The House resumed at 8 p.m.
TOWNSHIP OF MARATHON LAND ACT
Hon. Mr. Bernier moved second reading of Bill 148, An Act respecting certain land in the Township of Marathon in the District of Thunder Bay.
Hon. Mr. Bernier: Mr. Speaker, the township of Marathon is developing a residential subdivision to accommodate the rapid growth resulting from the great Hemlo gold discoveries. The plan of subdivision has been approved and the lots have been sold. However, underlying the plan of division is a survey of what used to be a dirt road. The road was never dedicated and accepted as a public highway, but there was enough use of it that lawyers cannot certify that it never attained that status.
This bill is the most expeditious way of solving the problem to the benefit of the owners, who are the township, the mining companies and the individual purchasers.
Mr. Nixon: Mr. Speaker, now and then we find that the time of the House is taken up by matters of this nature that cannot be solved in any other way. Occasionally it concerns me that road allowances are removed by legislation, regulation, or in this instance an act of the Legislature, when occasionally they give access to public waterways or something like that.
I have been assured by the member for Lake Nipigon (Mr. Stokes), in whom I have great confidence, that this is something that would benefit the community. On that basis, my colleagues and I will be supporting the legislation, and I cannot wait to hear what he has to say about it.
Mr. Stokes: Mr. Speaker, I can attest to what the Minister of Northern Affairs (Mr. Bernier) has said about what has made it necessary to introduce this bill. This is not to say that it could not have been done otherwise, but it was on the advice of Mr. Stepinac from the Ministry of Northern Affairs legal branch that it was the most expeditious way of removing from the subdivision the cloud that prevented potential owners from getting clear title to their land.
I have had considerable dialogue with people in the legal branch of the Ministry of Consumer and Commercial Relations who look after the land registry office, and it would have had to go to the Ontario Municipal Board. In effect, one would have had to ask lawyers to falsify or repudiate the records. It seemed this was the most expeditious way of giving clear title.
The township is very appreciative of the fact the minister took the initiative to bring in this bill, simply stating that a dirt road that once went through the subdivision was never deemed to have been a public highway. When this piece of legislation is given third reading and royal assent it will be possible for two mining companies, Lac Minerals and Teck-Corona, and all other purchasers of land in the area to get clear title.
We are told by the legal people this is the only expeditious way it could have been done. Several ministries have approved this, and the township and its lawyers are in full approval. I know the township and the prospective buyers are waiting for this legislation. On behalf of all concerned, we appreciate the initiative that has been taken by the Minister of Northern Affairs and his personnel.
I know everybody will want to give it third reading tonight and at the first opportunity give it royal assent, so they can get on with the business of looking after that much-needed development in the Marathon area. I support it wholeheartedly and I hope all members of the House will do likewise.
Motion agreed to.
Third reading also agreed to on motion.
ASSESSMENT AMENDMENT ACT
Hon. Mr. Gregory moved second reading of Bill 129, An Act to amend the Assessment Act.
Hon. Mr. Gregory: Mr. Speaker, the purpose of this bill is to postpone until December 1985 the return of assessment rolls at full market value across the province.
The bill will ensure that the section 63 market-value-based reassessment program will continue to be available to municipalities and school boards in unorganized territories to correct inequities within classes of properties without allowing tax shifts from one class of property to another.
As I am sure the members are aware, the objectives of the section 63 program are to ensure that assessments within property classes are fair and equitable, to provide ratepayers with assessments based on market value, a concept they can clearly understand, and to provide municipalities with defensible tax bases.
Since its introduction in 1979, the section 63 reassessment program has been implemented successfully in 434 municipalities to date. Approximately 40 more municipalities have requested tax impact studies so they can consider the consequences of the implementation of the section 63 reassessment program in the municipality for 1985 taxation.
Together with the 142 municipalities proclaimed at full market value, nearly 70 per cent of all municipalities in the province have been reassessed on a market value base. The fact this program is voluntary on the part of the municipalities, and the progress to date marks a major step on the reassessment front, makes it a remarkable achievement in moving towards the goal of an equitable property assessment and taxation system for Ontario's municipalities.
In summary, the purpose of the bill is to provide for the return of the assessment rolls for municipal taxation at present levels of assessment, except where the section 63 market-value-based reassessment program will be introduced.
8:10 p.m.
Mr. Nixon: Mr. Speaker, it is nice to hear the minister make his speech again. He is going to hear me deliver my speech again, because this bill has been introduced year by year ever since the former Treasurer and chief planner for Ontario, the Honourable W. Darcy McKeough, centralized the assessment responsibility here at Queen's Park.
Many people in the province continue to have a high regard for Darcy McKeough except in this one instance of bad judgement. He was able to persuade his cabinet colleagues and the then Premier to go along with the process of regionalizing local government, and in his impatience with the abilities of local functionaries, particularly those responsible for assessment, he decided to implement the final solution.
He passed legislation that centralized the assessment responsibility with his ministry. He was Treasurer and Minister of Economics and Minister of Municipal Affairs, I guess, at that stage. With the undoubted power and influence he wielded in the cabinet and in the province, it was going to be only a matter of months before all the properties across the province would be reassessed. We know this was probably the second-worst decision he made.
The matter has been abnormally expensive from that day to this. By taking over responsibility for all the assessment officers, he raised everybody's pay to the highest common pay. This was fine because the more money people make, I guess, the better it is for the economy, in spite of the fact that it was very hard on the taxpayers then and still is now.
He thought that by centralizing this responsibility he would reassess properties -- industrial, commercial and residential -- right across the province at market values. Of course, during that period of time, Mr. Speaker, as a member coming from Mississauga, you would certainly know that the market values were gyrating wildly, spiralling upward under rather strange and unusual pressures.
As a matter of fact, since that time many rural properties have roller-coastered downward in their value in spite of the administration of the former Minister of Agriculture and Food, who is so interested in this debate. These gyrations in value were only one of the reasons Mr. McKeough and his successors found it absolutely impossible to bring about any sort of rational market value assessments.
The efforts were rather elaborate. At one stage Willis Blair, a good friend of all of us in this House and the present chairman of the Liquor Licence Board of Ontario, was appointed chairman of a royal commission to bring us an answer to the problem that Darcy McKeough had left when he walked out of government rather precipitately some years ago.
Willis Blair, fine fellow though he is, former mayor of one of the municipalities in downtown Toronto, a lifetime Tory -- that did not have anything to do with his appointment, of course, because he is a very capable person in all respects --
Mr. Sheppard: What is wrong with that?
Mr. Nixon: What? Being a capable person? My friend may never know.
Willis Blair undertook a review of this matter from one end of the province to the other. He even consulted Liberals, and we were not able to give him the answer he sought because we felt market value assessment was a preposterous scheme at the outset and it remains so even to this day.
He had given up. Maybe that was the reason he left the Treasury benches, and this responsibility has gone through a number of ministers, first in Municipal Affairs and now in Revenue, who have tried to grapple with the problems of market value assessment.
You are aware, Mr. Speaker, that if you have true market value assessment, the transition, not so much of the assessed values but of the final tax load, is such that even a party like the Progressive Conservative Party of Ontario would not be strong enough to carry the public opprobrium that would go with such a mess.
As a matter of fact, I hear the minister tonight once again expecting to receive accolades for using the section 63 reassessment. The section 63 reassessment was a complete cop-out. It was a market value assessment within classes, which in no way meant that heavy industry and occupants associated with those properties and those assessments would be asked to carry a heavier share of the assessment and thus of the taxation, because it is only within the classes that these reassessments take place.
If members will forgive me, I will simply recount once again -- and members may have heard me on this before -- what actually happens to farm properties under this vaunted section 63 reassessment of which the minister is so proud.
In most areas if land is simply farm land, used for the production of food and not for any sort of subdivision or any sort of housing -- it has absolutely no call on education or on any other municipal services, such as policing and fire protection; it is just raw land that is farmed effectively, as in my case, of course -- and it is subject to reassessment under section 63, we might well expect that the taxes would at least double.
In the case where I had direct experience, the increase in taxation was well over 100 per cent. I for one, speaking for my neighbours who have been subjected to the same ministrations from this minister, resent it. We feel it is an extremely inappropriate way to establish the kind of reassessment concept that was run up the flagpole with so much fanfare by Darcy McKeough back in 1972, if I remember the date correctly.
Ever since that time, the Assessment Act has called upon the government to see that the assessment rolls were returned at market value assessment. Every year since then, for a decade plus two years, the government has been unable to do that. I suggest they will never be able to do that.
My own feeling is they should amend the original act with something other than this year-by-year patchwork approach. I have said that before, and I have called upon this minister and his predecessors to sit down with the experts in the ministry. They are undoubtedly very capable experts who have had to contend with this mishmash legislation over the years. Perhaps even I would not object to them retaining one of these high-priced lawyers who we hear about from time to time to get the kind of legal advice that might benefit the minister so he could come in with a piece of legislation.
If necessary, we could even call upon the services of the member for Oxford (Mr. Treleaven), who must know more about assessment than most of the people here, and his colleague from the Ottawa area. Both of them have been known to accept government contracts for legal advice in the past.
Mr. Treleaven: But the member wants it for nothing. He wants it for no legal fees.
Mr. Nixon: For nothing; I know what those guys charge. That is what he calls nothing.
I have a great personal friendship with the minister, and I have a high regard for his personal abilities. I am convinced that it would be possible for him, before he is kicked out of this job, which will probably be next February 1 because I understand he is going to the Treasury at that time, to bring about the kind of rationalization of the assessment legislation that would introduce some order into this situation, which has been chaotic for these many years.
The bill has come before us year by year. Also, with the postponement of the changing assessment on pipelines, I do not know why the pipeline people do not object more strenuously since it means they pay a much larger share of taxation than the intent of the government would suppose.
We are going to have this bill this year and next year, and in fact it may have to wait the very few short months until the Liberal Party takes over the responsibility of government before we have the sort of fair and rational approach to the whole problem of assessment that has been so sadly lacking in these many years of Conservative rule.
It was not working too badly before Darcy McKeough started fiddling with it. It is a classic example of the rule, "If there is nothing the matter with it, do not fix it." I am quite concerned that the minister has shown none of his well-known ingenuity in moving towards the kind of solution to the assessment problems the country is crying out for.
8:20 p.m.
I will simply end my remarks by saying again that I find it offensive that the minister is trying to convince us and all those people who read our remarks in Hansard -- and there must be thousands and thousands of them, Mr. Speaker -- it is offensive to try to convince all of those readers of Hansard that this 1963 reassessment is worth anything.
