Speech by Bob Topp, Executive Director of WRAFT, at FOCA Annual Meeting
November 6, 2004
Bob speaks to the FOCA annual meeting
I'd like to begin by expressing my appreciation and that of my directors for the support that FOCA have provided to WRAFT, in particular for the involvement of Terry Rees and Noel Thomas in our activities, for inviting me to speak here today and for allowing us to piggyback on the FOCA annual meeting by holding our first annual meeting during the lunch hour.
I plan to talk to you today about what's wrong with our property tax system, a bit of Muskoka history because that's where our tax problems began, the formation of WRAFT, what we've accomplished in our first six months, our plans for the critical year ahead and how you can help.
Waterfront Ratepayers After Fair Taxation, affectionately known as WRAFT, was formed in February of this year. It is building a coalition of waterfront associations across Ontario and has a single purpose: to fight for property tax reform in order to halt the ever escalating share of tax being levied on waterfront ratepayers. While WRAFT is relatively newborn, its founders have considerable history and experience in the struggle for a more equitable property tax regime in this province.
A decade ago property owners on the larger Muskoka lakes began to get hit with a growing share of the tax burden as a result of dramatic assessment increases. While some temporary relief was achieved through group assessment appeals and phase-in of tax increases, it was becoming increasingly clear that we were dealing with a more fundamental issue, the basic system for distributing property taxes. As waterfront taxes continued to escalate, taxes for properties not on water declined. One can envisage a time in the not too distant future when waterfront properties, which are roughly half of all properties in Muskoka, will be paying 90% of the taxes. In fact if we allow this present tax regime to continue unabated, it will be the end of cottaging as we know it. The idea of keeping the cottage in the family will be history.
Increasingly aware of the growing concern, particularly among seasonal residents, the District of Muskoka in 2001 appointed a task force to examine the property tax regime. I was a member of that task force. We debated long and hard, concluded the system was inequitable and made a number of recommendations to make it fairer. In the fall of 2002, the Council of the District of Muskoka endorsed our report and all its recommendations. The bulk of the recommendations required changes to provincial legislation. Two more years have now gone by and we've had no progress. What has happened is we've had two more assessments and the shift of tax onto those large Muskoka Lakes has continued. Let me illustrate the Muskoka situation by telling you what has happened in the Township of Muskoka Lakes. It is the most extreme example of a tax system gone crazy. The average 2003 assessment for built-on properties on water in the township, including big lakes, small lakes and rivers, was $513,000. The average for built-on properties not on water was $144,000. This means that the waterfront properties which are mostly seasonal, are on average paying three and a half times as much tax as the non-waterfront. On my lake, Lake Rosseau we're paying six times as much. Of equal concern, the shift of tax onto waterfront is not happening gradually. It's happening in leaps and bounds. One simple example; my assessment on Lake Rosseau was up 50% last year and my taxes were up 40%. . This is the system that's coming your way if its not there already.
Something else became apparent to us late last year. In the last two assessments, in 2001 and 2003, waterfront values were rising all over Muskoka. Also, anecdotally we were learning that the same high waterfront values were increasingly a fact of life in many areas across Ontario. We had earlier established the Muskoka Fair Tax Coalition. With that organization as a base we decided in February of this year to form WRAFT and take our efforts province-wide. While higher taxes are clearly bad news for cottagers all over the province, the good news is, we believe, that by building an Ontario-wide coalition we have a much greater chance of achieving tax reform. It gives us a broader and stronger voice and gets us away from the Muskoka image where, as it is widely perceived, we are all wealthy. It also allowed us, on day one, to approach FOCA who quickly signed on as a founding member, have put Noel Thomas and Terry Rees on our Board and have lent their knowledge, support and broad range of contacts to our cause.
What have we accomplished so far?
