Vaughan gets $2.3M for its schools after tax policy change
Is it good news for schools?
Yorkregion.com
Sept. 5, 2019
Dina Al-Shibeeb
The decision to halve the discount on excess and vacant land for both commercial and industrial businesses is bringing some extra money for schools in Vaughan.
Like other municipalities that have applied the provincially determined tax rate to property values (including businesses) to determine the amount of education taxes payable, this past June Vaughan changed a policy initiated in 1998.
For more than two decades, owners of vacant and excess commercial and industrial properties in Vaughan had 30 and 35 per cent discounts, respectively. Now, it’s halved.
Almos Tassonyi, a research associate with the International Property Tax Institute, says this won’t be a “big increase” for education funding in Vaughan, but might affect some landowners “very specifically.”
When asked if this means more money for schools, the city’s financial services department told the Vaughan Citizen, “Yes, technically these subclasses will be paying more education tax,” citing the increase in levy to 2019 is not necessarily due to any change in tax policy but “by growth (of) the number of properties.”
So far, Ontario's finance ministry is “phasing out the education portion of the vacancy programs” to “ensure the education portion of the vacancy programs is consistent with municipal tax decisions.”
“As a result of the phase-out, the change in the vacant and excess land reduction for York Region is estimated at $4.5 million in 2019, of which $2.3 million relates to the City of Vaughan,” said Scott Blodgett, spokesperson for Ontario's finance ministry.
The reason behind Vaughan’s lion’s share is because “half of York Region’s commercial and industrial properties are located in Vaughan.”
Vaughan isn’t alone.
So far, municipalities who have “implemented these changes,” represent more than three-quarters of all business properties in Ontario.
Policy to raise revenue ‘quietly’
Tassonyi, who says cities such as Toronto and London, for example, have long tried to reduce these discounts, interprets the policy as a way to “increase revenue in a quiet, small way.”
After all, up to $11 million was collected in 2018 for education from vacant and excess land in the commercial, industrial class from the approximate $300-million budget coming from property tax.
“One of the major policy rationales is that if you have a vacant property, rent it, or if you have excess land, use it, and the other is that taxpayers have been subsidizing those landowners and holdings,” said Tassonyi, who is also an adjunct lecturer with the geography and planning department at the University of Toronto.
“This issue has been kicking around for quite a long time in the sense as to whether there is merit to maintain this discounting of the education tax rate for vacant and excess land.”
“The argument against is reasonably strong,” he continued. “The assessed values of properties are affected by the extent to which they are vacant, and there isn't a strong need for provincial education finances to subsidize the holding of excess land.”
Blodgett, meanwhile, said “after accounting for this change and adjustments related to the phase-in of assessment increases, the 2019 commercial (business education tax) BET rate for York Region was decreased by 3.6 per cent and the industrial BET rate by 5.5 per cent from 2018.”
To explain this, Tassonyi said, “as the size of the assessment base grows in any particular municipality, rate reductions have taken place, the size of which is dependent on the amount of revenue to be raised. That is to say, if revenue neutrality is to be maintained, the rates will be reduced sufficiently to offset the average rate of growth of the whole assessment base.”