In my view, it simply compounds the problem of assessment and taxation, particularly in the rural areas. The minister may very well draw to my attention that the generous taxpayers of Ontario assist farmers in paying a part of their taxation -- a paltry 60 per cent as a matter of fact. However, this is beside the point. It is simply an attempt by the government to retain and perhaps curry additional political favour with the farmers by loading them down with money.
As far as I am concerned, I do not mind receiving the cheques. I have been involved in a number of elections, and I usually find these tax assistance cheques arrive a few days before the election. The time they are mailed out seems to be variable. I have a feeling the honourable Minister of Revenue (Mr. Gregory) was sort of prepared to speed them up in case there was an election on November 22, which is what we expected. That would be two days from now.
Frankly, I am rather upset the cheques have not arrived in my post office yet. The minister has probably decided that instead of having the money arrive at our farm -- by the way, the address is RR 1, St. George, Ontario -- just before the election, he is undoubtedly going to have them arrive just before Christmas. They will accompany the subsidies to our friends the senior citizens. This passes for high policy in taxation in this province.
I regret very much that over these many years the Tory party in Ontario has never been able to rationalize its assessment policy so that it is meaningful. As it is, it is anything but just and equitable. The minister should be embarrassed that once again he has to introduce this piece of legislation that has come before us at this time of year.
Mr. Breaugh: Mr. Speaker, the previous speakers have alluded to the fact they have seen this bill before. It is the annual bill which once again provides us with the opportunity to oppose it and to mention what we think are some rather serious problems surrounding market value assessment.
However, if there ever was a single piece of legislation that is the embodiment of the Tories in Ontario, this one is really what Torydom is all about. The kind of legislation they bring forward says a lot about a political party and a government. In Ontario, we have market value assessment but we do not have market value assessment; we do have it when a municipality asks for it under section 63, except that it is sometimes known as section 86; therefore we have it but we do not have it, except where somebody asks for it, in case they have it now.
It is interesting to watch the process the ministry uses. Most members will know that a lot of municipal councils -- too many, in my opinion -- are absolutely infested with Tories. Every once in a while somebody from the ministry will take the little road show out and convince them, usually just prior to a municipal election, that there is a way to get a lot more money in the municipality's coffers. It is called, "Using the Section 63 Approach to Getting Market Value Assessment." Normally, they will make that request just prior to a municipal election so that it does not happen before election day; it happens just after. People then have three years to forget who did that to them.
There is another interesting part to the process. There is a way into market value assessment, but there appears not to be a way out of market value assessment. No one seems to have found the means by which it can be rescinded. Even if a council decides after it has done the dirty deed that it is terribly wrong, that it should not inflict this pain on the citizens, there does not appear to be a means at the disposal even of the ever-powerful minister himself to undo it.
Therefore, it is a strange and complicated mix that is before us this evening. I would like to pick up on one of the things the minister said in his opening remarks. He said market value assessment is a system that is simple and easy for people to understand. I would contend that only a misinterpretation of market value assessment is easy to understand; that is, if one is naive enough to think market value assessment is really what one's property is worth on the market. Of course it is not. It is indeed a formula. People are having great difficulty understanding the formula because -- again, it is almost a personification of the Tories in Ontario -- it says one thing and does quite another.
I happen to be going to Niagara Falls tomorrow to have a little look around at some problems citizens are having there with market value assessment. I thought it would be interesting to put on the record tonight just one example of what has happened in that community.
An old police station on Zimmerman Avenue is in the process of being sold. The assessment roll down there, under market value assessment, says that property is worth $236,000. The council is considering selling the property for $40,000. The buyer wants another $19,500 knocked off in lieu of parking space. According to market value assessment, the city would be selling the property for about $215,000 less than market value.
I contend that is a little difficult for the citizens out there to understand. It is a little difficult for most people to understand, even those of us who work with assessment and work with the Ministry of Revenue. The minister has taken up the challenge of telling the people of Ontario of the virtues of market value assessment. He does so with great regularity and there are some people who are advocates of it. I have no problem with it in theory. My problem with market value assessment is as it has been introduced and practised in Ontario. There I think it is quite wrong.
The minister has a little road show now called "The Assessment Revolution," which I find another cute little turn of phrase. If there ever was a revolutionary, it is not the minister. He has a little road show that goes around trying to explain to people in Ontario all about the great massive changes in the assessment system. This is the very same road show that allowed him to get his picture in the Toronto Sun this week with a Penthouse Pet. That is the most notoriety he has had since he became minister. This is what is termed in the trade as a hard sell.
Market value assessment is a difficult one to promote. It is one which is most commonly brought forward without a great deal of public input. There are theoretical arguments that can be made -- and I would make them on occasion -- that the current assessment process without market value assessment is one that is pretty illogical too. But it seems councils are in a position where they take one set of kind of ridiculous numbers under the current assessment process and trade them for another equally ridiculous system.
To compound it even further, we have had a recent court decision which proves there have been pretty substantial inequities in an attempt to put assessment on condominiums. A recent court case is going to cost the city of Mississauga, it says in this Toronto Star story, about $5 million. That complicates the process yet again and even further.
The bill itself, although it seems a rather straightforward one, does tend to compound a problem that has been around for more than a dozen years. It is clear the minister is not going to be nearly as stupid as some predecessors might have wanted him to be, and that is to implement market value assessment holus-bolus across the province. No Tory worth his salt is going to be that dumb, now that they really know what the numbers are.
Mr. Samis: Some tried.
Mr. Breaugh: Some did try. The interesting thing is when they work up their little model of what market value assessment can do for a community, it depends on whether the model spews out numbers they like or do not like. For example, they did one on Toronto about three years ago. I have been trying to get a copy of that model since then. The latest word I have on the reason they cannot release it is that it is redundant. It is not up to date now. That is despite the fact the best number we could get an admission to in the House is that somewhere between $3 million and $4 million was spent in preparing that model. That is what the government will admit to on the record.
8:30 p.m.
I think it not untoward to suggest that it probably cost between $7 million and $8 million to put that model together. The numbers did not work, so the model has never seen the light of day. We do know that officers were brought in from assessment offices around the province. They worked overtime and weekends; they had expenses paid, got hotel bills, got per diems and worked very hard to put that model together. It is certainly a shame we have never been allowed to see what those numbers would do.
I think a good guess would show that market value assessment, if it were ever implemented here in Toronto, would cause the greatest hue and cry this town has ever seen. On the few occasions when there have been reassessments, the town has reeled from them.
Though the process sounds very sophisticated, as if assessment officers do a very fine job -- and I am sure that sometimes they do -- we also now know that sometimes they assess your property by driving down the street. It is such a common practice that it now has a name, which of course makes it legitimate. They call it windshielding. It means they look out of the windows of their cars and this is how they assess properties.
Mr. Nixon: Do not paint your shutters or veranda or you are dead.
Mr. Breaugh: The secret is to put all your improvements on the back of the house, because they have not devised a government vehicle that rolls through the backyards, only the front yards. Of course, people who are unfortunate enough to get building permits and things like that tip the government off themselves. I do not think they realize it when they go into the municipal buildings in Oshawa or Toronto and get a building permit, but they kind of squeal on themselves. They sometimes cause the old assessment boys to come around and take a peek at them.
The sum of it all is that assessment in Ontario is really a dog's breakfast. It is a mess. It is a system jammed between two systems: it is part market value assessment and part nonmarket value assessment. Some municipalities are in it; they think it is quite good because they get the revenue. Some are in it and think it is lousy because they cannot explain to their citizens how buildings that on the open market would be worth $40,000 or $50,000 have a market value assessment put on them in excess of $200,000.
Of course, the ministry staff quite rightly simply admit, almost gleefully from time to time, "We made a mistake on that one." The problem is that while there is a mechanism to fix the mistake it is certainly an awkward one. In some communities it involves great lineups of people appearing before the Assessment Review Board.
In that last great foofaraw here in Toronto, not this minister but the former minister, the current Minister of Government Services (Mr. Ashe), spent some time in the Legislature saying: "No, there is no problem with assessment in certain areas of Toronto. That is all wrong." Then he finally brought in a cute little bill that extended the period for doing an appeal for something like 6,500 residences, a pretty unusual thing.
The nub of it all is that there is a major problem here. The ministry seems to have taken the position it will slowly but surely go around Ontario and convince municipal councils to pass motions in the dead of night asking for market value assessment under section 63. I do not know whether the government will accomplish this.
I do not underestimate for a minute the ability of the ministry staff to make presentations to councils that are, by and large very friendly towards this government, by and large infested with Tories, and say: "Here is an appealing proposition for you. You do not have to worry about it. All you have to do is pass a motion that asks us to provide you with a study and another motion that asks the minister to implement the study. After that you can just walk away from it all, wring your hands and say: 'That is too bad. Market value is an evil thing, but we really did not do it.'" Again, this typifies the Tories in Ontario.
This is a very complicated process. When we ask home owners who is in charge of the assessment of their property, most home owners I have talked to still think the municipality has something to do with it. You try to explain, "Yes, it does, but then it does not." You try to explain the process to them, a very complicated one; and how they can appeal, again a complicated piece of business. You try to explain market value assessment, which is not really assessment based on market value, It is not quite as simple as that; it is a variation of it.
So without going on at great length, we know what the sins are. We know this is a position that is awkward for the minister. I am sure he has an awkward time trying to explain what exactly is going on with assessment in Ontario. I have heard him give speeches quite similar to his opening remarks tonight in which he explains how many municipalities in Ontario really have accepted the idea of market value assessment, but he never responds to that direct part of the question.
We are supposed to have market value assessment from one end of this province to the other. It is 12 years since that idea was broached, yet we still do not have it. There is a very good reason we do not. If he did that, he would have the assessment revolution about which his little roadshow talks and I am sure he is not quite prepared to deal with that. I know he has tried in vain for years to get this thing put in here in Metropolitan Toronto. The hard political reality would be that if the largest municipality in the province accepted market value assessment, if he could get it implemented here in Metro, then obviously all the other municipalities around Ontario would follow. It would be very difficult for them not to do that.
The reason it has not happened is that it would have visibility here in Toronto. One would actually be doing things to people such as Claire Hoy in assessing their residences, which would make them use their power in the media, that power of exposure of a very wrong idea on a large scale. While it is one thing to have a revolution down in Niagara Falls, in Niagara-on-the-Lake, in a portion of the town of Newcastle or in Sault Ste. Marie, those are kept as isolated squabbles at best and away from the central glare of the Toronto media.
