Ontario farmers are starting to get tax relief from the massive increases in the value of their land, but the amount of tax relief varies.
The reduction of the farm tax rate below the long-term rate of 25 per cent of the residential rate, has to be changed at county councils. Local federations of agricultures are finding that can take years, but some are now breaking through.
Why it matters: Farm assessments increased by 65 per cent on average in the 2016 reassessment of property values. That’s meant a windfall of millions of dollars for municipalities, without having to say they are increasing local tax rate, but also means farmers are paying a lot more of the local tax load.
Oxford County was the latest to get some relief when the county council voted on April 11 to reduce the farm tax rate from 25 per cent to 23.5 per cent. The result is that farmers will still pay a record amount of taxes in Oxford County in 2018.
Dirk Boogerd, president of the Oxford County Federation of Agriculture, said that the federation had asked for 21 per cent.
“We came back for a third and final time and with some reluctance, got a .235 ratio voted in,” he said.
Oxford County is unique in that the assessment on farm, residential and industrial and commercial properties all had healthy increases. That meant that the county could reduce the tax rate for all of them, without pulling from one group and adding from another and still maintain its revenues, said Boogerd. That made the request from farmers a bit easier for the county council to sell.
“We’re one of the few counties to have exceptional growth,” he said.
Farmers within the boundaries of the City of London have had their tax rate reduced to 17.52 per cent of residential tax. In Hamilton, farm tax rate is now 17.67 per cent of residential. But after a couple of years of lobbying by the local federation of agriculture and farmers, some more dominant agricultural areas are achieving results. There’s Oxford’s success and Lambton County’s rate is now at 22.6 per cent. Brant County and Chatham-Kent have also had reductions.
Some of the largest agriculture producing counties, however, have not budged. Huron County is an example, said Ben Lefort, senior policy analyst with the Ontario Federation of Agriculture. He has provided economic backup to many local federations taking this issue to their county councils.
Huron County’s farms increased by an average value of 84 per cent, com- pared to nine per cent for residential. That means a whopping transfer of tax onto farms.
In Huron County, farms paid $6.7 million in taxes at the county level before the last reassessment, said Lefort. By 2020, with the five-year phase-in of the increase in assessment, farmers will be paying $12 million in taxes and that’s only at the county level. It will be at least that again at the local level, said Lefort.
The Municipal Property Assessment Corporation, or MPAC, assesses property values every five years, then whatever increase in taxes flowing from that assessment is phased in over the next five years.
Boogerd, who operates a goat dairy farm near Embro, said the principle is about fairness. One group shouldn’t have to pay a disproportionate amount of increase in taxes over another. Boogerd doesn’t quibble with MPAC’s assessment of his property value. He says it’s fair and market value; it’s that the percentage increase for farmers is out of line.
Lefort said municipalities have argued that there are always fluctuations among property tax classes after reassessment rounds. OFA wouldn’t be concerned if residential value increased by 12 per cent and farm assessment by 20 per cent, he said, but in most areas of the province, the difference is much more significant.
In Prince Edward County, the assessment for farms increased by an average of 120 per cent. Residential and commercial were not nearly that high.
Municipalities also say that high farm assessments are a provincial issue, but the reality is that changing the farm tax rate at the county level is one of the few levers that local governments have at their disposal to manage how much tax is paid. Few of them have touched those rates in the 20 years the current program has been in place.
Jeff Leal, Ontario’s minister of agriculture, food and rural affairs, has made the same point and says the ability to give tax relief is at the municipal level.
Why have some counties been successful?
Ben Lefort of the OFA and Dirk Boogerd of the Oxford County Federation of Agriculture had several suggestions why some county farm tax campaigns have succeeded. Here are their tips:
- Get lots of support from local farmers, across commodities and organizations. The Christian Farmers Federation of Ontario was also involved in the Oxford appeal;
- Find a county councillor to champion the reduction in farm tax rate;
- Be prepared to go back to country council multiple times. The issues are complex and education takes time;
- Have constructive conversations with local officials;
- Have county staff create a comprehensive report that lays out the situation for councillors;
- Make sure county staff compares taxes paid by different classes year to year, not within a year, as taxes will continue to increase until 2020. In-year comparisons just look like taking from one group to give to another.