Big tax bite making waves on the lakes
Escalating property assessments are hitting waterfront cottage owners hard
By JANE GADD
Friday, May 6, 2005
Globe and Mail, page G12
Five years after they sold their Toronto home and retired to the family cottage on southern Georgian Bay, Henry and Franzine Poehlmann are paying as much property tax on one home as they used to pay on two.
The combined bills for their $300,000 North York home and the modest cottage they built in Tiny Township in the 1960s came to $4,500 in 2000, the former consultant engineer says.
Now they're paying about the same amount out of their fixed annual income for just the cottage - the result of escalating market-value assessments that are causing rage and panic among owners of waterfront property all over Ontario.
"If this continues, most people in similar circumstances will have to sell," Mr. Poehlmann says. Already, some of the Poehlmanns' old friends farther along the beach have gone. For now, he and his wife are staying put. "You make do with what you have," he says with resignation.
But for his brother-in-law, who was one of four family members who pooled their funds to buy the plot of land on Georgian Bay in the 1960s and built a family compound, the rising cost has meant moving off the waterfront on to a back lot subdivided from his piece of the plot.
"The parents moved to the back lot and the son's family now has the cottage on the water," Mr. Poehlmann says.
Rapid escalations in property taxes for cottagers on waterfront land have sparked talk of a tax revolt in usually peaceful pockets of vacationland.
The outrage is so strong that a coalition of ratepayer associations demanding controls on further increases has attracted 108 new member groups in just a year.
The WRAFT coalition (Waterfront Ratepayers After Fair Taxation) has bought data from MPAC, the province's Municipal Property Assessment Corp., analyzed it and found huge disparities in the share of property taxes now borne by waterfront residents, who tend to be seasonal, compared with owners who don't live on the water and generally live in the area year-round.
The Harris government legislated the move to a province-wide market-value assessment system in 1997.
Between the property assessments of 1999 and 2003, taxes on waterfront properties rose at double to triple the rate on non-waterfront homes, a reflection of their rise in value on paper, says Bob Topp, executive-director of WRAFT.
In Bluewater on Lake Huron, for example, a hot cottage market pushed waterfront taxes up 75 per cent compared with 23 per cent for non-waterfront properties.
In the Seguin area near Parry Sound, waterfront taxes rose 65 per cent while inland taxes rose 23 per cent.
And in the municipality of Muskoka Lakes, the rise for waterfront sites was 56 per cent compared with 26 per cent for landlocked properties.
"I would be happier if my cottage was worth half what it is and the taxes were half," says Mr. Topp, who is a fourth-generation cottager on Lake Rosseau in Seguin.
He took over his cottage in the 1980s from his father who bought it in the 1950s and would like to pass it on to his grown children except that they probably couldn't keep up the tax payments.
Mr. Topp has had numerous meetings with Ontario government officials who are holding lengthy consultations on how to make a fairer assessment system.
Two years ago, he was on a task force of Muskoka regional municipalities that debated the issues for a year and presented recommendations to the province.
Since then nothing has happened except a continuing upward surge of tax assessments.
"The tax doesn't relate in any way to what you get for that, and it doesn't relate in any way to the funds available to pay," Mr. Topp says. "It's a tax on a gain that may never be realized. We're not trying to get out of paying our share. We're happy to pay more than our share on any basis of the services we get. We're just saying it's gone far enough."
Ontario MPP Mike Colle, who is overseeing the property-tax issue in his capacity as parliamentary assistant to Finance Minister Greg Sorbara, told the Legislature almost a year ago, on May 31, 2004, that the government was committed to reforming property tax assessments.
"Next year, we're saying let's fix MPAC," Mr. Colle said. "The last government . . . basically created the most monstrous property tax legislation in the civilized world."
But this week, Mr. Colle's press secretary Sean Hamilton would say only that the minister has met with WRAFT "and has listened to their concerns and is reviewing the issues."
Asked if any change in the system could be expected by this fall, when new tax bills will be going out, he said, "I really wouldn't like to speculate on timing."
One problem is the unpalatable message that would be sent to ordinary residents of towns like Huntsville and Bracebridge by freezing or reducing taxes on recreational property owners who are perceived as spoiled fat cats from the city.
"People who live here year-round, especially those in the $150,000 homes, will say why should we subsidize the people with $5-million cottages?" says Bracebridge Mayor Scott Northmore.
"A happy middle ground, or a middle ground anyway, must be found," says Huntsville Mayor Hugh Mackenzie.
A fair balance would recognize that market-value assessment requires those with higher-value properties to pay more but also that they use fewer services and contribute greatly to the local economy, Mr. Northmore says. "It's an evolving process that won't be resolved any time soon."
Meanwhile, Mr. Poehlmann deals with his anger by writing letters to MPs and MPPs.
"I had responses from their underlings, just platitudes," he says bitterly. "They didn't at all address the issues I raised."