We oppose this legislation. We think there is nothing wrong with the theory of market value assessment, but that is not what has happened in Ontario. We think the process is quite wrong. We think where municipalities have been, to use the polite word, suckered into asking for market value assessment in their communities and where they decide subsequently the thing is quite wrong, there ought to be a way to right that wrong other than making each of the individual home owners go through the assessment appeal process.
There is a dastardly deed at work here. It is one that on its surface looks very simple and straightforward. It looks like a little housekeeping amendment. It has been a housekeeping amendment that just will not go away; it keeps coming back year after year. The government is trying to do something that is quite wrong. I believe the minister knows it is wrong. I believe if the minister felt for a minute this was the right way to do it he would be doing what Darcy McKeough wanted him to do, putting in market value assessment from one end of Ontario to the other. In some strange way I almost wish he would do that because that would ensure 40 years of government would fall in one quick stroke.
Mr. Haggerty: Mr. Speaker, I want to add a few comments on Bill 129, An Act to amend the Assessment Act, and perhaps follow up on some of the matters the member for Oshawa (Mr. Breaugh) mentioned. I was considering his approach to resolving some of the problems.
He talked about his trip to Niagara Falls. I am a member of the Liberal task force travelling around the province reviewing the Assessment Act. I have listened to a number of the issues that concern property owners and taxpayers, problems arising from the assessment increases that may affect a property under section 63 of the Assessment Act. This goes back to 1972 or 1974 when the Duke of Kent, Darcy McKeough, proposed market value assessment. It seems that year after year we bring in the amending bills required to keep the section in force.
8:40 p.m.
Section 63 of the act provides for the return of the assessment rolls for municipal taxation at present levels of assessment, except where a reassessment is introduced by proclamation at full market value or by equalization of assessment based on market value. I suppose it is a request. We are being persuaded by the regional assessment offices that one way to get rid of the number of complaints they get each year as they assess properties is to move in this direction, to bring about the so-called market value assessment.
Some 10 or 15 years ago the then minister responsible for assessment might have used the method that has been carried on by a number of county governments in the past. They used to have what they called revaluation of property. They would catch up with property owners who had built an addition or made improvements to their property, or perhaps they would pick up odds and ends where somebody had improved their property without applying to the council for a building permit.
The former county of Welland had an exceptionally good program for keeping tabs on assessment throughout the county. At that time they used to go out for revaluation of assessment about every four years and they used to pick up quite a bit of assessment. The most important thing about this revaluation method at that time was to see that there was some equalization of assessment of property from one municipality to another.
One of the reasons it worked very well was that they used to appoint a committee to review assessment appeals. Now it is more of an adversarial system. Someone wanting to appeal his assessment has to hire a lawyer. I do not have to tell members the cost of that. Sometimes the appeal process can be quite lengthy.
The old system was perhaps one of the best. I was the chairman of the assessment committee of the county of Welland for a number of years. We listened to all the expertise at the assessment conventions held in Ontario. The main thrust at that time was to bring about some form of complete assessment within the county structure.
The goal of a county assessor in these communities at that time was to be appointed county assessment commissioner. Then he could start to build an empire, one could say. Of course, there would be some objection from those elected to the county council. They did not think this was the right approach to take.
One of the problems at that time, and I suppose it still exists today, was coming forward with a manual that would be accepted across Ontario or within a region. I am afraid one would still have to question the manual being used today. As I understand it, there are still some discrepancies that would prevent uniformity across a region. I hope section 63 will correct that, but I do not think it will.
There is not much difference between section 63 and the assessment practice of 10 or 15 years ago. Today, as I understand it, the legislation brings the assessment to full market value and then introduces a common denominator to bring it to one tenth of the market value. The average assessment in Ontario 10 or 15 years ago was about 33 per cent of the market value based upon the 1941 figure. I do not know what assessors are using today. They may be using the 1960 or the 1980 base for market value. That can change overnight.
I suppose if I was to look at assessment and compare the value of my property, I would sooner go to what I pay for fire insurance. I think that is more closely based on market value assessment than what the assessors come up with. It is in a sense based on replacement value. It is not based on something transitory like interest rates because interest rates may be down today and property may be moving. Of course, when property values are moving up, the assessors are out in the area changing that assessment.
I have not seen at any time in the hearings we have had across Ontario where assessors are using the old method of depreciation. If one had a home for 10, 15 or 20 years, normally in the old assessment practice, a depreciation formula was used. Today that is not there. I am sure it is not there because, based on inflationary trends, if the price goes up on a house then the assessment goes up whether the value is there or not. I do not have to tell members about that.
One of the things we found in the reassessment to market value in the city of Niagara Falls, particularly relating to the industrial and commercial sector -- and it can happen and is happening in other places in Ontario -- is that under section 63 they use the whole number of assessment. In a community there may be $50 million or $60 million of industrial assessment -- I just use that as a round figure -- and when they come in to upgrade the assessment to market value they take that whole number and divide it over the whole area.
For example, the city of Niagara Falls lost some pretty heavy industry. Buildings were torn down through modernization of plants, bringing in new technology that did not require the elaborate buildings spread out over acres and acres. When those buildings came down, the assessment came down for that industry, which appealed it because the buildings were no longer there.
Under section 63, when reassessment comes in for market value that number does not change. It still stays the same, but new industry will have to pick up the loss of the existing buildings on old industrial sites. That is the problem with the current market value assessment. We found the same thing in the city of Windsor. As we look now to new technology, particularly in industry where buildings are becoming smaller and more efficient, we are going to see drastic changes in this area.
The owner of Marineland brought it to our attention that we are now going out and assessing amusement rides. He has one of the largest rides in the area. Under market value assessment, if this is the method this government is now taking, it is going out to assess equipment in amusement parks. He brought out a good point. He said, "I already pay amusement tax every time someone rides that machine or that ride."
If one looks at the new technology that is coming into industries where there are going to be fewer persons working on the assembly line and more robotics, modernized machinery that is going to take the place of man, I wonder if this government is going to assess these new machines and say it is part of the production and they should be assessed accordingly. I do not know if the minister has thought about that or is considering a move in that area, but it is causing some hardships already.
I look at the riding of Erie that I represent and the difficulties in the tourist industry there. We have a number of amusement parks, such as the amusement park at Crystal Beach. Sherkston Beaches and Crystal Beach are in receivership. All of these rides are being taxed by property taxes, which I do not think is right, not when there are other measures or methods through which the government can collect provincial taxes. I suggest the minister is going to have to look at areas where his assessors are going to have to go out and perhaps use some common sense so these things do not occur. It will cause inequity within the system of assessment.
8:50 p.m.
Changes should be made in the Assessment Act. We should go back to the old method of having appointed persons sitting on an appeal tribunal. I think that is the best way it can be handled, instead of referring it to the Ontario Municipal Board with long delays in having persons hear assessment appeals. With the old method in the county of Welland, and I am sure it has worked as well in other places, the persons making a decision or hearing an appeal would take the time to review the property in question and compare it to other properties within its class or vicinity.
This does not happen today. A person making an appeal finds it rather difficult to get sufficient information. Information should be made available when someone is making an appeal. If one stresses a strong point to the assessor on appealing it, the normal practice is that the assessor will make some minor adjustments to it; but the point is, they do not want it to come before an appeal. If the information is there, then they have to justify the decision they made in arriving at that assessment. In many cases they will have some difficulty moving in that direction, to substantiate their claims of how they arrived at that market value assessment.
The present system of assessment is going back to what it was a few years ago. At a market value of 100 per cent, one is assessing it in the Niagara region at about one tenth of the market value. Fifteen years ago it was about 33 per cent of the actual value of that property. If one were to purchase a property, one would just have to make reference to the assessment roll. At that time, 15 or 20 years ago, if they had to pay, say, $3,000, they would know the property was worth about $10,000.
It is rather difficult today to find the true value based upon the assessment because there are other things involved. Perhaps we should be looking at the method used in other countries where residential land is assessed more than the property is.
There are areas that should be looked at. The problems could be overcome if the government would come forward with a good piece of legislation once market value has been reached across Ontario. I understand there are very few municipalities left now. Very shortly, the minister will be bringing down the strong arm and saying it is mandatory across Ontario. That may be the right approach to take, but the government is going to have to have revaluation every four years to keep it up to date.
That should be mandatory; but not to increase taxes, since I can see once the government arrives at a particular plateau in assessment the old con game will eventually come out. A number of us who sat on municipal councils can see it will happen. The government will raise the assessment from 10 per cent to 20 per cent. This is what it has in mind. One mill in a small municipality would raise perhaps $70,000. Under the revised assessment, an increase of one half mill would bring in the same amount of money. There are enough taxes being shifted on to local property owners. It is getting to the stage where it is unbearable.
One of the other areas I find difficult is where a person has purchased a new home and all the services are provided by the developer at no cost to the municipality. Those persons are paying a higher percentage of municipal taxes than persons who have received all their hard-core services through local improvements. There is inequity in this particular area.
We opposed the bill for a number of reasons over the years and we are still in that position, are we not?
Mr. Nixon: Whatever the member says.
Mr. Haggerty: Whatever I say. I suppose we should go back and take a good look at it. We hope the minister will come forward with some new measures to bring equity within the regions on municipal assessment.
In the restructuring of local government that has taken place over the past 10 years, if the government had had a revaluation of assessment before it went into regional government as it has done in the Niagara region, many of these inequities would not be in existence today. Different municipalities in the Niagara region still feel they are being shortchanged in the cost of regional government as it relates to assessment. There is still some question of whether there is equity within the regional municipalities. I suppose that would also apply to the county restructuring.
The minister has a lot of homework to do. It can be done, but it should not be 10 or 15 years in the making.
Mr. Mancini: Mr. Speaker, I have a few short comments on Bill 129. Any time we talk about assessment we hear a lot of concerns and a lot of suggestions from different members on all sides of the House. The reason we hear these concerns and suggestions is the feedback we get from our constituents. It does not take very long to find that constituents in all parts of Ontario are not happy with the way in which the assessment is handled.
My friend the member for Brant-Oxford-Norfolk has said on many occasions, and I agree with him, that the assessment was better left in local hands. We have situations across Ontario in which there is tremendous disparity.
I can recall bringing to the attention of the House a tremendous disparity among different golf courses in Essex county. One golf course was very well taken care of with several expensive buildings paying a good deal less in property tax than one that was not quite so plush that had not as many buildings. If the present minister had been minister at the time, I know he would have resolved this matter for me quickly.
I never had it adequately explained at the time how it was feasible or possible that such a discrepancy could occur within a radius of 25 miles. That poor gentleman made and lost his appeals, so he is still paying an unfair price. Even though the municipality is able to collect that money and spend it for the good work it has to do, it still is an unfair burden on that person.
