The House resumed at 8 o’clock, p.m.
LAND SPECULATION TAX ACT (CONTINUED)
Mr. Chairman: When we adjourned, the hon. member for Riverdale had the floor on section 4(h).
Mr. J. A. Renwick (Riverdale): Mr. Chairman, as you say, I had just asked the minister whether he would give favourable consideration to the proposed amendment which I moved to the amendment made by the hon. member for Huron-Bruce (Mr. Gaunt). I wonder whether the minister has had any opportunity to speak --
Mr. B. Gilbertson (Algoma): Mr. Chairman.
Mr. Chairman: The hon. member for Algoma.
Mr. Gilbertson: I am sorry to interrupt the hon. member, but I would like to take this opportunity to introduce a school. Grades 7 and 8, I believe it is, from J. McMullin School in the Sault Ste. Marie school system. In the absence of the Minister of Transportation and Communications (Mr. Rhodes) I felt I should bring this to the attention of the members.
Hon. A. K. Meen (Minister of Revenue): Mr. Chairman, I have had a chance to reflect on this over the dinner hour. But I must say to the hon. member, through you, I see no real advantage to doing what he suggests at this time. The amendment would open up the entire picture of sales beyond a family. It would alter the entire picture, which I think is an essential principle of this bill, namely the family farm acknowledgement which we built into clause (h), and the counterparts of the other sections relating to family farms.
Therefore, although I have ruminated on this now for the last couple of hours, I have come to the conclusion that we should not tamper with this provision, clause (h), as it stands. It may be that at some time in the future we could consider this.
I agree with the hon. member for Riverdale that what we’re really trying to get at is the speculative sale, or speculative holdings in the eventual realization of a speculative gain. But I think that if we were to take the course of action he has suggested, albeit it’s a whale of a lot better than the course of action suggested by the hon. member for Huron-Bruce, it still would bring into significant question the whole matter of the family farm. I think with the provisions that we have for family farms -- for the roll-overs, or the 10 per cent per annum cumulator, or the net maintenance cost of 10 per cent non-cumulator; with those three factors combined there is adequate protection, and indeed there is generous protection for the farmer. I think it would be quite unwise and quite improper for us to go any further and completely exempt any sales, provided, as suggested by the hon. member for Riverdale on behalf of the NDP, they are retained in farming.
Therefore, with some reluctance because I recognize what he’s getting at, I think I must say, at this time at any rate, I cannot accept his proposed amendment to the amendment.
Mr. Renwick: Mr. Chairman, I perforce must accept the minister’s decision on the matter. We will, at some point, divide on that particular subamendment that I proposed to the amendment by the hon. member for Huron-Bruce.
Would the minister help me a little with three or four questions which have been put to me from time to time since this bill has been before the House? One specific question that has been put to me is this whole question of lands being tree-farmed, if I can use that expression, under the Woodlands Improvement Act. My colleague, the hon. member for Timmins -- no, Cochrane South (Mr. Ferrier), I always get confused during a federal election as to just what constituency I’m talking about -- asked a number of questions at the outset of the estimates of the Ministry of Natural Resources, as to the number of such lots and information about them.
The advice he received, as late as May 9 this year, was that there are 3,279 agreements which have been made under the Woodlands Improvement Act and which are in force at the present time. Of those, some 3,119 are agreements with individual owners. The average size of the parcel of land covered by any of these agreements is 52 acres.
Some 2,343 of them are less than 50 acres; 481 are between 50 and 99 acres; 159 between 100 and 149 acres; 56 between 150 and 199 acres; and 149 over 200 acres. Some 398 of them are for woodlot improvement only; 1,684 are for planting only; and the balance of 1,197 are for woodlot improvement and planting. Then 3,252 of the agreements relate to the land in southern Ontario, and some 27 agreements relate to land in northern Ontario.
There is considerable further information about them. As I understand it, the contracts or agreements with the ministry are for a period of 15 years. There are certain limitations and restrictions imposed on persons who engage in this activity. The owner of the land purchases the trees, but the ministry plants and manages the growth of those trees. It is part of the policy of the government to promote this kind of woodlot improvement, the major part of which is in the southern part of the Province of Ontario. I can’t say that my colleague, the member for Thunder Bay (Mr. Stokes), is terribly impressed with the argument that there should be any special arrangement made with respect to those holding land under woodlot agreements.
I have specifically been asked to put the questions to the minister and find out whether or not he would be prepared to extend -- and I will rest on his decision, as I don’t intend to propose it as a formal amendment -- the definition of farm or farming assets to include woodlots and forest lands which are an integral part of a working farm or which are or become subject to an agreement under the Woodlands Improvement Act, or which could be subject to such an agreement and are not disposed of within five years from the date of acquisition.
I put the wording of the amendment, at least I read it into the record because the language along those lines would meet the point of my correspondent. At the same time, the language obviously comes from the farm classification definition of the advisory committee which has been referred to earlier in the debate. Could the minister let me know whether he has any views about the inclusion or non-inclusion as farming property these tree farms, under the Woodlands Improvement Act principally?
Hon. Mr. Meen: Mr. Chairman, I’ve been approached personally, and others in my ministry have been approached, by people who represent that area of activity. I think it is fair to say that the definition of farming proposed by the farm classification committee would be broad enough to cover that sort of activity. Our definition is taken from the Succession Duty Act, as I mentioned during second reading and when we were on clause (e) itself.
Mr. Renwick: I recognize that.
Hon. Mr. Meen: It is kind of iffy when you get into the whole question of tree farming. I would expect that without much difficulty one could include Christmas tree farming within our definition of tillage of the soil. But when one gets into the broader characteristics and categories of raising trees and forestry generally, I would think the definition which I’ve incorporated in clause (e) of section 11 is not broad enough to cover that.
This brings me to a point I wanted to touch on about the definition of farming and the reference made by some of our colleagues before dinner as to the definition which was suggested by the committee.
The difficulty with that definition -- and it certainly would be broad enough -- is that it is tremendously broad. Someone made a comment before dinner that you could have a couple of bees on a bee farm, or apiary, and perhaps qualify under the definition that I have in the bill now. But if they think that is broad, I think they should take a look at the definition that is proposed by the committee. Although it is nice and broad, implicit in that breadth of definition -- and I see the hon. member has a copy of that report in front of him, so perhaps I could read from notes that I have as to a summary. These words may not appear precisely in that report, but on the other hand they may.
The recommendations that are contained in that report can be summarized under a number of headings, and I don’t need to refer to all of them. The first is that a system of classification is feasible, they say. Then they say, as the second item:
“Farm land be deemed to mean and to include the soil, whether mineral or organic, the attachments, whether attached by the course of nature, as trees [and that would cover the point made by the member for Riverdale] herbage and water, or by the hand of man, as buildings and fenced either solely or in conjunction with each other, used, or capable of being used, for the production of plants and animals useful to man, including the farm home. The attachments aforesaid being so connected to the soil that by rules or law they pass by a conveyance of the land.”
Now that’s a very broad definition, and it’s implicit in that definition that a number of the other recommendations of the farm classification advisory committee would also be adopted. For example, item 3:
“Farm land be classified into five classifications -- agricultural, agricultural-residential, rural-residential, rural-recreational and rural-speculative. [And item 4:] A farm index be established and maintained for all farm land and that an index form be made available to all owners and lessees of farm land for completion and return. The index be programmed for computer use for the development and carrying out specific agricultural policies and be in the form set out in schedule A.”
They go on with a total of eight more various criteria. But those first three or four are, to my mind, the essential ingredients, particularly that a farm index be established.
