Consultations: Provincial Land Tax Reform: Overview of the Provincial Land Tax Open Houses - Appendix 1, Open House Presentation

Ministry of Finance
Provincial Local Finance Division
August - November, 2015

Purpose of Open Houses

  • Provide an update on PLT changes announced in the 2015 Ontario Budget.
  • Hear property owner’s views as we move forward with the PLT review.
  • Provide information and respond to questions on a range of issues that unincorporated area property owners are interested in.

Goals of the PLT review

  • To develop a fair and modern PLT system that would:
    • Reduce property tax inequities;
    • Minimize differences in how services are paid for in the North;
    • Enhance transparency for taxpayers; and,
    • Support the work of local roads and services boards.
  • The goal of the review is not to align PLT rates with average municipal tax.

PLT Background

  • PLT is the property tax paid in unincorporated areas of Northern Ontario.
  • PLT is calculated by multiplying the tax rate by the assessed value of the property.
% Tax Rate x Assessed Value $ = Provincial Land Tax
  • Tax rates are set in regulation by the Minister of Finance.
  • The assessed value of all properties in Ontario is determined by the Municipal Property Assessment Corporation (MPAC).

Quick Facts - Assessment

  • There are about 63,000 taxable properties.
  • Over 90 per cent are residential.
  • About 70 per cent of residential properties have an assessment of less than $150,000.

Quick Facts - PLT

  • The average PLT for occupied residential properties was $164 in 2013.
  • About 50 per cent of all properties (including business and vacant land) paid less than $50 per year.
  • Less than 4 per cent of all properties paid more than $500 per year.

Quick Facts - Combined PLT and Local Board Levies

  • Unincorporated area property owners may also pay levies to local roads and services boards.
  • When these levies are included, more than 50 per cent of all properties pay combined PLT and board levies of less than $200 a year.

Snapshot of the PLT Review

  • The 2013 Ontario Economic Outlook and Fiscal Review committed to consult with northerners about the PLT and address their concerns in a fair and balanced way.
  • In 2014, the Province consulted with northern Ontarians, including 21 sessions with local roads and services board representatives held in locations across the North.
    • In December 2014, the Ministry released a paper, “Provincial Land Tax Review: A Summary of Stakeholder Consultations”.
    • The Ministry received over 150 submissions from northerners on the PLT.
  • The 2015 Ontario Budget announced changes that mark a first step toward creating a fair and modern PLT system, and committed to continue discussions with northerners on ways to further reform the PLT.
    • PLT changes were communicated to property owners through letters, guides, website updates, and direct responses to inquiries.

PLT Review Findings - An Outdated PLT System

  • PLT rates have not been updated to increase revenues since the 1950s.
  1954 2013
Residential PLT rate 1.5% Inside Schoolboard: 0.1617%
Outside Schoolboard: 0.0254%
Minimum PLT* $6 $6
* In 2013, about 8% of all properties paid minimum tax of $6 a year.

PLT Review Findings - Tax Differences in the North

  • There is a significant difference between average residential northern municipal tax and average PLT.
  • Part of the difference between PLT and northern municipal tax can be explained by fewer services in unincorporated areas than in municipalities.
  • Part of the difference between PLT and northern municipal tax can also be explained by the levies that many unincorporated area residents pay to local roads and services boards.

How Services are Paid For

  • Differences in the way services are paid for in the North is a significant reason why PLT is lower than municipal tax.
  • PLT contributes toward important services including:
    • policing
    • land ambulance
    • public health
    • social services
  • PLT revenue covers only a portion of the amount the Province spends on behalf of unincorporated areas for these services.
  • The review identified a gap between PLT revenue and Provincial expenditures on these important services in unincorporated areas.
    • The Province contributes almost $90 million to fund these services.
    • About $65 million is more than what the Province would provide if services were cost-shared as they are with municipalities.
  • The purpose of the PLT review is not to close the entire $50 million gap.

Municipalities also receive Provincial support through grants and other programs.

PLT Review Findings - PLT Differences for Residential Properties

  • In 2013, the residential PLT rate for properties outside a school board was one sixth the rate of those inside a school board.
    • One third of properties are located outside school boards.