I want to bring to the minister's attention a subject that was discussed with me by the mayor of Leamington, John Penner.
Mr. Ruston: A good fellow too.
Mr. Mancini: Yes, he is a very good fellow. He is very nonpartisan in his job, if I may say so, unlike some other local municipal officials we have met recently.
Mr. Nixon: I hope none of them is thinking of running against the honourable member.
Mr. Mancini: We never know. These things just kind of come up overnight.
The Acting Speaker (Mr. Robinson): Order.
Mr. Mancini: I thought I was going to be acclaimed, and now somebody wants to throw a wrench in the works. There is no justice in the world. Anyway, the mayor of Leamington was telling me he has concluded, and I believe a good number of other people have as well, that the value of the family home is in no way related to one's ability to pay certain taxes in many cases.
The minister knows as well as I do that people have a right to choose the type of lifestyle they want. Some people spend all their income, or as much of their income as possible, in rebuilding their homes, building new homes and keeping their grounds as best as possible. Other people, who have a different type of lifestyle and a different set of priorities, may want to go to Florida, take a cruise, spend a month in Europe or have a lot of cocktail parties. There is a whole range of things they may want. They may want to buy a small aircraft, a boat or a yacht.
Mr. Nixon: Or go to the races.
Mr. Mancini: Or even go to the races. I have heard of people doing that. I have only been there once myself in the past several years. I went with my colleague the member for Essex North (Mr. Ruston).
Mr. Ruston: I did not win anything, but he did.
Mr. Mancini: My wife made $54 on the exactor.
The Acting Speaker: Now back to the bill.
9 p.m.
Mr. Mancini: The point I am trying to make, and I am sure everybody has got the point, is that there are hundreds of types of lifestyles that an individual family can lead of its own free will.
Does the minister not think we should consider the gradual elimination of the property assessment on the family home and try to collect that money through income tax, which is probably the fairest tax there is? You pay on the basis of the moneys you have earned; therefore, if you wish to have a lifestyle different from that of your neighbour and if you do not want to sink the kind of money into your home that you feel will cramp your lifestyle, then you do not have to. At the same time, you will be giving your fair share to the municipality in order for that municipality to prepare and deliver the services that are necessary. I think that is one area we have to consider.
There is another area I am quite concerned about. The minister knows full well that his government this past year dished out approximately $8 million, I think, in grants under the Ontario neighbourhood improvement program. They are direct grants to municipalities that are improving certain parts of their town, township or city in order that our towns and cities not die on us the way some American cities and towns have let certain parts of their cities go. The cost of rehabilitating these cities now is just impossible, and I commend the government for not allowing it to happen in the province.
The point is that while we agree we should transfer this money to the municipalities, at the same time we penalize the individuals who upgrade their properties. I am not sure what the rate is right now. If you improve your property by a value of more than $3,000 and you are then reassessed -- or is it $1,500? What is the figure?
Hon. Mr. Gregory: I do not know. It is not my ministry.
Mr. Mancini: It is not in his ministry. Anyway, it is a good subject.
Those people are penalized, and the minister is the person who collects the taxes. I am sure many people are discouraged from improving their homes or, once they have improved their homes they are certainly surprised at what has happened to their property value or the so-called value of their property as assessed by his ministry.
That area has concerned me for some time. I continue to wonder why we do not do anything in that area. I wonder why we do not raise the limit or do something to encourage people to improve their homes, which of course would then improve their neighbourhoods, in the same way the government tries to encourage municipalities to improve certain parts of the areas they represent. As I said earlier, the ONIP grants have been great and have helped a lot of municipalities.
I want to close by saying that the market value assessment we keep talking about, which most municipalities do not have, is quite confusing. You get a statement from your own municipality; it states that your property and/or buildings are worth $12,000, $15,000 or $20,000, depending on the numbers they have been using, and then they factor a mill rate into it and you get so many dollars that you have to pay.
I find that quite discriminatory in the areas where new homes have been built. I have written letters to the minister, and I have encouraged other people to write letters to the minister, because once a person moves into a new home or property he finds the assessment in actual dollars is far greater than he had anticipated. Probably he has friends who have built recently or who have remodelled their homes recently. When he tries to compare, he asks, "Gee, why am I paying $400 or $500 more?"
One person in particular with whom I had communications, and who wrote to the minister directly, informed me it was very difficult to get information from the local assessment offices. I was told they have nine different items they factor before they finally assess the value of a home. They include the size, the location, the lot size, the quality of the material in the home, whether there is a fireplace or central air-conditioning and things of that nature. It is almost impossible for people to have this information in advance.
I know it would probably be very difficult to make this information known to all the people, but I do think when a call is made to one of the district assessment offices, in Windsor or wherever, the first things that should be given to an individual person or family are the criteria on how the assessment has been made.
"We have assessed you $28,000 times such a mill rate and therefore you have to pay $2,000 taxes because of the following nine points: yes, you have a fireplace; yes, you have a double-car garage; yes, you have imported marble from Italy; and things of that nature. The neighbour you are talking about does not have" --
Mr. Nixon: Who does that?
Mr. Mancini: I do not know anybody who has done that. I am just using it as an example.
Mr. Nixon: How about chandeliers?
Mr. Mancini: Yes, chandeliers. As I said earlier, people have different lifestyles. For example, I think my mom and dad have been to Florida once in their lives. They put most of the money they made into their home. That is fine; it is a decision they have made.
Mr. Nixon: They spent it all on their son.
Mr. Mancini: They spent it all on my four brothers.
In some ways, people are being unfairly assessed. I think the type of information we send to people who have complained about their assessment is not quite adequate. I know from his reply that the minister is concerned about it, and I think he should send directives to all his offices on how to educate people in short order about their assessments once they call the offices.
I am not sure whether this is the minister's policy, but it is very difficult to find out from the assessment offices why a property was assessed at the value it was. We should try to clear up that area. There is a big cloud of secrecy surrounding assessment, or people believe there is. It is very difficult to find out why the minister is doing the things he does.
With these few short comments, I will allow the minister to respond if he wants that opportunity.
Hon. Mr. Gregory: Mr. Speaker, I thank the honourable members for taking part in this debate and for making such supportive comments about the section 63 program.
Most specially, I want to tell the member for Brant-Oxford-Norfolk how nice it was to hear his speech again, word for word. I think there was a change in inflection on certain parts. That is probably because he has changed his interests and gives a greater accent to those things that interest him today. As I recall, at least the way it came across the chamber, his interests were not quite the same this year as they were last year, but I understand the changing positions on that side of the House, the winds of change.
9:10 p.m.
The member for Brant-Oxford-Norfolk opened by saying the section 63 program in market-value-based assessment is a very unpopular program, but I can tell him that 70 per cent of the municipalities have opted for it.
Mr. Nixon: What about the ratepayers?
Hon. Mr. Gregory: The elected officials, who are elected by those ratepayers, opted for it. If my friend could get 70 per cent of the people behind him, he would be over here. But I doubt that is ever going to happen.
Mr. Nixon: It is just a matter of time.
Hon. Mr. Gregory: He will keep working on it, I know.
He is quite correct when he speaks about farm lands and the possibly unfair assessment -- I do not agree that it is -- but they are reimbursed at 60 per cent, which I think came to the member as an afterthought and he realized he was perhaps not quite accurate in describing the heavy burden that was being put on farmers. They do receive a 60 per cent rebate, which is quite healthy.
I would like to point out, in response to something the member for Essex South (Mr. Mancini) said about opposing the bill, that he is quite right. If members opposite wish to oppose the bill, then do so by all means, but they have to bear in mind that if this bill does not pass by, I believe the date is December 1, then everything in Ontario goes to market value. That is the reason for the bill, and I think the member knows it. We are not trying to change anything; we are possibly supporting his position in that he does not favour market value and we are trying to prevent it happening in the communities he is concerned about.
To the member for Brant-Oxford-Norfolk (Mr. Nixon), I say that I hope he gets his rebate cheque very soon from the Minister of Agriculture and Food (Mr. Timbrell). As a matter of fact, I look forward to paying him a property tax assistance grant or a retail sales tax grant in one or two years. I will be very happy to do that.
Mr. Nixon: A senior citizen's grant?
Hon. Mr. Gregory: Yes.
The member mentioned the Liberal task force that was travelling around Ontario and investigating assessment. I too look forward to its results. I am becoming a little sceptical about whether they will come, if one can believe what one reads in the newspapers. I generally do not read the newspapers, but I did read something that puzzled me a bit; it quoted Mr. Michael Brooks, a spokesman at Liberal headquarters.
"Results so far have been varied. People in some communities have called for the implementation of market value assessment. Others have urged its abolition, he said. 'It is overwhelming to me right now that we have to write a report,' Mr. Brooks commented."
I can understand his dilemma. What he is saying is that he found some people like it and some people do not. On the basis of that, I suspect they are going to have a report taking the mean average and saying the government is right in doing what it is doing.
Mr. Haggerty: We are not in Ottawa; we do not muzzle our staff.
Hon. Mr. Gregory: I am not saying my friends opposite muzzle their staff, but if what he says reflects the thoughts of the task force, then they are in big trouble.
I want to bring something to the attention of the member for Oshawa. He mentioned the display -- the travelling roadshow, as he called it -- that is travelling around Ontario, telling about what he said was the assessment revolution. It is called The Assessment Evolution. There is a slight difference. What he said is about as accurate as his summation about my appearance in the Sun column yesterday. I am going to send this report across to him so he will know what it is about. Perhaps a page will take this over to the member who is laughing in embarrassment.
Mr. Piché: The lone member right there.
Mr. Breaugh: We are just trying to even up the odds.
Mr. Piché: It must be lonesome up there. What is happening?
Mr. Speaker: Order.
Mr. Piché: How come he is all by himself? What is happening to that party?
Hon. Mr. Gregory: My colleague should not help me.
Mr. Breaugh: Mr. Speaker, on a point of privilege: The member for Cochrane North (Mr. Piché) has noted that I am playing with a handicap tonight. Whenever we play the duffers, we give them a handicap. We figure we are just evening up the odds tonight, that is all.
Hon. Mr. Gregory: I would like to point out something else to the member for Oshawa that he has obviously missed. The section 63 program does not raise more money; all it does is equalize the assessments within a class. The amount of assessment and the amount of tax from that particular class remain the same. There is a misunderstanding there, and I hope it is clarified now.
He also said that nobody likes it; once they do it, they do not do it again. That is not a fact. We have had 27 repeats, and 13 are slated for repeat this year. Obviously, there are 40 municipalities that want it done again. We are doing approximately 40 a year at the request of municipal councils.