As I mentioned earlier, the Ministry of Agriculture and Food is studying this report, but at this moment we have no position from it yet as to whether it would be practical to adopt these recommendations. If the Ministry of Agriculture and Food should recommend, and if it should become government policy that we adopt this body of recommendations, and the farm index be then established, it would then be appropriate for me and my ministry -- and I would think there might well be other ministries involved in this -- to take a look at the definition, in this case in clause (e) of what constitutes a farm, or what constitutes farming as under clause (e). If that were the case, then something along the lines indicated by the member for Riverdale with respect to tree farming might be appropriate.
There are other areas, too, in which I think one might question the efficacy of this farming definition. It might be considered to be too broad in some instances and in other ways it might be classed as being too narrow.
In any event, I was asked before dinner what was my justification for this particular definition; I would repeat what I said during the debate on second reading, namely that I think it came from our definition in the Succession Duty Act. It was section 17 subsection 1(a) of the Succession Duty Act from which that section has been taken.
Until such time as I have something more definitive from the Ministry of Agriculture and Food as to its adaption of the farm classification report and its recommendations, including the matter of the farm index, then I think I must stick with the definition that we are presently using as adapted from the Succession Duty Act.
The areas such as tree farming, therefore, to answer specifically the question by the member for Riverdale, in my opinion would not be covered.
Mr. Renwick: Mr. Chairman, I think the minister’s synoptic statement about the farm classification study perhaps does a little less justice to it. I think one of the principal limiting criteria in the definition of farm land, as contained in that report, is the limitation to principal activity. Then there is a definition or a statement with respect to the principal activity as being such-and-such an activity. Then there is a list, not in an all inclusive sense, but item by item, of various areas.
I don’t know whether the minister has a particular favourite in the member for Algoma, Mr. Chairman, but for example maple products would not appear to me to come under the definition. At the same time, it would appear quite proper that the activity in which he is engaged should perhaps be included in the Act. If you are a friend of his, perhaps the Act should be broadened to include maple products, as in the case in this farm classification list. There are other examples about that, and I don’t intend to belabour it.
Hon. Mr. Meen: Food.
Mr. Renwick: I think the other point on which the minister is perhaps a little less than understanding about the report is that of the principal definition, the definition of “agricultural” among the five classifications to which he referred. The “agricultural” one is the basic, fundamental definition. The “agricultural-residential,” “rural-residential,” “rural-recreational” and “rural-speculative,” are but adumbrations grafted onto the original and basic definition of it. I suppose there is not a great deal of point in pursuing it further.
The other matter I raised before dinner was the question involved in this principal activity operation, and whether or not a person could have a chief source of income which is either farming or a combination of farming and some other source. In a sense he should be free from the kind of tax which the minister is imposing with respect to the carrying on of farming. My question specifically is in the definition of farming, and in the definition of those who would be entitled to the exemption provided in section 4(h), does this connote that it must be something called a full-time occupation, or does it envisage that either the transferor, as defined in the technical sense, or members of his family, or the farming corporation, should be engaged solely in the business of farming?
Hon. Mr. Meen: No, I don’t think that is the intention, Mr. Chairman. I would say that it is simply the principal activity that would be adequate.
Mr. Chairman: The hon. member for Kent (Mr. Spence). You weren’t on your feet. Anybody else?
Mr. M. Gaunt (Huron-Bruce): Mr. Chairman, I just wanted to respond to some of the remarks made by the minister before dinner and one remark made by my friend the member for Riverdale.
First of all, let me deal with that one. He was talking about the matter of preserving farm land, and the fact that in his judgement it was a moral question and one which should be dealt with on that basis.
As far as I am concerned, and as far as our party is concerned, we subscribe to the philosophy that farm land should be preserved, where at all possible, for farming purposes; because obviously we are losing good farm land at an alarming rate in this province. If this trend continues we are going to end up in the position where we are not going to have enough good farm land to feed our own people, which is an ironic situation in a country and on a continent which is normally considered the breadbasket of the world. So I don’t think there is any question about the matter of preserving good agricultural land. I agree with it, and I know my party agrees with it.
The rub comes in the fact that it is not always possible to preserve it. For instance, where you have a rapidly growing city surrounded almost entirely by good agricultural land, it is pretty obvious under those circumstances, that given our conditions today -- unless we change the whole emphasis and move into areas that we haven’t moved into heretofore insofar as legislative action is concerned, the only place a city can grow is on good agricultural land. And while it should be preserved where possible, there are instances where this land cannot be preserved. This is what I had in mind when I drew up the amendment.
Granted the amendment is far from perfect, I would be the first to admit it, but I think the minister knows what we are trying to accomplish.
The hon. members can do anything with that amendment. They can put it on a graduated scale. They can say: “Okay, sales within the family are exempt from the 10-year provision and are exempt without any strings attached.” They can put the matter on a basis where the tax is applied for the first five years and then they can put it on a graduated scale of, say, 20 per cent for each year thereafter. They can do any number of things with it.
All we are saying is that, in our view, farming should be exempt from this tax. And our basis for saying this is that a farmer is not a speculator. He’s an investor, at least for the most part. The person who is a bona fide farmer should not, in my view, be subject to this tax. I think under certain conditions, however, he will be subject to this tax.
My friend the member for Riverdale makes the point that he is not interested in providing $1 million to some farmer out near London, or out near Toronto, or near any big city I suppose. I can see his point, but the fact of the matter is that farmers for many years have not received the remuneration to which they are entitled. They have gone on living on their depreciation for years and years in many cases. Most farmers -- not all -- but most farmers consider that when they sell their land they really are, in effect, selling their pension plans. They’ve lived poorly, but presumably will die rich in some cases.
I think the philosophy, if you like, behind the amendment which I proposed, was the fact that even if the farmer were sold out of farming, and sold for what might be considered a very effective price, that price would represent the loss in earning power of that farmer over the period of his lifetime while he was engaged in farming.
Whether the hon. members accept this philosophy or not I think the amendment still has validity. I say to the minister that he can do a number of things with it. If he is concerned about the fact the amendment may, under certain circumstances, preclude members from selling within the family and therefore work to their detriment, well then he can throw that in. He can say that sales within the family are exempt from the 10-year provision.
Really, I’m not concerned how the minister handles it. I’m just concerned that farmers should be exempt and not incur tax under this particular bill.
Hon. Mr. Meen: I think it has all been said, Mr. Chairman, but I feel bound to repeat that that’s precisely what we are saying. We are saying that sales within the family should, indeed, be free of tax, and there should be the continued roll-over provisions which we are building right into this section.
Mr. Gaunt: The minister was complaining about my amendment.
Hon. Mr. Meen: Yes.
Mr. Gaunt: And the minister can tack it onto the end of my amendment.
Hon. Mr. Meen: That amendment by the hon. member for Huron-Bruce would cut everything off at a particular time and it would then start over again and you would be in another 10-year period. You would wind up with the young farmers -- young men
-- and it may even have been the member for Huron-Bruce who commented the other day that the average age of farmers was well up into the 50s today and we are not getting young people coming into farming -- well how on earth are we ever going to get them in if this kind of thing, a sale outside the family, can be allowed to occur and thereby generate the higher and higher prices that they would have to pay? We want to discourage that kind of thing.
I am saying to the hon. member, his amendment would accomplish just that by allowing each farmer along the line to take his speculative profit as he went along. We are saying no sir; we want to see that farms, of course, are kept in farming, but we want to see them kept in the family farm.
