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Provincial Land Tax reform underway

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The Provincial Land Tax (PLT)— the property tax applied in unincorporated areas of Northern Ontario outside municipal boundaries—is being updated in order to address inequities between municipal property taxes and PLT.

Changes to the PLT were the subject of an open house held last Tuesday evening at La Place Rendez-Vous—one of seven such consultations the Ministry of Finance is holding across Northern Ontario this fall.

The bottom line is property owners in unincorporated areas will pay more.

PLT changes announced in the 2015 Ontario Budget will be phased in over two years. For residential taxpayers, the PLT rate will be adjusted by $10 per $100,000 of the assessed value of their property in 2015 and by an additional $40 per $100,000 of assessed value in 2016.

Beginning in 2016, the minimum PLT will be set at $50 annually for each property to ensure that all property owners make a basic contribution toward the cost of important services.

Business taxpayers will make a contribution that is proportionate to residential taxpayers. Under this approach, the PLT rate increase for business properties will be in line with the percentage increase for residential properties outside school board areas.

In response to a question about further increases in 2017 and beyond, ministry staff this has not been determined at this point as the PLT review is still ongoing.

The PLT review has been undertaken to develop a modern and fair land tax system that would reduce property tax inequities and minimize differences in how services are paid for in the north, ministry staff informed those who attended the open house.

However, the goal is not to align the PLT with average municipal taxes, they stressed.

After all, those who live in municipalities have many more services than those living in unorganized areas.

PLT rates have not been adjusted to increase revenue since the 1950s even though wages, cost of living, and property values have gone up.

PLT is calculated by multiplying the tax rate by the assessed value of the property. The former is set by the Minister of Finance, the latter is set by the Municipal Property Assessment Corp. (MPAC).

In 2013, the average residential PLT bill was $164, compared to the average residential northern municipal tax bill of $2,200.

In Rainy River District, PLT payments vary. For example, the average Clearwater Lake resident pays a PLT of $210 per year along with $80 in Local Board levies (Local Roads Boards and Local Services Boards), while the average South Watten resident pays a PLT of $440 and levies of $148.

As of 2013, the total number of properties in unincorporated areas in Northern Ontario was 63,000. The number of households (including seasonal and permanent) was 43,307.

According to 2013 MPAC data, the Total Provincial Land Tax (PLT) Revenue was $11 million. The combined total revenue for Local Roads Boards (LRB) and Local Services Boards (LSB) was $9.3 million.

The PLT, which is paid by all unincorporated area taxpayers, contributes toward social assistance, child care, land ambulance, social housing, public health, policing and other services, ranging from PLT administration and assessment, planning boards, and waste disposal sites to fire suppression on Crown land, Crown land management, and more.

The government announced a review of the PLT in 2013 in response to concerns raised by Northern municipalities about significant inequities between their municipal property taxes and PLT.

The 2014 Ontario Budget and the 2014 Ontario Economic Outlook and Fiscal Review confirmed the government’s commitment to consult with northern representatives on PLT.

The province has consulted with a broad range of Northern stakeholders as part of the review, and received over 150 submissions from the public.

In August and September, 2014, 21 consultation sessions were held across the North with unincorporated area representatives of Local Roads Boards, Local Services Boards, and District Social Service Administration Boards. Meetings were also held with Northern municipalities and municipal associations.

The consultation findings formed the basis of a paper, Provincial Land Tax Review: A Summary of Stakeholder Consultations. The Ministry released the paper in Dec. 2014 and requested feedback from northern stakeholders.

In late March 2015, the Ministry of Finance provided an update on the PLT review that was posted to the Ministry’s website and was mailed to all property owners in unincorporated areas.

In addition to the 2015 Ontario Budget, the Ministry released a paper, Provincial Land Tax Reform: A First Step Toward a Fair and Modern Provincial Land Tax System, which outlines proposals in the 2015 Ontario Budget to modernize PLT.

The PLT changes for 2015 and 2016 mark an important first step toward reducing property tax inequities and inequities in the way services are paid for between municipalities and unincorporated areas, according to the ministry.

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