We are getting away from the act a little, but the question was asked -- I repeated this once today, but I will do it again -- concerning the condominium situation and the judgement of the court. That judgement was on a point of law. Many assessments -- I do not know how many; perhaps about 60,000 -- are slated for appeal before the Ontario Municipal Board. At this time there is no way of knowing the extent of any shortfall, because some will not be accepted on the basis that they have been improperly filed, some will be granted and the assessment will be reduced, others will stay the same and some will go down. There is no way of putting a handle on the amount of shortfall.
The member for Etobicoke (Mr. Philip) volunteered the amount of $5 million as the shortfall in Mississauga. I do not know what kind of slide rule he has or how he came up with that figure, but it is strictly pulled out of the air. I suspect he got it from a newspaper: which strikes me as rather odd; taking a figure out of a newspaper without any basis for it. No one has that figure now. I mentioned to him and others that if there is a distinct shortfall there will be room for discussion, and I would certainly be a part of that. We have to wait until the opera is over before we start throwing figures around like that.
The member for Oshawa mentioned that the councils showed a certain amount of irresponsibility in going for section 63. They showed responsibility in passing the resolution asking for an impact study and further responsibility, facing election or not, in asking that it be implemented. I am standing behind it. A perfect example of that occurred in Niagara Falls, where one member of council who opposed section 63 was defeated when he ran for mayor. So that does not bear out the member's argument.
Newcastle was used as an example. In Newcastle there was a total of 970 appeals, of which 162 were on properties where the assessment had fallen as a result of reassessment. Somebody was getting somebody worked up into a sweat; they did not know whether their assessments had gone up, but they appealed anyway. As a result of that, we have had a loss of 0.617 per cent. In doing section 63, we built into it a two per cent cushion. They are well below that cushion. There has been no loss of income for the community.
Thirty of the remaining cases have been appealed to the Ontario Municipal Board and will be heard next year. The results have hardly --
Mr. Haggerty: Next year?
Hon. Mr. Gregory: After January 1; that is next year.
Mr. Haggerty: That is a year away.
Hon. Mr. Gregory: It could also be two months away, but not to a Liberal, I guess.
Getting to the member for Erie (Mr. Haggerty), I do not mean to sound smug, but the member has not got a full understanding of what section 63 does. For example, he mentioned that some properties in Niagara Falls were penalized because other properties had been torn down or whatever. The property owners whose taxes went up have probably been having a tax holiday for years. Section 63 has redistributed those taxes so everybody is paying a fair share. The only ones we hear from are those whose taxes go up. I have been hearing from them.
9:20 p.m.
We discussed Marineland and Game Farm. I have heard from Mr. Holer at Marineland quite often, and we have been discussing it with them. We are looking for a solution to that problem. It has to do with the type of assessment on a roller-coaster, I think it was, being taxed as machinery or what have you. We are looking to solve that problem.
Mr. Haggerty: It is double taxation
Hon. Mr. Gregory: No, I do not believe it is double taxation at all.
Mr. Haggerty: The government does not do it to anybody else.
Hon. Mr. Gregory: Not everybody has a roller-coaster in his backyard.
I do not think there was anything else I wanted to say to the member for Erie. I did want to comment on the suggestion of the member for Essex South of eliminating property tax on the family home and possibly substituting an income tax. I think he is getting into a municipal tax and, of course, I have heard this before. I do not think at this point very much time is being given to studying that proposal.
Mr. Speaker: Mr. Gregory has moved second reading of Bill 129.
All those in favour will please say "aye."
All those opposed will please say "nay."
In my opinion the ayes have it.
Motion agreed to.
Bill ordered for third reading.
INCOME TAX AMENDMENT ACT
Hon. Mr. Gregory moved second reading of Bill 131, An Act to amend the Income Tax Act.
Hon. Mr. Gregory: Mr. Speaker, this bill will clarify Ontario's treatment of two recently enacted federal income tax credits. It will also clarify the application of the forward-averaging mechanism as well as change some of the administrative provisions of the act.
The federal Income Tax Act was amended earlier this year to introduce two new income tax credits in the form of share purchase and scientific research tax credits. These credits were first announced pursuant to the federal budget of April 19, 1983, and are applicable to the 1982 and subsequent taxation years. Taxpayers claiming these credits can reduce their federal tax payable.
Since Ontario personal income tax is calculated as a percentage of the federal tax payable, an amendment in this bill will provide that the Ontario tax is to be calculated as a percentage of the federal tax payable before any deduction in respect of the share purchase tax credit and after any deduction in respect of the scientific research tax credit.
The federal Income Tax Act was also amended last year to provide for a new system of forward averaging of income. Forward averaging replaced the income averaging annuity contracts and the former system of general averaging. Under the new rules an individual may elect to pay a refundable tax at his maximum marginal rate on qualifying income. All or part of such money may be brought into income in any subsequent taxation year, at which time it may be subject to tax at a lower rate and a credit will be given in respect of the tax previously paid.
Amendments in this bill will provide that any forward averaging tax or tax credit will be excluded from the determination of the amount subject to the social services maintenance tax -- for example, temporary surcharge -- the foreign tax credit and other Ontario tax credits. Other amendments in this bill will bring the administrative provisions of the Income Tax Act into line with corresponding provisions in the federal Income Tax Act.
Ontario imposes its own personal income tax, but this tax is collected and administered on behalf of the province by the federal government. Under the terms of the income tax collection agreement, Ontario is obligated to have the same or similar rules as the federal government for collecting and administering its personal income tax. The amendments in this bill will preserve the uniformity of the administrative provisions of the Ontario and federal income tax acts. None of the proposed changes involves any major change in the administration of Ontario's Income Tax Act.
Mr. Nixon: Mr. Speaker, as the minister was speaking I was thinking of all the factors that have kept the Progressive Conservative Party in power these 41 years: that is, cosseting and nursing the third party to split the opposition, paying it grants for a handful of members as if it had 30 in the House, things like that. It seems a good time to make that charge when there is only one measly Socialist in the whole House.
Mr. Samis: One and a half.
Mr. Nixon: One of them is considering conversion. So although he may bark away at me a little bit, there is only one of them to defend the cause of democratic socialism or social democratism or whatever is their moral principle.
An even bigger thing that has kept the Tories sitting pretty all this time has been the fact that another government raises most of their taxes. The bill we are now dealing with is the vehicle by which the government of Ontario has shifted the tax responsibility to the government of Canada for these many years. I am convinced this has had an unwarranted supportive political effect on the Tories in this province.
One of the basic tenets of democracy is that the government that hands out the goodies -- such as the 60 per cent tax rebates to farmers, the Jim Snow parkway, the Jim Allan bridge, the William G. Davis secondary school and the John Robarts library -- should raise the taxes. Those people who distribute all that largess to the grateful taxpayers should have the responsibility to levy the taxes that pay the shot.
The Treasurer (Mr. Grossman) is out on another mission tonight, no doubt distributing free trips to his northern parishioners or whatever happens to strike his fancy. But it is interesting to see that he has been struggling to explain why the deficit of the province is so high that we are in danger of losing our triple-A credit rating. It is almost incomprehensible that this province has had this continuing difficulty when this year alone $7 billion comes firehosing into the Treasury from the federal government. They collect the income tax we levy in this Legislature, with a tiny little amendment each year.
There are those who say we carry the responsibility for the provincial income tax by passing the legislation through this chamber and therefore it is a provincial tax. But the minister acknowledged the fact himself, in his brief opening remarks, when he quoted from page 3 of the compendium he was good enough to provide -- dated 1984 in this instance. I will quote from it as well. It says, "Under the terms of the Ontario-Canada income tax collection agreement, Ontario is required to have the same rules as the federal government for collecting and administering personal income tax."
Suppose we in our wisdom did what appears to be something we should do and decided the Tory friends of the government had to pay at least a 20 per cent tax on income. Most of them are in the tax bracket of $60,000 to $100,000 or $500,000 taxable income and many of them pay no tax at all. Suppose we were to decide in this House that we were going to establish a minimum limit and people with incomes over $50,000 had to pay at least a 20 per cent tax. We would not be permitted to do this under our tax agreement.
This agreement goes on. I quote from page 3, "The proposed amendments to Ontario's Income Tax Act are in accordance with the federal guidelines which were issued in October 1983." We are more than a year late on those guidelines, but it is a euphemism to call them guidelines. We must enact precisely the same amendments that are enacted by the Parliament of Canada or the agreement is broken. Then we would be left to collect our own tax, and the minister knows he would not choose to do that.
9:30 p.m.
One of his predecessors -- I do not think it was the Minister of Revenue (Mr. Gregory), but one of the Treasurers -- started shaking his chain one day. He said if the government of Canada did not do what Ontario told it to do, we would punish it by breaking this tax agreement and starting to collect our own income tax. Of course, that did not last long.
He farmed it out to a couple of his friends who are learned in the law. They were to look into the possibility and very soon they sent him a report that said we should continue with the agreement with the government of Canada because it was obviously extremely advantageous to Ontario.
I want to pursue this just a little from the compendium. On page 8, it states, "The powers of the Minister of Revenue," that is our good friend opposite who is sitting alone, "are exercised by the Minister of National Revenue, by the Deputy Minister of National Revenue and by those officials of Revenue Canada to whom corresponding powers have been delegated under the federal Income Tax Act."
It simply says that by decision of the government of Ontario, our Minister of Revenue is stripped of his powers. The powers he has under this act are not exercised by him but by somebody up in Ottawa, over whom we have no control whatever and who acts completely independently of this House.
This goes on and I quote again from page 8: "Actions, suits and other legal proceedings required to be taken under the Ontario act are taken by the federal government on behalf of the province." I simply put this before members to bolster my case that the provincial Income Tax Act is just a joke.
Under the former Constitution of Canada, the British North America Act, it was decided by the Fathers of Confederation that while the government of Canada could levy any kind of tax it could get through Parliament and which could be sustained by the courts, the provinces could levy only direct taxes. That meant income tax was in our field and for many years the income tax was levied and collected by the administration of Ontario. It was quite distinct and independent from the government of Canada.
It was not until the sainted William Lyon Mackenzie King, in his earnest efforts to prosecute the Second World War and win victory for the allies and other good guys, decided that he would ask the various provinces to enter into an agreement for the channelling of revenues from income tax to the government of Canada that we had a union of these two taxes.
Obviously it was necessary for the prosecution of the war that income tax, the major revenue producer, be administered at the federal level. As a matter of fact the government of Canada rented the right to collect these taxes and it paid us a rent, which was an amount agreed to by the government of the day.