Otherwise, once the sale is taken outside, we have to recognize that -- and we are; we are facing up to the fact -- that a sale by a farmer and at an arm’s length transaction to another farmer will undoubtedly, somehow or other, reflect the gain that farmer considers he has enjoyed or achieved over the years in which he has held the farm since April 9.
Therefore, although I recognize what the member is getting at I have to reject it; and, by the same token, as I expressed earlier, also reject the supplementary amendment by the member for Riverdale.
Mr. Renwick: Mr. Chairman, all I am going to say is we will, of course, support our amendment and we’ll oppose the Liberal amendment.
Mr. Chairman: Are you ready for the amendment?
Mr. V. M. Singer (Downs view): Oh, no. No, I couldn’t resist having a go at my colleague the member for Riverdale -- who interestingly enough says we’ll oppose the Liberal amendment -- it was interesting to note the phraseology of his amendment, where he had tacked it on to the back of the amendment posed by my learned friend from Huron-Bruce and therefore implied, as he posed it, that he accepted it.
My friend the member for Riverdale gets so fatuous in his arguments from time to time, and he opposes often just for the sake of opposing. He knows exactly what he is doing in this and he thinks he is being very cute because the NDP are embarrassed that they made a great --
Mr. Renwick: I won’t let him provoke me tonight.
Mr. Singer: The very voluble member for Ottawa Centre (Mr. Cassidy), who was very concerned about the Liberal attitude on this bill, doesn’t happen to be here through 90 per cent of these debates. I don’t know whether he has wooed the member for Riverdale or not, but the member for Riverdale is now paying lip service to the specious theory put forward by the member for Ottawa Centre. However, the facts speak for themselves.
The member for Riverdale is not a dumb member or a stupid member, and the fact that he chose to phrase his amendment in the way that he did, and to tack it on the eminently sensible amendment put forward by my colleague the member for Huron-Bruce, indicates, even though his words would signify otherwise, that he is in fact supporting the great good sense put forward by my colleague from Huron-Bruce.
Mr. Renwick: You just watch when I stand and when I sit.
Mr. Singer: Insofar as what is at issue here, Mr. Chairman, I am impressed by the fact that you managed to continue to occupy that seat during the course of this debate on this particular section of this Act, because I did listen to you very carefully as you rose in your seat, and I know where your sentiments lie. I am surprised at some of your colleagues, particularly the Minister of Agriculture and Food (Mr. Stewart), who appears so engrossed now in transcripts of the debates or some other very important and learned document that he is perusing --
Hon. A. Grossman (Provincial Secretary for Resources Development): He is reading a letter from you.
Mr. Singer: -- and is not prepared to stand in his place and support the farmers of Ontario against the ravages imposed upon them by the Minister of Revenue. I say shame on the Minister of Agriculture and Food, who should be the foremost in espousing the cause of the farmers.
An hon. member: Leave that to Whelan.
Mr. Singer: This proposal makes no sense. There is just no way in which we can support the minister. The thought put forward by the member for Riverdale does have an increased dimension to some of the thinking put forward by my colleagues. Therefore, we are going to support his amendment and ours, and I would think the member for Riverdale, if he has any good conscience still left about him, will do only the proper thing and act as he has worded his amendment and support the Liberal amendment as well.
Mr. Renwick: I am not provoked.
Mr. Chairman: Ready for the amendment?
Hon. Mr. Meen: I am not convinced.
Mr. Chairman: It was moved by Mr. Gaunt as an amendment to Bill 25, that clause (h) of section 4 be amended by adding after the word “transferor” in the second line, “in farming, as being so used by the transferor for a period of 10 consecutive years prior to the disposition,” and by striking out all other following words in the subsection.
Mr. Renwick’s amendment to the amendment is that clause (h), I think it’s supposed to be, rather than (1), of section 4 be further amended by adding thereto after the word “disposition” the words, “and the disposition or such designated land is for the purpose of enabling the persons to whom the disposition is made to carry on farming in the designated lands.”
I guess the proper procedure is to put the amendment to the amendment first. All those in favour of the amendment to the amendment please say “aye.” All opposed please say “nay.” In my opinion the “nays” have it.
Mr. Singer: Oh no -- that the amendment be further amended. You noted those words that you wrote with your own hand.
Mr. Chairman: Can we stack this and deal with --
Mr. Singer: No, no stacking.
An hon. member: This is ridiculous.
Mr. Singer: It is a ridiculous bill. For every section there is going to be a division.
Mrs. M. Campbell (St. George): It is a ridiculous bill and you are going to find out about it.
Interjections by hon. members.
Mr. Chairman: Call in the members. Order please.
The question to be decided is the motion of Mr. Renwick, the member for Riverdale, that section 4(h) be further amended by adding thereto after the word “disposition” the words “and the disposition of such designated lands is for the purpose of enabling the person to whom the disposition is made to carry on farming in the designated land.”
Mr. Singer: Mr. Chairman, on a point of order, I think -- and we made this point a little earlier -- the word disposition referred to by the hon. member for Riverdale is the word disposition in the amendment as moved by the hon. member for Huron-Bruce. I think the motion should read that way. I think that was the intent of the member for Riverdale.
Mr. Renwick: I would be quite happy either to consent to it or to accept your subamendment. You could ring the bells again if you had to!
Mr. Singer: It is your request. I wouldn’t want to amend your subamendment.
The committee divided on Mr. Renwick’s amendment to section 4(h), which was negatived on the following vote:
Clerk of the House: Mr. Chairman, the “ayes” are 24, the “nays” 38.
Mr. Chairman: I declare the subamendment lost. Do you want to take the same vote on the amendment?
Mr. S. Lewis (Scarborough West): Mr. Chairman, a member entered the door between the end of the first vote and the beginning of this vote, and I think that member should be allowed, therefore, to vote.
An hon. member: No way.
Mr. T. P. Reid (Rainy River): He is voting against the member for Scarborough West anyway.
Mr. Chairman: There is a vote called. As far as I am concerned I didn’t see the member enter the door.
Mr. Lewis: He walked right through the centre doors in between the votes.
The committee divided on Mr. Gaunt’s motion that section 4(h) be amended by adding after the word “transferor” in the second line “in farming and has been so used by the transferor for a period of 10 consecutive years prior to the disposition,” and by striking out all the following words in the subsection; which was negatived on the following vote:
Clerk of the House: Mr. Chairman, the “ayes” are 12, the “nays” 50.
Mr. Chairman: I declare the amendment lost and sections 1, subsection 1(a), section 5(1) clauses (e) and (f) and section 4(h) carried.
Section 4 agreed to.
On section 5.
Mr. Chairman: On section 5?
Mr. Singer: No, what about section 4 clause (i)?
Mr. Chairman: That has just been carried.
Mr. Singer: You haven’t done section 4(i) have you?
Mr. J. R. Breithaupt (Kitchener): The clauses that have been added, section 4(i) and clauses (j), which were the old clauses (a) and (b).
Mr. Chairman: They were dealt with and carried.
Mr. Breithaupt: No. I am simply inquiring, I was not aware, Mr. Chairman, that they had been attended to. These were from the former Act and were clauses (a) and (b) of section 4.
Hon. Mr. Meen: That is correct, Mr. Chairman, the vote was taken on that, I think Tuesday afternoon just when we commenced the proceedings.
Mr. Chairman: On section 5 of the bill.
Mr. Breithaupt: The section is completed then?
Mr. Chairman: Yes, completed.
On section 5?
