REPORT General Committee

Transcription

1 V W0kkillP foh YOU. REPORT General Committee For Information DATE: REPORT TITLE: TAX RELIEF FOR LOW-INCOME SENIORS AND LOW-INCOME DISABLED PERSONS UNDER SECTION 319 OF THE MUNICIPAL ACT, 2001 FROM: Norma Trim, Chief Financial Officer and Commissioner of Corporate Services OBJECTIVE To provide Regional Council with details regarding a potential program to cancel property tax increases for low-income seniors and low-income persons with disabilities under section 31 9 of the Municipal Act, 2001 (hereafter referred to as the "Act") as directed by Recommendation GC which was adopted at the September 10, 2009 meeting and read as follows, "That staff prepare a report for consideration by Regional Council regarding the cancellation of property tax increases for low-income seniors and low-income persons with disabilities which is permitted under Section 31 9 of the Municipal Act, 2001". And further, to receive Regional Council direction on the Regional Tax Relief for Seniors and Persons with Disabilities Program for 2010 and future years. Section 319 of the Act mandates upper-tier and single-tier municipalities to pass a by-law providing relief from property tax increases to low-income seniors or low-income persons with disabilities. 0 The existing Regional Tax Relief for Seniors and Persons with Disabilities Program provides for interest free deferrals of annual property tax increases to eligible taxpayers. The lower-tier municipalities offer tax assistance to seniors and disabled taxpayers under local by-laws or Council resolutions. Halton lower-tier municipalities have enacted tax assistance by-laws under section 365 of

2 ka A-AS-2 - DISCUSSION 1. Background a) Legislative Requirements Section 319 of the Act mandates that a municipality, other than a lower tier municipality, shall pass a by-law for the purposes of relieving financial hardship for low-income seniors and low-income persons with disabilities. The tax relief may be by deferral, cancellation, or other tax relief of all or part of a property tax increase in the residential property class. The by-law of an upper-tier municipality providing tax relief also applies with respect to the tax increases for lower-tier and education purposes. The cost of any program that is adopted by an upper-tier municipality must therefore be shared by its lower-tier municipalities as well as the school boards based on the prorated tax shares (i.e. portions of the tax rate) of the relief being provided. The definition of "low-income seniorsj7 and "low-income persons with disabilities" is to be specified in the by-law. b) Existing Regional Tax Increase Deferral Program (by-laws and ) Peel provides eligible low income senior and disabled taxpayers with an interest free tax deferral of all annual tax increases of their property taxes (local, Regional and education tax portions). The tax deferral is secured by a lien on the property. Low-income seniors that are 65 years of age or over and in receipt of the Guaranteed Income Supplement (GIs) or disabled taxpayers that are in receipt of benefits under the Ontario Works Act (OWA) or the Ontario Disability Support Program Act (ODSPA) are eligible to apply for the tax deferral if they are either an owner, the spouse of an owner or the same sexpartner of an owner. The existing program has been in place since 2004 when it was enhanced to make eligible all annual tax increases and with the removal of the $100 threshold that had been in place for the taxation years. The program was developed in consultation with staff from the lower-tier municipalities through the Joint Regional and Area Municipal Tax Policy Team. A summary of the program as well as the programs offered by the lower-tier municipalities is included in Appendix I. Currently there are 72 properties in the Regional program with a cumulative tax deferral total of $26,136 in the program. All of the participants are Mississauga taxpayers who are also participating in the city's interest free loan program. The cost of the program to Regional and Mississauga taxpayers is therefore negligible as it is limited to the interest carrying cost of the relatively small outstanding deferral balance. c) Tax DeferrallAssistance Provided by GTA Regions The property tax relief offered by the Region is consistent with the rest of the GTA upper-tier municipalities. No regional government in the GTA currently offers a grantlrebate to low-income seniors or low-income disabled persons under section 319 of the Act. Appendix II provides a summary of the programs offered by the other GTA Regions as well as the City of Toronto. The Region of Halton also participates with any of its lower-tier municipalities that have adopted a tax rebate program for senior taxpayers under section 365 of the Act. The City of Burlington and the Towns of Oakville and Halton Hills have passed rebate by-