Now that agreement is so many points of the federal tax payable and it is quite easy to adjust. The government of Ontario has not done too much with it lately, except for one thing. It has left the tax return alone, emphasizing it is the rotten government in Ottawa that is levying these taxes. When we write out our income tax cheques or it is deducted at source -- and a very large deduction it is in your case, Mr. Speaker -- that money goes to Ottawa and there is a tendency for us to say, "Those people in Ottawa," and by the way that connotation has changed slightly in the past few weeks, "those bums in Ottawa are now taking our money in large amounts and we will see what they are doing with it."
In fact it is returned by agreement to Ontario, this year in the amount of about $7 billion. What this government does with the income tax form is insert a nice purple page, a nice different colour that catches the eye of the person filling out the tax return, that says, "Province of Ontario Tax Credits" in big words.
It says in effect, "This means we are giving money back to you. You send the money to Ottawa. It is bad, but we are giving you money to help you pay your taxes. To you old folks we are giving a special deduction. To any of you people who are paying sales tax we give a special tax credit. To any of you intelligent people who write out a cheque to your local political candidate, preferably Progressive Conservative, we give a very rich return indeed, far richer than we give to those people who support charities or the church."
I want to emphasize the point that we have this deal with the government of Canada whereby they carry all the ashcans of the tax collector. They gather to themselves all the opprobrium of a government that levies taxes at the very highest rate of revenue. Then these smart politicians, who are so experienced in the chicanery of modern political practice, insert a piece of paper -- they do not say, 'We are not doing this," they leave that blank -- and say: 'We are giving you back money. You fill in the figures and you sign here and then you can deduct that from the cheque you would otherwise send to Ottawa."
I feel this practice has dislocated political realities in this province almost as much as the cosseting of the New Democratic Party by the government, which is another stated policy. Those two things, as far as I can see, are the only reasons the Liberals have not been in power in this province for many years.
There probably was a time when the minister's predecessor was at least thinking, "It would be nice if we grew up around here and had something to do with the control of the tax that is our largest revenue producer." I have already suggested this returns something in the order of $7 billion -- actually quite a bit more than that -- to Ontario. At the same time, the government of Canada, through a practice that was established under the former administration there, a very generous practice indeed, supports many of our provincial programs in education and the provision of health and welfare services and many others.
All that money added together is well in excess of $4 billion. They collect $7 billion in income tax. Add to it $4 billion to $5 billion in special programs and they are returning to Ontario this year alone close to $11 billion out of our budget of about $27 billion. In other words, our rich uncle in Ottawa is giving us more than 40 per cent of the total revenue of Ontario.
It is the worst kind of ingratitude to hear the Treasurer as he goes about his political business castigating the former government in Ottawa for not giving us more, for not being more generous, for not recognizing that Ontario deserves a larger share in the tax agreement. It really is incredible, particularly, that thinking citizens in Ontario continue to listen to that claptrap and continue, God help me, to vote Tory.
They have done that for the last time, as you and I well know, Mr. Speaker, and before another year rolls around, frankly I hope the honourable minister is one of the handful who returns to sit on this side, because it would be good for his soul and the souls of a few of his buddies to come back here and sit in opposition.
Politicians can never hope to enter heaven unless they have had an opportunity to serve in opposition. I hesitate to think what may happen to some of these Tories if they have not had such an opportunity when they go to the Pearly Gates for the judgement. The question is going to be: "Has your political career been fulfilled? Has it been complete?" The answer will be a resounding no, unless they find themselves in the seats of opposition.
On the other hand, if there is any justice at all, the colleagues I am delighted to be here with tonight in such large numbers, who have worked so diligently over these 41 years offering alternatives in concepts and principles, are prepared to serve the people of the province. We will make it well known to the citizens of the province who have so long been misled -- let me say misguided; I know you like that word better, Mr. Speaker -- by various Ministers of Revenue that we in Ontario have benefited from a tax agreement which we are now adjusting slightly for another year and which has been so much in the best interests of Ontario.
I do not intend to vote against the bill, but I wanted to be sure the Minister of Revenue knew my views in this important matter.
9:40 p.m.
Mr. Breaugh: Mr. Speaker, the member for Brant-Oxford-Norfolk (Mr. Nixon) is always entertaining. Most members like to hear him speak. I have heard him give that speech about five times now. Oddly enough, he is not getting any better at it. Maybe that is why there have been 40 years of failure around his cause. Perhaps that is one of the reasons why there is not a Liberal government anywhere in this nation any more. I am not even sure there is a county council left that is dominated by the Liberal Party.
I appreciate that he has tried in his own inept way to make the traditional Liberal argument, railing against the bill for 20 minutes and then announcing he is going to support it.
Mr. Nixon: If there were more than two New Democrats here, we could join together and throw out the government.
Mr. Breaugh: I do not think we could join together with the Liberal Party on any matter.
Let me say at the outset we will oppose the bill. In essence, it does serve a useful purpose to have this bill before us. One of the little exercises I go through regularly when I meet with citizens, school groups and trade union groups, is to ask them a simple question. Is there an Ontario income tax? It is really quite frightening to notice how few members of the public at large know for sure whether there is or is not a provincial income tax.
When I ask that question, the most common reaction I get is everybody tentatively says no. I believe the general public has the perception there is no such animal as a provincial income tax. They are not quite sure because they know most levels of government tax them whenever they can. There is a small amount of realization that in some way Ontario is involved in the collection of income tax but people are not sure how. The more common thought is that certain exemptions and tax credits are put together and sponsored by Ontario.
It is interesting -- fascinating, in fact -- that a government that is so into media work, public relations, advertising, all of that, has such a low profile with respect to being a participant in the collection of income taxes. I do not want to encourage the minister to run out and do a big public awareness program around the fact there is a provincial income tax, but it is not by accident that its profile is so low in that regard.
It seems to me the compendium provides an excellent opportunity to discuss fairness in taxation. While we cannot exactly hold the government on full hook now for a lot of the things which are being talked about in this bill, I think it is fair to talk about some of the matters covered in the compendium that are listed in this act and are very much a part of the principle of the bill.
The first thing I want to mention is this part. I think this addresses the question of whether income taxes are paid fairly by all citizens, whether they are understood by all citizens, and whether all citizens have an equal advantage on their income tax provisions.
Here is the explanation for this one amendment in subsection 2(2) of the bill. It has the purpose of "allowing the federal scientific research tax credit to reduce, in effect, Ontario tax payable, while not allowing the federal share purchase tax credit to do so."
One really has to think about that for a minute. One has to understand who is doing it to whom now. When one goes a little further into the background, one should pause for a moment and think about this one as well:
"The share purchase tax credit was introduced to enable a corporation to 'flow out' its federal investment tax credit to purchasers of qualifying new equity shares of the corporation. In effect, the investment tax credit of a corporation earned after April 19, 1983, becomes available to these shareholders in the form of a share purchase tax credit. This credit is then deductible by the shareholders in calculating their liability for federal tax."
I simply want to pause for a moment and let the members savour that. Most of the people I represent do not have an opportunity to take advantage of this kind of income tax provision. Most of the people I represent have income tax deducted at source. Before they get their paycheques, governments get their money.
It is interesting to note that incorporated in this bill tonight is the principle of taxation that is probably most prevalent in Canada. The vast majority of Canadian citizens do not get to read these kinds of weasel words. They just pay income tax and they pay it before they are able to cash their own paycheques. The income tax laws in this country are full of such weasel words, which allow corporations, for example, to flow things out. Nowhere does it ever talk about their escaping paying their fair share of income tax; it is always couched in weasel words. Always they are allowed to flow out, always they are allowed to avoid, always they are allowed to be exempt.
It reminds one, as one reads through this kind of bill, that the income tax provisions themselves and the whole concept of income tax are supposedly temporary. It has been around for a while, long enough that most people would accept that it is no longer a temporary tax, but that is the concept. It was introduced in this country as something temporary, something we needed for a war effort. It is still in place today.
Let me just go on to a couple of other concepts that are in this bill, which are part of the principle here. It goes on to lay out at some length in the background material an admission that I do not think I have ever seen in print by a government publication before.
It says in not very bold print here, "Ontario imposes its own income tax." Frankly, I do not remember ever seeing the government of Ontario admit this in writing before. It certainly does not advertise this fact the way it advertises the property tax credit, the senior citizens' credit and all of those kinds of programs. It is an admission that Ontario does have an income tax and does participate in this collection process. It simply has an extremely low visibility factor, so to speak.
Let me just go on to a couple of other areas that are included in this because I think it is interesting to get a grasp of it. It gives one explanation of section 1 of the bill: "It ensures that the temporary surcharge for the 1983 and 1984 taxation years will not be imposed on any forward-averaging tax, nor will it be reduced as a result of any forward-averaging tax credit pursuant to the provision in the federal act providing for the forward averaging of incomes."
I would dare say that pretty close to 95 per cent of my constituents could not make head or tail of that section of the act. The one thing they might catch on to is that this Income Tax Act federally is supposedly a temporary thing and that provincially another temporary surcharge has been added to it. I think they might be interested in knowing -- and I would certainly be anxious to hear the minister's comments on it -- just how long, O Lord, this temporary surcharge is going to be around, because it is now getting embedded, as they say, in the practice of taxation in this country.
Let me just quote one or two other little parts here. Here is an amendment being put to section 6 of the bill. According to the backgrounder here: "It provides that no interest is payable in respect of an underpayment of Ontario tax resulting from an adjustment of foreign income tax for 90 days after the first notification of foreign tax adjustment."
9:50 p.m.
All of this is classic Canadian tax law these days, written in a jargon that few people can understand and even fewer, I suppose, will ever get to see. I do not suppose I am going to get a lot of requests in my constituency office for copies of this compendium. I think they will probably be held in rather short supply. Most Canadians, most Ontario residents, do not get a chance to look at this kind of stuff, and most people who do have an opportunity to exercise some of those provisions will do so only with the assistance of accountants, tax lawyers and people like that.
That is the way the taxation process in this country has arisen. It is most unfair and most complicated. It is not really written in either one of our official languages but in the language of the bureaucrat, the lawyer and the accountant.
I will point out another thing that caught my eye on the way through. Section 8 of the backgrounder says: "This enables the minister to acquire and dispose of any interest in a taxpayer's property that he is given a right to acquire in legal proceedings under a court order or through sale or redemption, and issue the equivalent of a garnishment order where moneys have been seized from a taxpayer by the police in the course of administering or enforcing the Criminal Code of Canada."