Mr. Singer: Yes, section 5(1) is the first one I want to talk about. Section 5(1):
“Every tax imposed upon designated land by this Act is, until paid, a special lien in favour of Her Majesty in right of Ontario upon the designated land and has complete priority [and this is where I think we get into a little trouble] over every claim, privilege, lien, encumbrance, tight, title or interest of any person that arose or came into existence as a part of or subsequent to the disposition of the designated land, as a result of which the tax was imposed on the designated land [up to that point, it’s fine] and such special lien has priority over every execution in the hands of any sheriff or other officer that affects the designated land, whether the designated land was subject to the execution before or after the disposition of the designated land.”
Why should the section be so worded that the lien takes precedence over an execution by the sheriff -- and an execution, as the minister well knows, is the result of a court decision which allows the execution to issue and to be filed with the sheriff -- why should the lien take precedence over an execution which came into existence before the lien arose? It just makes no sense to me. If an execution creditor has established a right before in fact the disposition took place, and something takes place afterwards, why should Her Majesty the Queen, in the right of the Province of Ontario, be allowed to step in ahead of an established right of an execution creditor?
Hon. Mr. Meen: Mr. Chairman, the reason is that the execution creditor has the opportunity to collect on his execution at the time the property is disposed of. Therefore, it seems appropriate that with that right arising at the time of the sale and the lien only arising on the completion of that sale, the execution creditor who has filed his execution will have been paid off ahead of time.
In any event, it’s identical to section 6(1) --
Mr. Singer: Ah, come on.
Hon. Mr. Meen: -- of the Land Transfer Tax Act and other taxing statutes that we have dealing with real estate.
Mr. Singer: No, I lose the minister completely. The execution creditor, if I understood the minister correctly, has the right to collect at the time of the disposition. Now it may be that there are no proceeds of the disposition. The right of filing an execution is to have a judgement running against the land and is to warn subsequent people they take the land subject to that execution. You cannot, as the minister knows, compel a sale bf a piece of real estate until after three years and the difficulty in collecting can be very substantial.
I can see no reason, no matter what other statutes you may have it in and no matter what other reference you may make to it, why you should take away the priority which an execution creditor established in advance of the disposition, in advance of the passing of this Act, and say that the Crown steps in ahead of that execution creditor,
Hon. Mr. Meen: Mr. Chairman, there is one factor that I think should be emphasized and that is that the Crown has priority over executions anywhere, and so inasmuch as it does I think it’s appropriate we should spell it out here so that the people involved in dealing with this Act will know, if they don’t happen to know, that the Crown does have priority. What we are saying in the guts of this section, which is what the member for Downsview has already referred to, namely is that we are not imposing this execution except, and I underscored it in my copy of it, in priority to any “lien, encumbrance, right, title or interest of any person that arose or came into existence as part of or subsequent to the disposition of the designated land.” So what we are saying in the latter part is that the Crown has priority and we are preserving that priority and making sure that everybody can see it there in the Act.
Mr. Singer: No, but that’s not it, that’s not it! What I object to is the last 2½ sentences of the subsection -- “whether the designated land was subject to the execution before or. after the disposition of the designated land.” If I had gone through the legal process necessary to become an execution creditor against Blackacre, and I have that judgement and I have registered it with the sheriff, and suddenly an event takes place over which I have no control whatsoever and Her Majesty the Queen comes to the conclusion that she has a lien and/ or a right to pay the payment of tax -- which are not exactly the same thing, as we are going to develop a little later -- why should my right be taken away? It’s quite conceivable, if there are all sorts of other encumbrances and if I am shoved down the ladder and lose my position through no fault of my own. that the value of my writ of execution is completely destroyed.
Why do you need the words “before or”? Why don’t you delete the words “before or,” in the second last line of the section, and say that after the disposition, when your right arises, then you have the priority?
Hon. Mr. Meen: No. Mr. Chairman, the point is we are trying to protect the prior encumbrance and so we refer to that as being a specific exemption. But otherwise we are spelling out precisely what the law is, that the Crown has priority over all other execution creditors, whether before or after, so we are simply saying so.
Mr. Singer: Why should you protect the prior encumbrance and not protect a prior execution creditor? I don’t think it is fair, I don’t think it is reasonable and I don’t think it is just. I think what you are giving the Crown here is an ability to override any individual rights. It is completely unreasonably and irrational.
Mr. Renwick: Mr. Chairman, for what it is worth, I think the member for Downsview’s argument is unanswerable. I don’t see why you can pick and choose between executions. I would also draw to your attention, of course, that you have left out writs of extent which may be in the hands of the sheriff against the lands as well.
Mr. Chairman: The member for High Park.
Mr. M. Shulman (High Park): Is the minister going to answer before I speak?
Hon. Mr. Meen: No.
Mr. Shulman: You are not going to answer? How can you not answer? Well all right.
Mrs. Campbell: The member for Riverdale just said it was unanswerable.
Mr. Shulman: Okay. I’m not a lawyer, unfortunately, but even I follow the logic of the member for Downsview, and I can’t see why the minister doesn’t. However, I want to ask something in a more simple vein, if I may, not quite understanding this.
It says here: “Every tax imposed upon designated land by this Act is, until paid, a special lien.” Now as I understand it, if I sell a piece of land to someone else and you feel you should get your end of it, your 20 pieces of whatever, and if you don’t get it, you can then put a lien on it and have the land subsequently sold. But aren’t you then catching the wrong guy? Aren’t you catching the fellow who bought the land instead of the fellow who sold it? Am I confused, or are you penalizing the wrong person again?
Hon. Mr. Meen: The lien arises at the time of the transaction, Mr. Chairman. It isn’t necessarily put on. The lien arises by statute, unless certain prescribed actions are taken by the parties in order to protect themselves against the lien, either the satisfaction of the ministry as to the amount of tax payable and some security being given and a release therefor being endorsed upon the document, or the completion of statutorily required affidavits which would automatically release the lien. These various steps that are taken will mitigate against the arising of the lien. But failure to do that creates the lien, which then attaches to the property.
Mr. Shulman: Let me get this quite straight then. What you are saying is that at the time of sale the person who is buying it has to make sure that the person who has sold it has paid you his tax. Holy smoke, do you realize the tremendous amount of extra paperwork you are getting into? This means that in every sale that goes through in the Province of Ontario from here on in, you are going to have to go through that exercise. Have you any estimate of what the cost of that’s going to be? It’s great for the lawyers again. No estimate? No idea?
Hon. Mr. Meen: No, that’s not what I said.
Mr. Shulman: What did you say?
Hon. Mr. Meen: I said I don’t think it will be great for the lawyers in that sense of imposing a great workload on the lawyers.
Mr. Singer: The 1,500 who were there yesterday didn’t think it was great for them either.
Hon. Mr. Meen: Subsection (3) is a saying provision which the members might want to look at. It protects the innocent purchaser of land from a lien where the appropriate affidavit identifying the land is attached to the document. I don’t have any statistics but I would figure that nine out of 10, possibly 95 out of 100, transactions would fall within that section, and it would be a comparatively small percentage of the total number of transactions that would have to come to the ministry for some special attention.
Mr. Shulman: I see. So, in other words, if I’m buying the property and I have an affidavit from the person who is selling the property that he has paid the tax, that’s all that’s necessary?
Hon. Mr. Meen: No, not necessarily. If you have an affidavit that he has complied with certain sections of the Act, or if you have a release from the ministry -- if he has produced that in other words -- then yes, there would be no lien. In other words, you, the purchaser, would be clear of any liability for that tax. If it should turn out at a later time that the affidavit was falsely sworn, or that incorrect evidence had been provided to the ministry, and steps had been taken that thereby relieved the title of the lien and thereby relieved the purchaser of any obligation to see that money paid, that does not mean the money is not still recoverable from the person who filed the false affidavit or provided the incomplete information to the ministry, but it does remove the lien, and that’s what we’re talking about under section 5.