3 e"b A -AS3 - laws under that section and the Region of Halton funds the upper-tier portion of the rebate through a separate by-law that may be passed by an upper-tier municipality after receiving notice from a lower-tier municipality of by-law passage under section 365. The rebate by-laws passed by the Halton lower-tier municipalities under section 365 also trigger the sharing of rebate costs with the school boards. The City of Toronto offers a cancellation of property tax increases to eligible low-income seniors and low-income disabled. Toronto's program for 2008 had 3,300 participants with a total rebate cost of $687,187 (city and education tax portions). d) Other Assistance Programs Available to Low-income Taxpayers The lower-tier municipalities in Peel offer the following low-income assistance programs (see Appendix I and Appendix Ill for program details and eligibility criteria): o Mississauga offers a $500 interest free loan on an annual basis to eligible taxpayers. There are currently 92 properties with outstanding loans of $194,529 in the program. 0 Brampton offers a $300 rebate on an annual basis to eligible senior taxpayers, amounting to an estimated 1,450 applications in 2009 for a total cost of $435, Caledon offers a $300 rebate on an annual basis to eligible senior taxpayers, amounting to an estimated 300 applications in 2009 for a total cost of $90,000. o Mississauga and Brampton also offer snow removal assistance to low-income seniors and disabled. The Province also offers the following property tax related assistance programs for lowincome individuals and seniors: 0 Basic property tax credit of $250 per year for individuals under the age of Basic property tax credit of $625 per year for individuals age 65 or older. o Senior Homeowner Property Tax Grant of a maximum $250 in 2009 and $500 in 2010 and future years (this is in addition to the basic property tax credit above). Exemption from taxation for alterations, improvements and additions on existing residential units to provide accommodation for or improved facilities for the accommodation of seniors and persons with a disability under section 3 of the Assessment Act. 2. Estimated Cost of a Cancellation of Tax Increases for Low-income Senior and Disabled Taxpayers Program for 2010 The potential number of applicants and cost of a Cancellation of Tax lncreases for Lowincome Senior and Disabled Taxpayers Programs will depend on the eligibility criteria set by Regional Council. The tax increases eligible for cancellation would be impacted by municipal tax rates, the education tax rate set by the Province as well as the reassessment impact on individual properties. The Joint Regional and Area Municipal Tax Policy Team considered the various criteria currently used by the other GTA municipalities as well as various methods of trying to identify the potential number of program applicants and related tax cancellation costs and decided that for initial estimate purposes the following assumptions would be used:

4 HAeA%4 - Current Peel Region and lower-tier program eligibility criteria (i.e. age, income, disability, ownership) would be maintained. Brampton and Caledon 2009 seniors rebate program data would be used to estimate Mississauga participation (2009 Brampton and Caledon senior rebate program applicants as a percentage of total households applied to the Mississauga number of households to arrive at the potential number of Mississauga applicants). Low-income disabled applicants are estimated at 10 percent of the number of lowincome senior applicants at each lower-tier municipality. 0 Average rebate cost per applicant in the initial year would be $100 in Brampton and $150 in Caledon (calculation based on the actual 2009 database of potential applicants) and an estimated $150 in Mississauga. 0 Administration of the program would require billing system changes, the cost of these changes is estimated at up to $100,000 (provided by Mississauga staff). Brampton shares the billing system with Mississauga. Caledon is currently reviewing potential costs. The lower-tier municipalities also indicated the following incremental staff requirements in order to administer a new program: o 1.0 FTE in Mississauga o 0.5 FTE in Brampton o 0.5 FTE in Caledon The following table outlines the estimated 2010 cost of a tax increase cancellation program: Senior applicants Disabled applicants Total applicants Mississauga Brampton Caledon Total Region Estimated cost per applicant $ $ $ $ Estimated Costs Tax cancellation cost $412,500 $1 59,500 $49,500 $621,500 System changes cost 100, TBD 100,000 Administration cost (staff) 100,000 50,000 50, ,000 Total $ $ $ $ Program Cost Allocation Region cancellation portion $194,333 $64,390 $19,828 Cityrrown cancellation portion $1 16,012 $62,518 $17,005 Education cancellation portion $1 02,155 $32,592 $12,667 Systemladministration costs * $200,000 $50,000 $50,000 * Allocation of costs among funding partners yet to be determined

5 HA-AS5-3. Considerations The Joint Regional and Area Municipal Tax Policy Team identified the following issues, among others for further consideration: i. Nature of Tax Assistance - The current tax deferral program is incremental in nature. Taxpayers only receive deferral assistance for the application year and must therefore pay the tax increase impact of the prior year in the subsequent year. Making the tax assistance cumulative in nature under any future program requires consideration. Although a cumulative program would protect eligible applicants from all future tax increases it would result in significant costs for the Region as well as the lower-tier municipalities. For example, the program cost could double to $1,243,000 and the 2012 cost could be $1,864,500 (based on the above program cost assumptions being applicable to those years). ii. Program Criteria - Consideration may be given to making any new program feature two levels of assistance (similar to Toronto's) where the benefits differ based on the relevant criteria such as, applicant's age, income or assessed value of the home. For example, introducing an assessment criterion that would limit the full benefits of a tax increase cancellation program to those applicants that own a home of less than $400,000 of Current Value Assessment in 2009 year phase-in value has the potential of reducing the number of applicants by approximately 30 percent. This would reduce the 2010 cost estimate from $621,500 to $435,050. The applicants not meeting this criterion may be offered a tax deferral similar to the current program. iii. Funding Responsibility for Additional Costs - Administration of the current Regional program is done at the lower-tier level and due to the low participation in the program, administration costs have been minimal. The introduction of a new program by the Region will result in significant incremental administrative costs (i.e. $300,000, see table above) and consideration will be required on the optimum program delivery as well as who would bear the responsibility for funding the administrative program delivery costs. iv. Possible Impact on Lower-tier Tax Assistance Programs - If the program becomes cumulative in nature, it is anticipated that over time the total amount of tax cancellation will grow to a point where the amount of assistance provided would exceed the current level of assistance provided by Brampton and Caledon. The lowincome senior assistance programs in Brampton and Caledon are currently grandfathered under the Act and these municipalities may need to reconsider their respective programs. CONCLUSION The existing Regional Tax Relief for Seniors and Persons with Disabilities Program provides taxpayers protection from property tax increases that is consistent with programs offered by the other GTA Regional governments (i.e. tax deferrals). This report identifies key details, including the cost, of enhancing the current Regional deferral program to offer a cancellation of tax increases program under section 319 of the Act. Council direction is requested in regards to the program criteria before staff can develop and propose a tax increase cancellation program for Regional Council consideration and implementation in and future years.

