section 39, as amended, carry?
All in favour? Opposed? Carried.
Section 40: I have no amendments. Shall section 40 carry?
All in favour? All opposed? Carried.
The next amendment is a government motion.
Mr Baird: I move that subsection 257.11(17) of the Education Act, as set out in subsection 41(4) of the bill, be struck out and the following substituted:
"Amounts deemed to be education funding
"(17) Amounts paid by the minister under subsections (14) or (15), other than amounts for the purposes of paying a board's share of the costs of rebates under sections 442.1 or 442.2 of the Municipal Act or paying rebates under regulations under section 257.2.1 of this act, shall be deemed to be education funding within the meaning of subsection 234(14)."
Just to speak to it briefly, this is similar to amendment 48. It excludes the portion of the education tax rates used to fund the charitable and municipal rebates.
The Vice-Chair: Discussion?
All in favour? Opposed? Carried.
Shall section 41, as amended, carry? All in favour? Opposed? Carried.
We have an amendment to section 42. It's a government motion.
1550
Mr Baird: I move that the definition of "tax rates for school purposes" in subsection 257.12(1.1) of the Education Act, as set out in subsection 42(2) of the bill, be struck out and the following substituted:
"'Tax rates for school purposes' includes tax rates for the purposes of paying a board's share of the costs of rebates under section 442.1 or 442.2 of the Municipal Act or paying rebates under regulations under section 257.2.1 of this act."
This amendment would clarify that education tax rates -- and I guess the difference on this one is tax rates -- include any tax rates for the purposes of funding the charitable municipal rebates.
The Vice-Chair: Further discussion? All in favour of the motion? Opposed? Carried.
Shall section 42, as amended, carry? All in favour? Opposed? Carried.
I have no amendments to section 43. Shall section 43 carry? All in favour? Opposed? Carried.
Section 44. We have an amendment. It's a government motion.
Mr Baird: I move that paragraphs I and 2 of subsection 257.12.2(6) of the Education Act, as set out in section 44 of the bill, be struck out and the following substituted:
"1. The weighted average tax rate for school purposes for the commercial classes for a municipality for a year shall be determined by adding the taxes for school purposes for the year on all property in the commercial classes in the municipality for the year, dividing that sum by the total assessment of such property, as set out in the assessment roll returned for the year, and multiplying by 100.
"2. The weighted average tax rate for school purposes for the commercial classes for a municipality for a previous year shall be determined by adding the taxes for school purposes for the previous year on all property that is in the municipality in the current year and was in the commercial classes for the previous year, dividing that sum by the total assessment of such property, as set out in the assessment roll returned for the previous year, and multiplying by 100."
This amendment deals with the weighted average education tax rate and clarifies that the assessment on the returned assessment roll is going to be used to calculate the weighted average rate.
The Vice-Chair: Further discussion? All in favour? Opposed? It's carried.
Shall section 44, as amended, carry? All in favour? Opposed? Carried.
Section 45: We have an amendment, a government motion.
Mr Baird: I move that section 45 of the bill be struck out and the following substituted:
"45.(1) Clause 257.14(1)(d) of the act, as enacted by the Statutes of Ontario, 1997, chapter 31, section 113, is repealed and the following substituted:
"(d) providing for the apportionment and distribution of amounts levied under subsection 257.7(1) on residential property taxable for English-language public board purposes between a district school area board and a board established under section 67, where the property is in the area of jurisdiction of both boards.
"(2) Clause 257.14(1)(f) of the act, as enacted by the Statutes of Ontario, 1997, chapter 31, section 113, is repealed and the following substituted:
"(f) providing, despite any provision of this act or the Provincial Land Tax Act, that parts of territory described in subsection (2) shall be deemed, until the territory becomes or is included in a municipality, to be attached to a municipality under section 56 or clause 58.1(2)(m), for the purposes of this division and of section 21.1 of the Provincial Land Tax Act;
"(g) providing for such transitional matters as the minister considers necessary or advisable in connection with a change as to which board or municipality is required to do a thing under this division or under section 21.l of the Provincial Land Tax Act in relation to territory without municipal organization;
"(h) governing the levying of rates under subsections 255(1) or 256(1);
"(i) providing, despite any provision of this act, the Municipal Act or the Provincial Land Tax Act, for boards and municipalities to levy, in 1999, rates for 1998 under this part on property in territory without municipal organization, subject to conditions set out in the regulation.
"(3) Subsection 257.14(2) of the act, as enacted by the Statutes of Ontario, 1997, chapter 31, section 113, is repealed and the following substituted:
"Clause (1)(f)
"(2) The territory referred to in clause (1)(f) is territory without municipal organization that, on December 31, 1997, was attached to a municipality for school purposes and that, on January 1, 1998, was not so attached.
"General or particular
"(3) A regulation under subsection (1) may be general or particular."
Briefly, this amendment will allow the Minister of Education and Training to make regulations ensuring that unincorporated territory attached to a municipality for school purposes continues to be deemed attached until these areas become municipally organized.
The Vice-Chair: Further discussion? All in favour? Opposed? Carried.
Shall section 45, as amended, carry? All in favour? Opposed? Carried.
There are no proposed amendments to section 46. Shall section 46 carry? All in favour? Opposed? Carried.