Mr. Shulman: Well wait a minute, I want to make sure I quite understand what you are saying. In case you later find that the information was not proper, is there any responsibility on the purchaser, the person who bought it? He is clean?
Hon. Mr. Meen: Yes. Unless, of course, he has been party to this by way of a collusive action, which is covered under section 6. But subject to his being in a collusive relationship to the transferor, yes, he is clean.
Mr. Shulman: Then let me get this quite straight. What exactly do I have to do, if I am buying a property, to make sure I am not going to get it in the neck four years from now when you people decide you want a lien?
Hon Mr. Meen: I would suggest you retain a good lawyer.
Mr. Shulman: Ah, I thought it was more legal work. Tell me, what does the lawyer have to do? They can get a little confused too. They are phoning me, and that worries me.
Hon. Mr. Meen: Yes, I think so.
Mr. Shulman: What does the lawyer have to do to make sure --
Mr. Singer: You could ask Mr. Stephenson, who was advising the lawyers yesterday.
Mr. Shulman: Let’s try it again, and do it very slowly, because I am a little confused with this bill, I’m sorry to say. What does the lawyer have to do to make sure I don’t run into trouble four years hence when you people decide that you didn’t get as much money as you properly should? How can I be sure? I gather that an affidavit is not sufficient. Do we need something from your department?
Hon. Mr. Meen: No. Mr. Chairman, let me just repeat --
Mr. Shulman: Try it again.
Hon. Mr. Meen: In about 95 per cent of the cases an affidavit in the form prescribed will completely wipe out the lien and any obligation on the purchaser. It will clear the title. There will be no cloud on the title. A purchaser can take it and sleep at night, and his solicitor can transfer it to him.
Mr. Shulman: How do we know which is the five per cent?
Hon. Mr. Meen: In the other five per cent, where the grantor, the transferor, can’t give such an affidavit, for whatever reason, it is still going to be incumbent upon the solicitor acting for the purchaser to see that a lien clearance certificate is then available, attached to the document or registered on title. It will be in those five per cent of cases in which my ministry will be involved in determining the original price, the difference between the two, the amount of tax, and determining on what basis that tax is going to be paid.
Mr. Singer: By that time the transferor’s gone.
Hon. Mr. Meen: The transferor --
Mr. Singer: He’s gone. He’s in Venezuela, probably.
Mrs. Campbell: If he’s got a brain in his head he will get out of the country.
Hon. Mr. Meen: The transferor will give the ministry an undertaking to pay the tax out of the proceeds. On that basis the ministry might very well give a release of that lien to the transferor’s solicitor for delivery to the solicitor for the purchaser. In one way or the other, the solicitor will see on completion of the transaction that the lien has been cleared.
This is unusual in the sense that this is a new piece of legislation, but the practice of lien clearance certificates is not new or novel to the legal profession. For years, lawyers have had to obtain this kind of clearance certificate with respect to corporation tax, they have had to obtain this sort of thing with respect to the retail sales tax, all of these things. We have this additional one now with respect to the land speculation tax. So it is not new, it is just an additional item the profession will be required to obtain a clearance for at the time they complete the transaction.
Mr. Shulman: Will you assist me a little further? I am almost finished; I am trying to get my brain unfogged on this one. If it involves five per cent of the transactions in the province, I’m trying to figure how many this would be. Does the minister have any idea how many transactions there are in the province in a year? Are there a million?
Hon. Mr. Meen: No, I would be speculating. I don’t know.
Mr. Shulman: Can the member for Downsview assist me?
Mr. Breithaupt: Let’s say a million.
Mr. Shulman: A million? Well, if it is only five per cent it means there are only going to be 50,000 occasions in which your department is approached to do this type of investigation. Has it entered your mind that perhaps you may have a manpower problem and there may not be enough people in government to do all this investigating?
Hon, Mr. Meen: Yes, I realize we may need some staff for this.
Mr. Shulman: About 50,000.
Hon. Mr. Meen: As I told the hon. members when we were debating this on second reading, my assessment department will have staff available, so will the succession duty officer. They are all skilled in determining real estate values and it will not take long, I venture to say, before they will be skilled in determining the amount of tax that will be payable in processing these applications for lien clearance.
Mr. Shulman: Thank you very much. Can you just assist me for one further moment? Approximately how long do you think it will take to process one application? Can it be done in a day? Or an hour? Or five minutes? Could you give me any assistance on that?
Hon. Mr. Meen: I guess some could be very speedily despatched.
Mr. Shulman: An average one?
Hon. Mr. Meen: This is going to be one of these things in which, I guess, experience will speed things along. Conceivably, if all the documentation were not provided or further supporting material were required, with exchange of correspondence if this came in by mail rather than personal delivery, the turnaround time on something like this, I suppose, could get up to a couple of weeks.
Mr. Singer: A couple of weeks for an evaluation?
Hon. Mr. Meen: I would like to think that when the legal profession is accustomed to the Act and accustomed to the requirements and can submit to my ministry me necessary documentation -- and of course our staff becoming more experienced with it will be able to handle it quickly -- I would hope the turnaround time could be much faster than that.
In the old days when we required corporation tax clearance certificates -- I can think back to the 1950s -- it used to take a week to two weeks to get a corporation tax clearance certificate from the provincial department. But latterly, I am told, through mechanization the comptroller of revenue, that particular end of my ministry, is able to handle that kind of thing very much more speedily. I would think that as experience grows we will be able to have a much quicker turnaround time in this end of things too, provided the profession provides the staff with the necessary information on the first shot.
If a solicitor were in a rush to get a clearance certificate on a piece of property and brought the documentation in in the same way as he would to the corporation tax office and the succession duty office, well act very quickly in the case of an emergency when a clearance certificate has to be issued quickly or when a consent under the Succession Duty Act has to be issued. I would think that likewise in this area of activity we would be able to give the profession pretty speedy service.
Mr. Shulman: I see. I want to pursue this just for a moment. Let’s suppose we have everything perfect. I’m the lawyer, I do everything right and I bring all the papers into your people’s office at 9 in the morning. Everything goes well and there are no hitches; how long should it take before it’s back in my hands?
Mr. B. Newman (Windsor-Walkerville): What year is this?
Hon. Mr. Meen: That’s a hypothetical question.
Mr. Shulman: Would it take an hour?
Hon. Mr. Meen: It might.
Mr. Shulman: Would it take more? Would it be fair to say it would take at least an hour?
Interjection by an hon. member.
Mr. Shulman: All right. Let us suppose your people are really fantastically great and it takes only an hour for one of them to do this. From my friend to the right I gather this is being rather optimistic, but let’s suppose --
Mr. Singer: Suppose you are one of the five per cent and they are suspicious and they don’t accept your assessment -- what then?
Mr. Shulman: Let’s put it this way. If there are a million transactions in the province a year, and I’m told there are more, that means 50,000 a year are going to come to you people. There are 300 working days in a year.
Hon. Mr. Meen: It’s 1,000 a week.
Mr. Shulman: Pardon?
Hon. Mr. Meen: It’s 1,000 a week.
Mr. Shulman: One thousand a week?
Mr. Breithaupt: Two hundred working days.
Mr. Shulman: Two hundred working days! Okay; 1,000 a week; that means 1,000 hours, if everything is perfect --
An hon. member: Two thousand working hours a week.