It struck me that is pretty clear in contrast to the other sections where they are talking about exemptions, flowing out and this, that and the other thing. When it comes to the point in this legislation when the government is going to nail somebody, it is pretty clear. Even I can understand it. I bet most of my constituents would understand that there is a lot of power involved there. There is an ability to do something, even outside the court system, which is unusual. When we get right down to it, when these folks want to grab someone, they sure know how to do it. The tax laws of Canada contain the provisions that allow them to do it.
Here is another part I thought was interesting. Section 9 supposedly "renders directors of corporations personally liable" -- this part I understand, this sounds tough -- "where the directors have not exercised reasonable care and diligence" -- lo and behold come the weasel words again: what is "reasonable care and diligence"? -- "for withholding tax obligations where the corporation failed to deduct or withhold or remit the required tax."
Section 10 "permits the destruction of a taxpayer's books and records without the prior consent of the minister if permission for such destruction has been permitted for federal income tax purposes." I am sure the minister would say: "That is bringing this into line. It is conformity. It is evening out the process. We are not really do anything here. We are just mirroring what the federal government is doing."
In summary, that is my objection. The government is mirroring what the federal government has done for some time. I anticipate, when Mr. Wilson begins to get a little more formal about his budgetary policies and gets into the striking of a budget next spring, we will see once again that the Income Tax Act in this country and the practices of Revenue Canada and of the Ministry of Revenue in Ontario will be stacked against ordinary Canadians.
It is quite remarkable. The poor in this country do not pay taxes for obvious reasons. They do not pay income tax for an obvious reason. They do not have any money nor do they have any income. More and more of them live below the poverty line and are having some difficulty surviving.
I have to correct myself because I said they do not pay taxes. That is wrong. We all know every time they buy a candy bar, a piece of clothing or a magazine, they do pay taxes. Every time they buy a litre of gasoline, or it may even be legal to buy a gallon of gasoline these days, they pay taxes. They do not know it, but they pay them.
This government and the federal government have become remarkably adept at taxing people without telling them there is any taxation at work. They do that every day. The person who sells gum in a store is a tax collector for Ontario. The gas jockeys at any gas station are tax collectors. They never wanted to be tax collectors.
Most Canadians do not recognize they are tax collectors, but this minister does and the minister in Ottawa understands it very well. They have become remarkably adept at concealing taxation, simply by calling it by a different name, simply by having someone who is not recognized as an agent of the Ministry of Revenue do the collecting for them.
Canadians are having a little difficulty establishing who is grabbing taxes. If one said to most Canadians, "You probably pay taxes several times a day," they would say: "No, I do not. I pay income tax once a year when I fill out a form and they send me back some of my money."
A lot of people are beginning to have a little light twinkle on in their heads now. They ask: "What did they do with that money all year long? They took it out of my paycheque all last year and held on to it and I have to wait a full year to get my refund. What did they do with that money for the full year"?
As we read the provisions in this act, we see that government in Canada pretty regularly protects itself against the notion that maybe, just maybe, it ought to pay people a little bit of a refund on money held in its possession for the better part of a year before they get it back. It just may be that one of these days people in this country will become a little more fervent about the idea that when the government collects taxes, it ought to tell people it is the one doing that. They should be up front and honest about it. It ought to provide ordinary Canadians with some fairness. That is all anybody is ever asking for.
The rich do not pay taxes in this country because of this legislation, precisely because of it. It is legislation which needs to be interpreted by lawyers and accountants. Of course, to get that kind of interpretation, one has to have an income which allows one to have access to those folks. So the rich will use provisions such as are contained in this particular act to avoid the paying of income tax.
As members who have followed the taxation process in North America may know, south of the border people are talking about things like flat taxes. It would be my judgement that maybe they are getting too simplified in that kind of a notion. I think the truth of it is that they are reacting to the idea that income tax provision in this country -- and the United States is no different from us -- are written in such a way as to be unintelligible to the vast majority of the population. They do not stand a chance unless they have their personal accountant or their personal tax lawyer to interpret the laws for them. I believe that is wrong.
Most people do not have as much awareness as they probably should of the amount of taxation they pay. I believe that to be wrong. I believe most people need to be more aware that this Ontario government has its hands in their paycheques before they even have an opportunity to cash them. I believe that to be wrong.
Over the centuries there have been a lot of rather emotional and lengthy arguments about taxation without representation and about people at one level of government taxing a society that is really quite helpless. It is not too far a stretch to apply the same interpretation of history to this bill before the Legislature tonight.
It is true that one can say it is public knowledge. This is a public bill printed in the provincial Minister of Revenue's name and it is being debated here tonight. But it would be refreshing to have the minister do an awareness program, as he does on many other programs run by that same ministry, so that perhaps some day people in Ontario might be aware that the Minister of Revenue for Ontario collects income tax indirectly -- perhaps he does not do it himself, but he is a participant in that process -- and that there is an income tax set upon one by Ontario.
It has been my experience that there are not many people in this province who really do have a full understanding of that fact. Second, it would be refreshing if we saw provisions written into an income tax act that an ordinary Canadian could look at and understand. That would be a major step forward.
For those reasons and a great many others I will not go into now, we intend to oppose the bill. We know the minister will probably get up and do his little song and dance about how we misinterpreted this and we did not understand that and have made yet another error. That is fine. He is quite free to do that, but I want to say that in my view, the whole taxation process in this country is quite wrong.
It is done in a way which I frankly believe to be less than honest. It has continued long enough for me to say it is not done by accident. It is not an accident that the awareness of a provincial income tax is so low. It is not an accident that income tax provisions are written in a language that few people have a chance to even understand, let alone use.
10 p.m.
I believe that to be quite wrong. I believe there is a need for a revision of the principle of income tax in this country and the way in which taxation measures such as this one are put together. That time has come.
I use this opportunity to oppose this bill and intend to use any other opportunity to do the same thing when there is similar taxation legislation. They can call it housekeeping legislation or that which simply brings something into conformity with existing practices, policies and laws of the federal government. I do not care what they call it. Provide me with an opportunity, and I intend to speak against this type of taxation and to do so with amazing regularity.
Mr. Bradley: Mr. Speaker, I have a brief intervention to make in this debate on a bill that deals with income tax in Ontario. It arises because of an experience I had in the standing committee on public accounts with a gentleman who is now very much involved with Ontario Hydro. I am referring to Tom Campbell.
I recall vividly the day there was a plot to do some fed-bashing at the public accounts committee. The member for St. David (Mrs. Scrivener), who was her usual nonpartisan self that day in committee, had arranged to have the Deputy Minister of Finance brought in. He was to talk about payments made to the provinces by the federal government. We got into a discussion of income tax. Naturally, he had all the facts and figures to bash the feds. I somehow think we are not going to see a repeat of that performance in the public accounts committee because the political stripe of the government in Ottawa has changed.
I want to touch briefly on the fact, as my House leader has aptly pointed out, that Ontario does not have to carry the albatross of an income tax on its back. This is simply because most people in this country, and certainly in this province, think all taxes on income are levied by the federal government.
It used to annoy me no end, although it may not annoy me quite so often with the new government in Ottawa, to have people say -- these would be people one would have thought were informed -- "I just sent my income tax to Trudeau today." They would say it as though all the money were going into the Prime Minister's own pocket or to the federal government to be expended on various endeavours at the federal level.
Provincially, we know that is not the case. We have a very large take, as the payments come back to the province. We benefit immensely from the income tax through the portion allocated to the provincial government. It is nice to see a bill of this kind come forward if only for the fact that it points out, as the member for Oshawa (Mr. Breaugh) explained -- although he did so in a sparse way -- that we do have a provincial income tax. It points out that the people across the floor do extract money from the taxpayers of Ontario. The taxpayers make those payments because they happen to have work or generate some revenue for themselves in other ways.
I well recall that the Treasurer (Mr. Grossman) threatened he might institute a provincial income tax. All of us knew that was a hollow threat, however, because this government would have to accept responsibility for raising taxes. I will not be repetitive and go into the details the Liberal House leader did in such an excellent way, explaining how this government is first in line to take the credit and last in line to take the responsibility. That is probably one of the reasons it has been in power in this province for 41 years.
The federal government, even if it is a Progressive Conservative government, is not solely responsible for collecting income taxes. This government benefits immensely from them and should be accepting some of the responsibility for income taxes levied and collected.
It is also noted by some in this House that in keeping with the practice of accepting all the credit and not much of the responsibility or the adverse publicity over taxation, we have some attractive provincial income tax credits which those of us on this side of the House would agree with. Indeed, on many occasions we called for them to be implemented. It is interesting to see that the provincial government once again gets the credit for those tax credits while not accepting the same kind of credit for the taxes that are levied.
The bringing forward of this bill this evening in the House also gives us an opportunity to touch on something that was a rather major issue in the federal election campaign. Although it did not necessarily influence the outcome greatly, it was talked about a lot during the federal campaign. My friend the former member for Rainy River raised this matter in the House some time ago.
Mr. Samis: What is his address?
Mr. Bradley: His address is the same as that of Michael Cassidy.
Mr. Samis: No, it is not.
Mr. Bradley: Oh no, it is not now. He found a heaven. Michael Cassidy found another heaven, it seems to me. But I do not want to be sidetracked. The Speaker wants me to stay on the bill, and the Minister of Revenue is interested only in my remarks on the bill.
I remember him asking a question in this House about when this government was going to go about ensuring we have a minimum income tax for wealthier people in Ontario. Certainly the leaders of the three parties nationally indicated some interest in a minimum income tax for rich people in this country who are not paying taxes for some reason or other, who are able to manipulate the tax system in such a way as not to pay any taxes.
We understand that on occasion there are exemptions or special tax breaks for those who governments feel are making payments or investments in certain areas that are beneficial to the federal government or the province. We understand that can happen.
There was one issue that struck a responsive chord in the electorate of this country, and that was ensuring all people, regardless of their income and particularly those in the high income brackets, paid some kind of income tax. We heard figures of from 11 per cent to 20 per cent of income going for income tax and that these people would not be able to dodge their fair responsibility.
Unfortunately, this bill does not provide for that; so it is incumbent upon us in the provincial Legislature to encourage our Minister of Revenue, who would have a great deal of influence now with the Minister of National Revenue, to implement what was talked about during the campaign, even though that would be one of the few items brought to fruition by the federal government after being promised. It appears to be doing all those things that were not promised, and some of them actually end up being broken promises in terms of what is being implemented.
I hope the Minister of Revenue will use his prestige and good offices to attempt to persuade his federal colleague to implement a fair tax system which would call for a minimum income on wealthier people in this province so they can pay their fair share. Nobody is asking that they be bled to death; we are simply asking that they make their contribution as others in our society do.