There are no amendments proposed for section 47. Shall section 47 carry? All in favour? Opposed? Carried.
There are no amendments proposed for section 48. Shall 48 carry? All in favour? Opposed? Carried.
We have an amendment to section 49, a government motion.
Mr Baird: I move that subsection 49(2) of the bill be struck out and the following substituted:
"Same
"(2) Section 3 comes into force on the day subsection 18(19) of the Ontario Property Assessment Corporation Act, 1997 comes into force.
"Same
"(2.1) Section 10 comes into force on a day to be named by proclamation of the Lieutenant Governor."
This amendment deals with the Ontario Property Assessment Corp and is a bringing into force provision for provisions related to the Property Assessment Corp.
The Vice-Chair: Further discussion? All in favour of the amendment? Opposed? Carried.
Shall section 49, as amended, carry? All in favour? Opposed? Carried.
Shall section 50, the short title of the bill, carry?
Mr Silipo: Just a couple of words, if I could, on this. I find it a bit odd that section 50 declares the short title of this act to be the Fairness for Property Taxpayers Act, 1998, in light of a number of amendments that I proposed on behalf of our caucus proposing some of the same protections for people in the residential and the farm property tax categories. We proposed a number of amendments to try to deal with the caps and to suggest that where municipalities were going to fall into these schemes that this legislation puts in front of them to provide the 10% cap to increases and then 5% for each of the subsequent two years, that those same provisions should be available to all property taxpayers, not just those on the commercial side, as strongly as we believe that measure is necessary there.
The government is not making that same provision available to taxpayers who fall on either the farm or the residential side and I just find that particularly odd. I suppose at the end of the day I'm not particularly surprised by the position the government has taken on this. They continue to believe that's not a major concern.
I was a bit puzzled as to why the Liberal caucus representatives chose not to support that. I know they abstained on that, and that's fine, that's their position, but certainly we've heard from a number of taxpayer groups over the last little while indicating that, at the very least, those same provisions should be available to all taxpayers if we're going to move into this sphere to try and patch up what has been really a mess in terms of the way in which the government has handled this whole property tax reform.
I don't want to belabour the point, but I just thought it was odd that we are about to approve a section which calls this the Fairness for Property Taxpayers Act. Quite frankly, nothing could be further from the truth than using that title for this piece of legislation.
Mr Phillips: Just to comment on the same issue, the organizations that are best able to give us advice on how this will work are the Association of Municipalities of Ontario, the clerks and treasurers, the people who are responsible for tax policy and the financial officials. It's the first time I've ever seen all four groups come together and give us the advice that this bill is fundamentally flawed.
I think we're going to find we've made a significant mistake in moving forward with it. The government would have been far better advised to respond to these groups weeks ago. I was at meetings with the mayors probably eight weeks ago when they started to raise these concerns, and actually they had many proposals for the government. The government met with them behind closed doors and refused to allow them to appear here. As I said at the beginning of this committee, I think it's fundamentally wrong that the public don't have an opportunity for some comment and input.
Mr Silipo may wonder why we abstain. We abstain on the basis that the best advice we get is that this bill is fundamentally flawed and will create substantially more problems than it's going to solve. Only time will tell. We'll know probably in six to eight weeks who's right. The best advice we get suggests it would have been far better for the government weeks ago to step back and incorporate their advice. Certainly that's what I've been getting from municipalities across the province, that we are rushing to approve something that is not workable. If we want to disregard that advice, then we live with those consequences.
You wonder why our caucus abstained from it. It's because we are amending a bill that, according to those four groups, needs some substantial revisions. As I said, that should have been done and it hasn't been done.
Mr Baird: Maybe just a final comment. I certainly appreciate the comments of both our colleagues from Dovercourt and Scarborough-Agincourt.
I do have one concern with respect to some of the submissions that the member for Scarborough-Agincourt discussed. I have here a joint presentation that was sent to the government by, among others, AMO, the Municipal Finance Officers' Association and the Association of Municipal Clerks and Treasurers of Ontario, and I take issue with one of them. Right in the table of contents, it says what Bill 79 does: "Bill 79 imposes mandatory, inflexible and blunt solutions to manageable problems."
I want to say very bluntly I don't think these problems were manageable for a lot of small businesses in this province, whether it's that small business owner who rents a space at the Richmond Mall in my part of the province or whether they be in York region, in Northumberland county or where have you. Municipalities were given a number of tools and I want to acknowledge that some, the city of Toronto, used the tools. Others -- we've discussed the case of Halton or Ottawa-Carleton or Wellington county -- made an earnest effort and used a good number of them. But to say a "manageable problem" when a majority of municipalities used none of the tools, it would be dishonest of me not to say I had a problem with that because I do, because it wasn't a manageable problem for those small businesses.
Are we inflexible about ensuring that our small businesses are protected? You bet your boots we are.
The Vice-Chair: Further discussion? There being none, I'll put the question. Shall section 50, the short title of the bill, carry? All in favour? Opposed? Carried.
Long title. Any discussion? There being none, I'll put the question. Shall the long title of the bill carry? All in favour? Opposed? Carried.
Shall Bill 79, as amended, carry? All in favour? Opposed? Carried.
Shall Bill 79 be reported to the House? All in favour? Opposed? Carried.
The committee adjourned at 1605.