Hon. Mr. Meen: No, that is not what the member said.
Mr. Shulman: I am asking how long it will take one of your -- what I am asking you is if you put one of your perfect workers who doesn’t make mistakes onto it and he does everything perfectly, how long does it take him from the time he gets the application in his hands, working until he is finished? Can he do it in an hour?
Mr. J. Riddell (Huron): They will have to be a lot different from the ones I normally get.
Mr. Shulman: I suggest to you it will take at least an hour. I suggest you are going to need a whole new building to house the people you will have to have just to do this one aspect of this particular subsection of this particular section of this particular silly bill.
As we go on, section by section -- I’m not a lawyer; I’d be the first to admit I’m the rankest amateur in this -- looking at it as an amateur, I don’t even have to read it ahead of time. In each section, as the member for Downsview points out the technical errors, I read it and look at the common-sense errors. He’s right that you are wrong on the technical aspects and it’s obvious to me that you haven’t considered the implications of what is involved.
You are going to be the biggest employer in the province. You are going to solve the whole unemployment problem all by yourself. The Treasurer (Mr. White) will be able to get up in the House and say Ontario has the lowest unemployment rate; they are all working for the Minister of Revenue, they are all trying to figure out what is going on in this bill. It boggles my mind that you haven’t considered all the implications and the huge staff you are going to need. This is ii everything works all right.
The other aspect, which we haven’t even talked about, is what happens to all these deals which are going to be held up? Or rather, what happens to the deals which don’t go through because they are being held up?
Hon. Mr. Meen: I think the member really is exaggerating a situation. Certainly we will need more staffs, but the one thing you can’t equate or try to average is the time involved in dealing with these transactions.
Mr. Shulman: That’s what worries me.
Hon. Mr. Meen: I would suppose that many of them could be dealt with in just a few minutes each. Then there are going to be others in which an assessor in the area may be instructed by teletype to go take a look at a certain piece of property.
Mr. Shulman: Boy, are you going to need a lot of assessors.
Hon. Mr. Meen: We’ve got them all through the province now.
At any rate he may be familiar with the property. He may be able to teletype back his own personal information from his records in the local office; or if he is not current with the situation he might very well go out and take a look at a farm and see whether the new farm building that is alleged in the affidavit to have been built is in fact there.
Mr. Singer: Fifty-six King St. W. is now worth $34,000; he just tells it like it is, brilliant. That subjective and casual opinion is supposed to be definitive.
Hon. Mr. Meen: This is the kind of situation, of course, where it might take a few days to get an answer back to the ministry. But that doesn’t mean the assessor has occupied several days of his time doing that. He will be doing this in the normal course of his other duties. Then, eventually, the results will come back to the ministry.
Mrs. Campbell: You have to be kidding.
Hon. Mr. Meen: I think the hon. member is not developing a proper case for the time factor per item in dealing with this. Certainly he may have 500 a week or 1,000 a week on the average to deal with, but I think they can be handled within the ministry.
Mr. Shulman: I’ll wager you will spend more money in your budget next year just looking after this section than you collect in tax.
Interjection by an hon. member.
Mr. Chairman: The hon. member for Kitchener.
Mr. Breithaupt: I would add a comment to those that have been made by the member for High Park. I would only add two things.
The first is that when this matter is equated to the corporation tax clearances we receive as lawyers now, this procedure has been speeded up because the letter that one sends in is returned with a rubber stamp on it saying those corporations are clear in the ordinary case. On the other hand, those of us who have attempted to obtain valuations from appraisers or real estate persons -- who indeed go into the matter in depth and visit the property and take photographs and check the adjoining titles to lands and check the tax records and whatever -- we wait two weeks on the average before we can possibly get a report.
Mr. Singer: Two weeks! You can’t get a competent evaluation under two months.
Mr. Breithaupt: I simply put it to the member for High Park that you have one which is a turnabout with a rubber stamp --
Interjection by an hon. member.
Mr. Breithaupt: -- the other that will take between two weeks and a month. Decide as you wish as to where these will fall.
Mr. Singer: Mr. Chairman --
Mr. Chairman: The member for Downsview.
Mr. Singer: I am rather puzzled about the --
Mr. Breithaupt: You are never puzzled.
Mr. Singer: -- exchange between the minister and the member for High Park. It just boggles my mind as to how this thing is possibly going to work. Are you suggesting for instance, that I am one of your civil servants, and suddenly I see coming through a series of papers involving the sales of Arthur Meen’s house?
Interjection by an hon. member.
Mr. Singer: I say, oh I know Arthur Meen, he lives in North York; I went by his house the other day and that is worth exactly $61,235.50. The affidavits indicate that; therefore, we will give him a clearance.
Are you suggesting that land of process is possible in dealing with real estate in Metropolitan Toronto? Because if you are I don’t believe it. I don’t believe it at all. I don’t see how you are going to get any kind of reasonable assessment. When you look at section 5(2) once the certificate issues, if it is a valid certificate, everything is over; it ends.
How do you distinguish between the 95 per cent of valid ones where you give clearance and the five per cent of suspicious ones where you don’t? One of the things that arose out of this meeting yesterday was the comment of one lawyer who said: “I was faced with this. I had to get the deal closed and I called up my friend the real estate agent in my town and said: ‘Joe, you know that house up the street. Would you say it is worth X dollars now and X dollars before?’ Joe said: ‘Sure.’ I said, ‘Joe, will you give me a letter on your letterhead saying that?’ Joe said, ‘Sure.’”
So off went the affidavit with Joe’s letter attached to the letterhead. Clearance over. Finished -- done. Except is that the kind of testing that you are going to do?
Mr. Breithaupt: This comedy is --
Mr. Singer: Surely there must be some realistic method of determining this. If you are going to tell me a little later that you are going to resort to section 6 to reverse what appear to be the inequalities that apply, then I don’t understand you at all.
It just doesn’t come through to me in any way how the mechanics of this are going to work. I wish you could explain it. My friend from Kitchener said maybe you can get an evaluation of a competent evaluator in two weeks or maybe a month. My experience is that competent evaluators are pretty hard to find, and when you retain one, and you want a good job done, you are going to wait six weeks or two or three months before you get an evaluation that one would be prepared to go to court with. You’ve got to be prepared to wait that length of time.
If you are in a situation where you are untrusting of the kind of information that has come forward to you, in advance of having issued the clearance -- as I read section 5(2), once you’ve issued the clearance it’s ball game over --
Hon. Mr. Meen: As to the lien.
Mr. Singer: And as to your right I You see, the special lien conferred by the Act is not attached to the designated land disposed of where the minister has given the certificate that no lien is claimed with respect to the land; so the land is gone. The transferor has taken his money as I jokingly said a minute ago in old unserialized, one-dollar bills and taken a trip to Switzerland and deposited them in a numbered bank account. So he’s gone from your reach.
The tax is levied against the transferor, not the transferee; you have no lien against the --
Hon. Mr. Meen: That’s right.
Mr. Singer: What do you do? The barn door is open and the horse is gone too. Tough. The easiest thing in the world to beat. You haven’t got a practical system for administering the Act, All right, that’s pretty obvious.
Let me try to clear up this business about prior executions, Mr. Chairman.
Mr. Singer moves that the words “before or” in the second last line of section 5(1) be deleted.
Mr. Singer: I argued about it before, and will argue about it again.
Mr. Chairman: The member for High Park.
