GUELPH – Farmers in Wellington County and across the province are concerned rising farm values and existing policy are putting an increasing share of the tax burden on agricultural properties.
Ontario Federation of Agriculture (OFA) senior policy analyst Ben Le Fort made the case for change, on behalf of the OFA and of the Wellington Federation of Agriculture, to county council on Feb. 27.
Le Fort advised council Wellington County’s 2,348 farms generate $769 million in farm cash receipts and generate $2.3 billion in provincial GDP.
“And that supports nearly 50,000 jobs around the province,” said Le Fort.
He explained assessment increases from the Municipal Property and Assessment Corporation (MPAC)are phased in over four years and the province is currently in the fourth year of a cycle that bases assessments on 2016 property values.
In 2016 Wellington County generated 5.4 per cent of its tax revenue from farm class properties, a figure that has increased steadily and will reach 7.7% this year unless the county adjusts its tax ratios.
At 7.7 per cent, the farm tax burden would increase by $2.3 million in 2020.
Le Fort pointed out the rapid increase in farm tax burden over the past four years contrasts the period between 2000 and 2012, where the farm share of taxation in the county rose gradually from 3.8 per cent to 4.2%.
Farm land values are driving the current increases, Le Fort explained.
In Wellington County current value assessment (CVA) for farmland has increased by 69% since 2016, while residential values have increased by just 18%.
“That’s really what the issue here is – not necessarily that [the farm rate] is increasing, that doesn’t necessarily pose a problem – but that it’s increasing much faster than the other property classes.”
Le Fort told council that to avoid a “disproportionate” property tax shift onto farmland property owners, county governments would have to adjust the Farm Property Tax Ratio below the current level of 25% of residential taxes.
“How much they need to adjust the tax ratio will depend on the assessment changes in your county,” he explained in his presentation, noting county governments have full authority to adjust the farm tax ratio anywhere between zero and 25% of the local residential tax rate each year.
Le Fort provided a list of 18 Ontario municipalities which have adjusted their farm tax ratios to address the issue. Among neighbouring municipalities on the list, Dufferin County has lowered its farm rate to 23% of residential, Grey County to 24% and Halton Region to 20%.
Le Fort told council that in order to return the farm tax burden to its 2016 level (5.4%), which was a record high at the time, Wellington County would need to reduce its farm tax ratio to 17.4% in 2020.
For the farm tax burden to remain at the current record high (7.2%) would require Wellington County to reduce the ratio to 23.3%. He also noted the county would have the option of returning the ratio back to 25% in future years if the tax burden begins to shift the other way.
“If you wanted to bring the tax burden to farms back to where it was before this assessment kicked in, to the 2016 level where they were paying 5.4%, that would require a significant ration reduction from .25 to .175 or .174,” said Le Fort, noting that to “hold the line” would require “a much more modest reduction.”
Le Fort says the OFA does “want to reiterate that we are always willing to work with our rural municipalities to address that issue of sustainable rural infrastructure.”
He pointed out the OFA has worked with municipal organizations to successfully lobby the province to reinstate funding for the Connecting Links program and OFA continues to work with the municipalities on funding for rural infrastructure, including broadband, natural gas and funding for rural roads and bridges.
Councillor Don McKay, himself a part-time farmer, suggested the province holds the key to solving the problem.
“You’re going after the wrong group. Who you should be looking at is the province,” said McKay.
He pointed out that prior to 1998, farmers paid a full 100 per cent of the assessment value of their land to municipalities and then applied to the province for a 75 per cent farm tax rebate.
“Then, when the Harris government came in, they put the burden on the municipalities, which is not right,” McKay stated. “If you’re in a municipality that has no farmland and yet you’re eating our food from us farmers you’re not contributing at all.”
McKay said the province “should go back to the old method and that way all of Ontario would be contributing to our food.”
McKay continued, “So instead of coming to the municipalities and saying ‘please reduce,’ which is a big burden to municipalities … put it back on the government.”
“This is certainly not the first time we’ve heard this suggestion,” replied Le Fort, who added the OFA has discussed the issue with five different finance ministers since the change was made.
Noting “this move was not made in a vacuum,” Le Fort pointed out the rebate process change was part of a restructuring that also included the province creating funding programs like the Ontario Municipal Partnership Fund (OMPF) to provide revenue streams for municipalities.
“There is no appetite to go back to this, and the impact on farmers would be significant,” Le Fort stated.
Under the previous system, he said, farmers had to pay tax at a rate four times higher than the current system and “then have to apply to the province and wait for a rebate.”
Le Fort continued, “Practicality speaking, it doesn’t make any sense for farmers to go back to that. It does makes sense to have more funding for municipalities and we can accomplish that in more efficient ways.”
Harrop told the Advertiser in that referring back to the previous farm tax rebate system doesn’t recognize “the environment that we’re living in right now.”
“That hasn’t happened since the 1980s … but because they’re not getting the OMPF transfer from the province they keep referring back to those times when they got 100 per cent of the (farm tax) pool.”
Harrop added, “We keep trying to work with the county and with the province to be able to reinstate proper provincial transfers, but when we keep going back historically to how things were done in the ‘80s we go back to that conversation and the fact that everybody is now paying a portion of that difference in the tax bill because were not getting the transfers of the dollars from the province.”
LeFort said the OFA recognizes issues exist with the current set up, noting that adjusted for inflation, total OMPF funding for municipalities “should be $850 million per year now, not going the opposite way.”
In 2020 The OMPF funding envelope was decreased by $5 million to $500 million distributed among 389 municipalities.
Councillor Jeff Duncan pointed out some of the municipalities that have reduced their farm tax ratios have a much lower percentage of farmland than Wellington County and some, such as Halton Region, “have literally massive areas of commercial assessment.”
“I think they have the ability and the room to move … where Wellington County doesn’t,” noted Duncan.
“Some of these municipalities, the urban ones, would definitely have more commercial/industrial than Wellington,” Le Fort agreed.
“But if you look at Dufferin County, Prince Edward County, Elgin County, these are not industrial hubs, these are not commercial hubs.”
Warden Kelly Linton thanked the delegation for the presentation, stating, “We do appreciate how critically important agriculture is in Wellington … We will take this under advisement.”
Council accepted the presentation as information.
