On Value-Based Taxation

If you live in Toronto, and probably anywhere in Canada, and own your home, you pay property tax. What is worth examining is the manner in which those taxes are assessed, and how that has been disconnected from what you get for those dollars.

Assessment based on market value is the norm. The municipality takes the dollar total it wants, divides it over the total assessed property worth, and sets a mil rate. Bingo, your tax bill. It may be divided into parts, but each of those parts was set in the same manner.

Note that you are not told, you pay $x for policing, $y for road repair, and $z for education. No, you pay because of the value of your house.

The value of the services you get is never discussed.

I have the good luck to have property in the District of Severn, Simcoe County. Don’t be envious; it’s a shack decorated in early rummage sale style. However, it is on a lake with a small frontage and a one-lane private road at the back, which is sort-of plowed (not by the municipality). It has hydro, although long outages do occur.

Because the property now has a hefty assessed value, we pay a hefty property tax on it.

I submit that this is unfair. I submit that assessed value taxation is unfair. I will use this scrap of land as an example to demonstrate my reasoning.

The value of this piece of land is created entirely by the possibility that a millionaire will someday want the property. The tax on this land is similar to what we pay for a bungalow in Etobicoke. I am certain that the tax on this land is much higher than on a bungalow in Severn Bridge or Port Severn.

I submit that this is unfair. In Port Severn a police call is answered within minutes. In Etobicoke, same. When there was a break-in on our lake, the police arrived the day after. We do not get fire protection. We do not get water, nor sewage. We maintain our own road. Hydro outages of several hours are common; we know this because we have a stove clock that stops and restarts. Hydro outages of several days happen often enough. A portion of the tax is for education, but Simcoe County made it clear during a strike here that we could not send children to school there under any circumstances.

In Port Severn, and in Etobicoke, the services are markedly better.

What burns me is that we over-assessed cottage-owners are subsidizing the towns in the district. It seems unfair.

There are other ways of showing that value-based taxation is unfair. I will give a few thought experiments to show this.

An elderly man wishes to remain in his home as long as possible. He lives on a crescent of wartime housing near Kipling subway station. A developer wishes to buy the entire crescent for condominiums. Property values soar. Taxes soar. Our elderly man cannot afford to live in his own home. He is forced to move – an abrogation of his fundamental rights.

Suppose I win the lottery. Suppose my neighbour also wins the lottery. (We have identical 649 tickets, say.) I choose to put my winnings into gold bars in my basement; the police are asked to watch my house as there have been a lot of attempted break-ins. My neighbour puts his winnings into basement renovation. My property taxes stay the same. My neighbour’s property taxes jump.

I am getting more services. He is paying for them. Unfair? I think so.

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