Mr. Shulman: Before we come to a vote, I am still a little puzzled on one or two aspects of this. I’m trying to put myself in the position of a landowner. Suppose I own some land now which I’ve owned for some years, and three years hence I want to sell it. Along comes a gentleman who is willing to buy it, and we don’t want to get involved in this section 5(4), having warrants issued and all sorts of horrible things happening. I want to be a good, public-spirited citizen. I want to pay my 50 per cent speculative tax. How much is it?
I know I’m selling the property today -- and suppose it is April 1, 1982 -- for $50,000. I bought it in 1925. How much was it worth on April 9, 1974? How do I establish that?
Mr. Singer: You get your friendly little old real estate agent to write a letter.
Hon. Mr. Meen: That isn’t quite the way it works. One way to be satisfied that you weren’t being robbed would be to have your own evaluation done round about now. If you had some property you were contemplating selling one day that was not your principal residence, not your recreational property and which didn’t qualify as one of the other exemptions -- and it wasn’t being taken by the Crown -- what you would do would be to apply to the minister for an assessment of the amount of the tax at that stage. Within a few months from now, for that matter it would be possible under the information in my ministry’s assessment division to obtain within a couple of minutes --
Interjection by an hon. member.
Hon. Mr. Meen: -- a computer printout of roughly say a dozen properties of similar size, construction and vintage and located in the same general geographic area of the municipality, having had sales in that general area of April 9, 1974.
Mr. Singer: That’s going to be a definitive as to value? Oh come on!
Hon. Mr. Meen: And from that it will be possible to determine with reasonable accuracy the market value of your property on April 9, 1974. That is, of course, presuming that it was acquired prior to and held on April 9. Now from there to the sale price, of course, you have the difference in price; consequently from that, and subject to the other allowances for maintenance and the like, the net taxable amount can be computed.
Normally, a closing date for a sale would be 30 days from the time of acceptance of an offer until the time of possession on closing, and your lawyer would set about swiftly to make this application, and within that period of time he would have satisfied the ministry and I am sure they would have worked out the amount of tax liability that was payable. If they can’t reach agreement, then there are other steps available to them as to security to be given or some other arrangement to be made so that the sale could be completed and the tax paid or collected at a later time, based on other security that you, the vender, might want to give the ministry.
Mr. Shulman: I would like to follow the minister’s advice. I am going to do that and suggest that everyone in the province do. How many properties are there in the province? Have you any idea? Would 10 million be a reasonable number or would there be more than that?
Hon. Mr. Meen: I couldn’t say.
Mr. Shulman: Let’s suppose there are 10 million properties in the province. You are suggesting we all go out now, or within a reasonably short time, and have our properties appraised so that when we want to sell them at some future date we would know what they are worth at the present time. Is that the advice? I think I heard the minister say that.
Hon. Mr. Meen: I know there were people who offered this advice in January, 1972, at the time of valuation day under the federal capital gains legislation. I am sure there were quite a number of people who did just that, but I am equally certain there were an awful lot of people who didn’t do that. If we can assume the same sort of situation here, we will probably see a number of people go out and get valuations on that day just for their own satisfaction.
Mr. Shulman: Who can give this valuation, Mr. Minister? Any real estate agent? Would that be acceptable?
Hon. Mr. Meen: Any real estate agent or qualified real estate appraiser. It is certainly worth considering anyway.
Mr. Shulman: Thank you, that’s great, I suppose I can phone my cousin Steven, and ask him to come and give me a valuation then. He would really like that property I have.
Hon. Mr. Meen: I want to make it clear that I am not saying that we would accept anything. I am just saying that it would be reassuring, perhaps, to an owner to know what his property was evaluated at, at least by a qualified appraiser.
Mr. Singer: I told you about good old Joe who would sign a letter about the value of real estate; what does that prove?
Mr. Shulman: I see. Presuming you don’t accept the valuation that cousin Steven gives me, which won’t come to your attention for some 10 years from now, because I presume we won’t sell the land, how are you going to tell if these flood of sales that go through are valid?
There must be thousands of sales every week. The flood of sales goes through your office and you are fighting manfully with only the 10,000 people you have working for you. As they come through and each one has 50 or 100 on his desk each day, how is he going to know that these valuations he sees in front of him, which presumably were done on your advice back in May or June, 1974, were or were not valid? How can you possibly tell?
Hon. Mr. Meen: I think the hon. member should remember that we are going to move to market value assessment and we are going to have these --
Mrs. Campbell: Oh you are? What year?
Hon. Mr. Meen: -- market value figures available for every property.
Mr. Singer: Do you seriously believe that assessment is at market value?
Hon. Mr. Meen: As time goes on, there will be more and more cases in which the time of acquisition is after April 9 rather than before; so there will be other dates and other evidence available besides just from that date.
I would think that, prima facie, one would have the evidence of the market value assessment notice that went out to the owner each year as time goes on. If he accepts that market value assessment for the purpose of his real estate taxes, maybe he gets himself on the horns of a dilemma if he thinks he is under-assessed, because one of these days he is going to sell.
Mr. Singer: Oh come on! You don’t mean it.
Hon. Mr. Meen: If he sells at a price, there’s the evidence he has accepted the lower value. So he is going to be anxious, I would think, on his own home dwelling to have the assessment at a high value. This is where this kind of person is going, as I say, to be on the horns of a small dilemma.
Mr. Chairman: The member for Waterloo North.
Mr. Breithaupt: That will be an animal at the new zoo -- the horns of a small dilemma.
Mr. E. R. Good (Waterloo North): Now that the minister has introduced the assessment process into the ministry’s valuation on property, I think this is a whole new ball game right about here. A short while ago I was talking to people from the assessment department. We know that the market value assessment has been completed in most areas across the province, but the assessment even at the present time bears no relationship to the present selling price of houses in that particular category. The pressure on single family homes and apartment buildings has been so great that there has been an unnatural and artificial value placed on certain types of housing. Surely the ministry isn’t saying they are going to rely on assessment data to find out valuations for valuation day. I was told just a few months ago that present market value assessment has been completed in certain areas of the province. In the one area alone, where I live, they now say that the assessment completed about two years ago or 1½ years ago represents only about 60 per cent of the present selling price. The minister knows as well as I do that it is impossible to run a percentage factor through all assessment and come up with a market value for all classifications of buildings, simply because certain types of buildings are subject to more inflationary pressures than are other types.
So it is ridiculous to me that the assessment process will be even thought of or used to establish one’s valuation for the application of this tax. It might be a guideline but a very rough guideline at that, because even now I think the assessors are beginning to realize that the market value is not the important thing, but the relationship that one assessment bears to another assessment in the same vicinity. If that is equitable, we don’t have to worry too much about whether it represents market value, because you know and I know, Mr. Minister, that the assessment isn’t going to represent market value when it is brought out in 1976.
This is an entirely different thing. This valuation on valuation day of April 9 has to be related to the actual selling price, and the selling price may be inflated or deflated, depending on the stress and pressures under which the sale was made. As far as I am concerned, Mr. Chairman, it’s a new ball game altogether when we talk about using the assessment rolls to establish evaluation.
Mr. P. D. Lawlor (Lakeshore): He doesn’t mean that. He wants to take it back. He has changed his mind.
Hon. Mr. Meen: I don’t disagree with the member for Waterloo North when he talks about the difficulties we have had in reaching market value assessment in some areas --
Mr. Lawlor: They’re not difficulties.
Hon. Mr. Meen: -- in which the rates of increase have been substantial. That’s the reason why we have had to put over to 1976, for the taxation year 1977 --
Mr. Lawlor: That is not the reason.
Hon. Mr. Meen: -- our estimate of the time when we can apply market value assessment.