I promised I would not be lengthy on this.
[Applause]
Mr. Bradley: I am encouraged when I hear the applause, but I will not rise to that particular debate, except to conclude in some agreement with the member for Oshawa. He points out aptly that the Income Tax Act is almost impossible to read for those of us who are lay people, not lawyers or tax lawyers, and this is true whether we are dealing with federal legislation or provincial legislation. Some day it would be nice if we could find ways of enacting legislative rules and regulations the average individual could understand.
10:10 p.m.
When I fill out my income tax form, I pity those who have nothing to do with government or with filling out forms who are attempting to fill out an income tax form. I have a relatively simple form because I do not have a lot of money -- I simply have my income from here to figure out; so there is not a big problem -- but even I have a difficult time figuring out the income tax form and putting down the appropriate numbers as the tears are falling on the page.
I simply want to touch on some of the items my House leader has touched on because they are worthy of emphasis. They were recalled to my mind by the visit to the public accounts committee by Tom Campbell, who seemed quite prepared to provide all the facts and figures with which to hammer the federal government on that occasion. I would only hope we will have the same exercise initiated by someone on the government side in the public accounts committee again now that we have a Progressive Conservative government in Ottawa.
Mr. Haggerty: Mr. Speaker, I want to add a few words to Bill 131, An Act to amend the Income Tax Act. I want to talk about two or three sections in the explanatory notes.
One is subsection 2(4). The amendment provides that the worker's compensation and social assistance payments, which were formerly exempted from taxable income by annual federal and Ontario orders in council, will continue to be excluded from the calculation of the foreign tax credit.
We talked about property tax assessment and bringing in some measures of uniformity and equalized assessment relating to property taxes, yet we find under this section -- under the Corporations Tax Act, I suppose it would be -- that there is no equity within the tax base here.
To exempt the foreign corporation from paying the cost of workers' compensation and social assistance payments means somewhere along the line other industries in Ontario will have to pick up that extra tax burden. I do not think that is right in today's circumstances. Each corporation, whether it is foreign or based here in Ontario for a number of years, should be treated in the same manner. I do not have to tell members about the difficulties there are just to pick up the increase in the workers' compensation assessment charges from local industries in Ontario. To allow a company, under a minister's order here, to escape paying its share is not justified, nor is it a fair form of taxation.
Previous speakers have spoken about the area of personal income tax in Ontario. Through loopholes in our provincial and federal income tax, persons with a higher income can find ways and means to avoid paying their share of the tax base in Ontario or Canada. I think we will have to have some equity in this area and plug those loopholes so they at least pay their fair share compared to the wage earners at the lower end of the scale.
There was an article in the Globe and Mail on Saturday, November 17. I should read this because I think it would drive home a point to the minister. It is headed, "Firms Keeping Employees' Taxes." This is the federal tax collector, Mr. Beatty.
The article goes on to say: "More than $328 million in taxes deducted from the pay cheques of thousands of Canadian employees, in some instances by foreign-owned corporations, has not made its way into the federal government's coffers, Revenue Minister Perrin Beatty says.
"In addition, one third of the $3.5 billion in back taxes owed to the federal Treasury is a result of some corporations, also including ones that are foreign-owned, not paying their tax bills, he said. More than 119,000 employers have deducted a total of $328.8 million in income tax and Canada pension plan and unemployment insurance contributions from their employees but have failed to remit payment to Revenue Canada."
That is quite a large amount of money that belongs to the tax collector of Ontario and to the federal government as well. When we allow taxes to escape the federal and provincial authorities in this manner, there have to be some measures under this bill, or perhaps the bill should not even be introduced at this time because of the difficulties we now find in trying to collect back corporate taxes or personal income taxes. I thought the minister would be putting something in here to go after the persons owing taxes in Ontario.
He goes on to say further, and I think I should draw this to the attention of the members:
"Foreign corporations that have outstanding taxes will come under closer scrutiny by the tax department with the addition of 30 auditors in 1985-86 who will 'be looking' at foreign taxpayers.
"All businesses are supposed to send the taxes they collect from employees to the federal Treasury every month and, 'where a company is not remitting, the tax department acts as quickly as possible. But resources have been so strained there has been a difficulty across the board for collection people.'"
I can well recall the last federal election, where this was an issue. Certain tax procedures used by the former federal Liberal government were such that people thought they were like hatchet men out there trying to get one or two individuals. When we find this amount of money out there, perhaps that government was taking the right approach in trying to retrieve some of those back taxes.
He said: "From 1980 to 1984, there was a significant increase in the number of corporations owing back taxes and in the number of businesses that deducted income tax from employees without remitting it to the department.
"In 1980, 64,000 corporations owed $669 million in back taxes and as of March 1984, 81,000 corporations owed $1.055 billion in back taxes."
I could go on, I guess, to find out that either this government or the Minister of Revenue is a little bit lax in going after its share. I suppose the question I should direct to the ministry is, how much of these back taxes should be coming to Ontario? What share should be coming to Ontario in delinquent corporate and personal income taxes?
There must be another bundle that this province would be getting now if it had taken some initiative to go after it. Maybe my colleague the member for Brant-Oxford-Norfolk is on the right track when he says it is time for Ontario to be going after its own taxes and getting its share without looking to the federal government to carry it for it. If we can have this amount of money still outstanding, it means there are other taxpayers who have to pick up the tab and carry that load.
I suggest the minister should be moving in this direction now. In fact, there should be something in this bill to say that he is going after the province's share of those back taxes. That, I suppose, would be for the 1983 taxation year.
I am also concerned about section 9 of the act. The explanatory note says, "The addition of section 36a renders directors of corporations personally liable for the amount of tax required to be withheld on payments made to taxpayers, where the directors have not exercised reasonable care and diligence and where the corporation has not remitted the tax before becoming insolvent or commencing dissolution proceedings."
There is another area. Maybe someone owes taxes from three or four years back, and the province or the federal government has not moved to collect back taxes in that area. Once the firm goes into receivership, bankruptcy or insolvency, then I do not think there is a winner in any case, and the province loses money.
I suggest the minister should get his tax collectors together with the federal authorities and go out and get some of this money that is owing to the people of Ontario. He cannot go back and hide forever under section 4 of the act, which says that under an order of the minister we can wipe out any taxes that should be coming to Ontario.
When we look at the compensation cost today for workers' compensation, I do not think it is justified to have that clause in there under circumstances such that other small businesses in Ontario have to have such an increase in workers' compensation assessment, some of which have been increased by about 20-odd per cent, I think it is, over the last year.
I suggest the minister should get off his good intentions and go after this money that should be coming to Ontario.
10:20 p.m.
Hon. Mr. Gregory: Mr. Speaker, once again I would like to thank the honourable members for their comments in regard to this bill. I am sure it is realized, as it was said in the preamble, that the bill is presented to bring the Ontario Income Tax Act in line with the federal Income Tax Act.
To tell the truth, I am very surprised at the number of people opposite who are not aware Ontario has an income tax of its own and that it does collect income tax. As was stated, we have an agreement with the federal government. It dates back to about 1940. I believe Mitchell Hepburn was the Premier at that time. It seemed like a good idea at the time and was perhaps one of the few good ideas that government had.
We have been working under this arrangement for many years and we are one of the many provinces that has an agreement. There is only one province that does not have an agreement and collects the tax itself, and that is Quebec. It seems to me that if both sides are on balance, then we probably are doing something right both from an economic standpoint and from a voluntary standpoint.
What I am hearing is that the federal government is objecting to doing this major chore for us. It is probably cheaper in the long run for both to be done on one form. It is surprising to me that people are unaware Ontario collects a tax, because on any income tax form I have filled out, and I do not know whether the members have filled one out lately, there is a definite section --
Mr. Haggerty: Have you filled one out?
Hon. Mr. Gregory: Yes, I do, as a matter of fact. I do it on a regular basis and have for many years.
On every one every year, there is a section that says "Ontario Tax." It does not say on behalf of Canada or anything else. There is also an Ontario tax grant, the Ontario tax credit, as my friend the member for Brant-Oxford-Norfolk mentioned. He says we should be giving the federal government credit for the Ontario tax grants, notwithstanding that it is a return of tax money from Ontarians, as is all the tax collected.
It seems all-important to that side that we give credit to the federal government then and now for collecting this tax from Ontarians. Somehow the logic of that totally escapes me, but I suppose the bill is difficult for all of us to understand. Therefore, there was very little to talk about and that is what the members opposite chose to discuss. There are a couple of thing I should mention. I have already covered the agreement with the federal government.
The share purchase tax credit is a credit given by the federal government. Its purpose is to increase investment in business. The provision in this bill provides that Ontario will not adopt this credit because it has the small business development corporation program in which we are doing the same thing. The member for Erie (Mr. Haggerty) mentioned that problem. Because of the SBDC program, it would be a double benefit if this tax benefit were allowed to Ontario taxpayers.
The temporary surcharge was mentioned. My friend the member for Oshawa wanted to know when it was going to end. It is going to end on December 31, 1984. One of the sections in this bill makes that possible.
On the foreign tax credit, the Ontario Income Tax Act applies only to individuals. The province has separate computations. The provision in the act is to exclude workers' compensation from the calculation of foreign tax credit. This compensation is not subject to tax in Canada.
The member for Erie mentioned the outstanding taxes and suggested we should be going after outstanding Ontario income tax. He mentioned we should probably be ashamed because we are not doing this. I am not ashamed of the record of the Ontario Ministry of Revenue, but there is some question about the reputation of Revenue Canada. I would not want that reputation. I think our method of going after outstanding taxes, which we handle, is a lot more sensible. It is more dependent on voluntary compliance than on the heavy hand of the auditor.
The federal people choose the way they want to do it and they have chosen some rather ill-advised ways of doing it. At any rate, I think the members know that what they are suggesting is totally unworkable. The federal government, whether it be the former one or the present one, would object to us getting into the act. I think it makes absolutely no sense at all.
The Deputy Speaker: Is it the pleasure of the House the motion carry?
Some hon. members: No.
The Deputy Speaker: All those in favour will please say "aye."
All those opposed will please say "nay."
In my opinion the ayes have it.
Motion agreed to.
Bill ordered for third reading.
MUNICIPAL TAX SALES ACT
Mr. Rotenberg moved, on behalf of Hon. Mr. Bennett, second reading of Bill 102, An Act respecting the Sale of Lands for Arrears of Municipal Taxes.
Mr. Rotenberg: With three and a half minutes to go, I suggest it would not be a good thing to start this bill this evening.
On motion by Mr. Rotenberg, the debate was adjourned.
The House adjourned at 10:27 p.m.