PLT Review Findings - PLT Differences for Business

  • Businesses contribute significantly less in PLT than they would pay in a northern municipality.
    • For example, in 2013 the PLT rate for pipelines was only 11 per cent of the average northern municipal property tax rate for pipelines.
PLT and Average Northern Municipal Tax Rates for Pipelines and Railways (2013)
Property PLT Northern Municipal Tax
Pipeline (per $100,000 of assessed value) $190 $1,676
Railway (per 100 acres)* $9 $4,405
*Property taxes for Railway Rights-of-Way (ROW) are levied on a per-acre basis.

A First Step toward a Fair and Modern PLT System

  • The 2015 Ontario Budget announced an important first step in PLT reform, including:
    • 2015 and 2016 PLT rate changes that will reduce inequities.
    • Measures to better support the work of local roads and services boards, such as providing up-to-date property information to support planning.
    • A commitment to ongoing discussions with northern Ontarians on creating a fair and modern PLT system.

PLT Changes

  • The PLT changes announced in the 2015 Budget is the first time in over 60 years that PLT rates were updated to increase revenues.
  • For residential taxpayers, the PLT rate is being adjusted by:
    • $10 per $100,000 of assessed value in 2015; and,
    • $40 per $100,000 of assessed value in 2016.
  • Beginning in 2016, the minimum PLT will be set at $50 so that all property owners make a basic contribution toward the cost of important services.
  • The PLT rate change for business properties is in line with the percentage change for residential properties outside schoolboard areas.

PLT Changes - Residential

Moving Forward with the PLT Review

Your input will shape the second stage of the review and
continue to help transform the PLT into a fair and modern property tax system.

Next Steps

  • Open Houses will be held in communities across Northern Ontario in Summer and Fall 2015.
  • The Ministry will have further discussions with local roads and services board representatives.
  • We continue to welcome comments and submissions.

Image Descriptions:

Chart Title: Assessed Residential Property Values in Unincorporated Areas (2013)

The bar graph shows the percentage of assessed property values in increments of $50,000. Twenty one percent of properties have a value less than $50,000; 27 per cent are valued between $50,000 and $100,000; 21 per cent are valued between $100,000 and $150,000.

Return to Assessed Residential Property Values in Unincorporated Areas chart

Chart Title: PLT Paid in Unincorporated Areas

This bar graph shows the percentage of properties that pay certain amounts of PLT. Forty eight per cent pay less and $50; 31 per cent pay between $50 and $200; 10 per cent pay between $200 and $300; 7 per cent pay between $300 and $500; 4 per cent pay more than $500.

Return to PLT Paid in Unincorporated Areas chart

Chart Title: PLT and Local Board Levies Paid in Unincorporated Areas

This bar graph shows the percentage of properties that pay certain amounts of combined PLT and Local Board Levies. Thirty percent of properties pay less than $50; 27 per cent pay between $50 and $200.

Return to PLT and Local Board Levies Paid in Unincorporated Areas chart

Chart Title: Average Residential Northern Municipal Tax vs Average PLT ($, 2013)

This bar graph shows the average municipal tax was $2200 and the average PLT was $164.

Return to Average Residential Northern Municipal Tax vs Average PLT chart

Chart Title: Average Residential Northern Municipal Tax vs Average PLT and Local Board Levies (2013)

This bar graph shows that average municipal tax was $2200, and combined PLT and local board levies was $315. For the highest paying third of unincorporated area properties the figure was $662.

Return to Average Residential Northern Municipal Tax vs Average PLT and Local Board Levies chart

Chart Title: PLT Revenue vs Provincial Expenditure on Services on Behalf of Unincorporated Areas (2013)

This bar graph shows that provincial expenditure was $89 million, $65 million of the $89 million was additional provincial spending on services. PLT revenue was $11 million.

Return to PLT Revenue vs Provincial Expenditure on Services on Behalf of Unincorporated Areas chart

Chart Title: PLT for each $100,000 of Assessed Value of Residential Property ($, 2013)

This bar graph shows that PLT inside school boards was $162 and outside school boards was $25.

Return to PLT for each $100,000 of Assessed Value of Residential Property chart

Chart Title: PLT for each $100,000 of Assessed Value of Residential Property

This bar graph shows that PLT for properties inside school boards will be $212 per $100,000 in 2016 and will be $75 per $100,000 for properties outside school boards.

Return to PLT for each $100,000 of Assessed Value of Residential Property chart