Mr. Lawlor: You want to complete the assessment across the board. It has nothing to do with it.
Hon. Mr. Meen: Nevertheless, our men are going back now and redoing the market value assessments that were done two or three years ago.
Mr. Lawlor: You made a grotesque blunder.
Hon. Mr. Meen: Because of the enormous increase, they have had to go back and do this work. As the member for Waterloo North said, you just can’t apply an across-the-board figure of an increase of 40 per cent to bring those up to market value. There has not been that great a consistency. So they have to go back and rework these to bring them back up. That work will be completed, I am advised, by about the end of this year or the very early part of next year.
Mr. Singer: Then it will be two years.
Hon. Mr. Meen: Then everything will be on an equal basis and they will be essentially current at that time --
Mr. Breithaupt: We will never catch up.
Hon. Mr. Meen: -- since the rate of increase is by no means as great now as it was in the last two or three years.
Mr. Lawlor: This is self-hypnotism.
Hon. Mr. Meen: So I think we will be able to use those figures with reasonable accuracy.
Mr. Chairman: The member for Downsview.
Mr. Singer: I would like to ask the minister if he has read any of the decisions of the Ontario Municipal Board in relation to values for expropriation purposes, if he has read any decisions of the Land Compensation Board that it has made about values for expropriation, if he has read any of the decisions made by the former Exchequer Court, now the Federal Court of Canada, in relation to the decisions it has made. And if he has, I would suggest to him that he would never have brought before us the gobbledygook that he has been enunciating in the last few minutes.
To suggest even remotely that the assessment is anything more than the most far-out, single and mostly irrelevant criterion in determining -- what’s your phrase here? -- “fair market value,” is just dreaming in Technicolor. The amount of attention that any of these tribunals ever pay to assessment, or will pay now to this assessment on the new basis -- which will be about three years out of date before it is ever used -- is almost invariably nil. The values change from day to day and month to month.
Fair market value? What is fair market value as defined in the Expropriations Act of Ontario or in the Federal Act? Fair market value is what a willing buyer will pay to a willing seller. That’s what it is. Its relationship to assessment is hardly more than coincidental. It certainly is not the criterion, or even one of the important criteria.
If you are going to get into an argument about what fair market value is, if you have it in one day, then your magical computer answer about five comparative buildings in the same neighbourhood, if you can find them, is almost completely and absolutely irrelevant.
So the position put by the member for High Park as to what the mechanics of this are remains completely unanswered. You have all your new assessment base, you have readjusted the years and keep on moving them forward. No matter what year you say they are finalized, they’ll still be three years out of date. They won’t be accepted by any of the tribunals in this province or this country as really pertinent or relative to the phrase, “fair market value,” which is the value on which you can base your tax. So tell us how it is going to work because you really haven’t made it at all clear.
Mr. Chairman: The member for Lakeshore.
Mr. Lawlor: Mr. Chairman, I really can’t bring myself to discuss the matter under discussion. I feel that I would stutter. Somehow it would stick in my throat. So I’ll pass that over and say one of the worst features -- and I am sure you’ll commiserate with me, Mr. Chairman -- of these prolonged, parsing debates that take place at times, brought on our heads by inept legislation, and inept arguments introduced in defence of the wretched legislation, is that sometimes the dreamy quality, bedizenment and obfuscation that characterizes the minister rubs off on some of the rest of us. That wonderful and terrifying thing, as far as I can see, just happened to the member for Downsview when he was arguing his amendment a moment ago -- I really can’t make head or tail of his amendment now. Things are getting in a very --
Mr. Singer: On an entirely different point --
Mr. Breithaupt: If that is the case -- stand up in court.
Mr. Lawlor: I swear. Did you notice, Mr. Chairman, that there is a word “whether” in there and he somehow has left the “whether” but taken out the “or”?
Mr. Breithaupt: No one can do anything about the weather!
Mr. Lawlor: I guess you can refine the ore! I don’t know.
Mr. Singer: You are quite right. I will accept your subamendment.
Mr. Lawlor: I move that we take out the whether.
Interjection by an hon. member.
Hon. Mr. Meen: Very clever.
Mr. Chairm.in: The member for High Park.
Mr. Renwick: How about the committee rising?
Mr. Shulman: I still am not clear from the minister’s answer how his fair market value assessment, which he is going to have in 1976, is going to help him in any way to determine what a house is worth on April 9, 1974.
Hon. Mr. Meen: Mr. Chairman, what I have just been trying to tell the members, and I think we are about ready to close up for the night, but I can make this brief, is that under the computer system you can punch into the computer the question of (a) the particulars of the property you are talking about and (b) the date of, say, a spread of a month or so on either side around April 9, 1974, for similar types of sales.
Mr. Singer: Are you making a definitive assessment --
Mr. Chairman: Order, please. Order.
Hon. Mr. Meen: And the computer will punch out in a couple of minutes particulars of half a dozen other properties, let’s say, that have similar floor areas and are of similar vintage --
Mr. Singer: Try that one on for size.
Hon. Mr. Meen: -- similar area, and so on. The dates when they were sold, and the prices for which they sold, and, for that matter, the terms of sale -- how much was cash, how much was mortgage. And that can be punched out for any day you want to pick. Pick the middle of July. Pick the middle of April. Pick whatever time you like, and we can produce that information out of the computer on a couple of minutes notice. I have seen it demonstrated now and it will be applicable throughout the whole of the province towards the end of this year.
Hon. Mr. Stewart moves the committee rise and report.
Motion agreed to.
The House resumed, Mr. Speaker in the chair.
Mr. Chairman: Mr. Speaker, the committee of the whole House reports progress and asks leave to sit again.
Report agreed to.
Mr. M. Shulman (High Park): Mercifully!
Mr. G. E. Smith (Simcoe East): Not very much progress.
Mr. P. D. Lawlor (Lakeshore): Let’s call it all off for two or three days.
Hon. W. A. Stewart (Minister of Agriculture and Food): Mr. Speaker, before you move the adjournment of the House, the House leader (Mr. Winkler) has asked me to announce that on Friday, tomorrow, we will deal with item 20 on the order paper, Bill 65, followed by the committee of supply in the estimates of the provincial Treasurer (Mr. White), and on Monday, May 27, we will continue with item 2 on the order paper, Bill 25; item 10, Bill 51; and Bills 52, 9, 44, 35, 37 and 39.
Mr. V. M. Singer (Downs view): You will not need anything to follow Bill 25.
Hon. Mr. Stewart: One is always optimistic.
Mr. Singer: Well --
Mr. F. Drea (Scarborough Centre): You might not be here.
Hon. Mr. Stewart: I move the adjournment of the House.
Mr. J. R. Breithaupt (Kitchener): Mr. Speaker, before the House does adjourn, I can understand the requirement to go ahead with the Municipal Elections Act, Bill 65, tomorrow. I must say, though, that it is regrettable that an estimate has been called for which there has been no particular warning --
Hon. Mr. Stewart: You are not prepared, then?
Mr. Breithaupt: I think members who are involved particularly in financial matters have been involved in this debate and we have now spent some 28 hours on this debate. I hoped some other estimate might be called or, alternatively, that some of these other smaller and hopefully less controversial bills could be dealt with tomorrow. I would hope the House leader, in reviewing the comments I have to make tonight, might possibly consider that tomorrow morning. But, of course, we will have to play the hand the way it is dealt.
Hon. Mr. Stewart moves the adjournment of the House.
Motion agreed to.
The House adjourned at 10:30 o’clock, p.m.