- Our first challenge was to agree on the problem. This may sound strange but there is so much wrong with the assessment and property tax system that we had to narrow down the list and establish our number one priority. In doing so we recognized two realities. Realistically we are stuck with some form of assessment process. Also realistically it is not feasible in the present fiscal environment to upload or transfer to the province some costs currently included in property tax. We then concluded that our primary challenge, on behalf of our member associations, was to concentrate on putting a halt to any further shift of tax onto waterfront properties.
- Our second priority was to build our coalition. We currently have over 80 member associations spanning the province and the list is literally growing on a daily basis. It ranges from the Lake of the Woods on the west to the Thousand Islands and Rideau Lakes on the east.
- Next we wanted to confirm that the shift of tax was in fact a province-wide reality. We've obtained from MPAC statistics by municipality which demonstrate that waterfront properties over the last two assessments are increasing in value at a much greater rate than those not on waterfront. The listings by township will be handed out at the WRAFT annual meeting.
- To begin our lobbying efforts, we've had introductory meetings with Ontario politicians and bureaucrats involved in property tax policy, we've described the issues as we see them and we've made it clear that we're not going away.
- In order to communicate our progress to members, we've developed what we believe is an effective website, www.wraft.com. We will update it regularly and encourage you to look at it frequently.
- To build a war chest, we've carried out a successful fundraising in Muskoka, bringing in over $100,000. This is particularly heartening as it says that a lot of folks believe in our mission. We'll be talking to uor members later about helping to build our war chest.
- Finally, we've begun a research project designed to identify precedents in North America for property tax reform and in particular for methodologies which move away from a pure assessment-based approach, as we have in Ontario, for distributing taxes.
In the May 2004 Ontario budget, the Liberals first and now infamous budget, there was a bit of good news for cottagers. The next assessment was deferred from 2004 to 2005. More importantly, language in the budget indicated an awareness of the concern with inequities in the current system. The budget stated that before the end of 2005, research will be carried out to "address taxpayers concerns with assessment volatility for individual properties" and "ensure fairness for all property owners...". There was no specific reference to waterfront but from meetings we have held already with the province we think that they recognize our concerns and we have indicated we will be researching precedents and providing input to their deliberations over the coming months. Let me tell you though that it's going to be an uphill battle. The bureaucrats think the present methodology is fair. The winners under the system, those in your municipality not on water, think its just fine. Municipalities like it because it makes it easy, unless we watch closely, to raise more taxes without jacking up the millrate. (This happened a few years ago in my own township, Seguin, where we've since had a major change in our elected council. I don't know what your experience has been but it appears that many townships are taking advantage of higher assessments to raise their total tax take.) With many supporting the status quo, we need the strongest possible voice and the best possible research and precedents to accomplish our objectives.
We believe the next year is critical in our efforts to modify the present property tax regime and halt the shifting of tax onto waterfront property owners. How can you help? If your association is not already a member, join up and strengthen our voice. The one-time fee is tiny relative to the issue and to the contributions of the founding members. If it helps you can even pay it in installments. We seriously need your support because we have to demonstrate to the powers that be that we represent waterfront associations across Ontario. Politicians pay attention to numbers. Secondly, we need to build a political base. Provincially we vote where we live which for most of us is not where we cottage. We need to know where your members live and vote, so that we can go, for example, to Michael Bryant in St Pauls riding and tell him he has x thousand cottagers in his riding and then we have to be sure he hears from them. This is a huge project and we're going to need your help. You'll be hearing more from us on this subject at our Annual Meeting.
Let me close by saying that, while it may seem obvious to many of you, we spent some time early on agreeing on what was inequitable about the present pure assessment- based system for distributing property taxes in Ontario. It bears no relationship to ability to pay. It bears absolutely no relationship to services provided. It is volatile and unpredictable. It creates financial hardship for many waterfront residents. It is a tax on an unrealized gain and it is now forcing the sale of properties, leading to an acceleration of development on the waterfront. We already know that many other jurisdictions have modified their systems to deal with these inequities. We are dedicated at WRAFT to finding a better way in Ontario. We hope, if you haven't already, you will join us.