6 M P-As- 6 - Norma Trim Chief Financial Officer and Commissioner of Corporate Services Approved for Submission: D. Szwarc, Chief Administrative Officer For further information regarding this report, please contact Dave Bingham at extension 4292 or via at binghamd@peelregion.ca Authored By: Jim Alpous c. Legislative Services

7 Program Name Appendix I - Tax Relief Programs for Seniors & Disabled Taxpayers Region of Peel Tax Relief for Seniors and Persons with Disabilities City of ~ississauga Low Income Seniors and Disabled Tax Loan City of Brampton Elderlv Residents Tax Assistance Town of Caledon Elderly Residents Tax Assistance Brief Description Interest free deferral of annual tax increases secured by a lien on the property. Application must be made annually. Repayment must be made for the total amount deferred. Interest free loan secured by a lien on the property. Application must be made annually. Repayment must be made for the total loan amount. Tax creditlrebate to eligible senior citizen property owners. Application must be made annually. Tax creditlrebate for eligible applicants. Application must be made annually. I M ~ ~ ~ I " Mandatory, ~ ~ Program ' * 1 Optional Program * I Optional Program * I Optional Program * Legislative Reference Program Tv pe Deductible Amount Annual Benefit Amount Program Sharing Eligibility Criteria Municipal Act, Section 31 9 Deferral NIA Varies Region, CitylTown, and Province years of age and in receipt of the Guaranteed Income Supplement (GIs) 2. Must be the personallprincipal residence 3. Owned the property for at least one year 4. Handicapped and in receipt of benefits under the Ontario Works Act (OWA) or Ontario Disability Support Program Act (ODSPA) The City of Mississa uga Act Loan NIA $500 City. 65 years of age and in receipt of the GIs. Must be the personallprincipal residence. Owned the property for at least one year.. Handicapped and in receipt of benefits under the OWA or ODSPA years of age and in receipt of benefits under the OWA By-law ** Subsidy NIA $300 City years of age and in receipt of the GIs P. Must be the personallprincipal residence 3. Have not claimed a tax credit on any other property for the year By-law ** Subsidy NIA $300 Town. 65 years of age and in receipt of the GIs. Must be the personallprincipal residence. Must be the assessed owner for at least 5 years * per the Municipal Act ** passed under the authority of the Municipal Elderly Resident's Tax Assistance Act (now repealed)

8 Appendix II - GTA Municipalities Survev of Tax Relief Programs for Seniors and Disabled Taxpavers Municipality - Program York Renion - Tax Deferral 0 Property owned as of Jan. 1' of e taxation year Applications due Sept. 3oth of taxation year Halton Renion - Tax Deferral Applications due 45 days after date of mailing of the final tax bill Durham Reqion -Tax Deferral 0 Applications due August 1 5'h of taxation year Toronto - Tax Deferral and Tax Cancellation Applications due August 31 " of taxation year Tier 1 : Low-income Seniors Criteria 0 65 years of age or older Tier 2: years of age 0 Allowed tax increase threshold of $100 Household income of $23,000 if single or less than $40,000 in a family of 2 or more persons 0 65 years of age or older 0 Household income does not exceed $41,300 per annum o 65 years of age or older and receive the Guaranteed Income Supplement (GIs) o Allowed tax increase threshold of more than 5% or $100 Tax Deferral 65 years of age or older years of age and receive the GIs or if widowed in receipt of the Spouse's Allowance under the Old Age Act o 50 years of age or older and receive a pension or pension annuity under the Income Tax Act Household income does not exceed $50,000 Tax Cancellation 65 years of age or older o years of age and receive the GIs or if widowed in receipt of the Spouse's Allowance under the Old Age Act Household income does not exceed $36,000 Residential assessment of $525,000 or less Low-income Disabled Criteria Receiving benefits under Ontario Disability Support Program (ODSP), or Receiving the Guaranteed Annual Income System (GAINS) for the disabled and be eligible to claim a disability amount as defined in the Income Tax Act. Receiving benefits under ODSP or similar plan (government or private insurance plan) 0 Household income does not exceed $41,300 per annum * Receiving benefits under ODSP Allowed tax increase threshold of more than 5% or $1 00 Tax Deferral Receiving disability benefits Household income does not exceed $50,000 Tax Cancellation a Receiving disability benefits Household income does not exceed $36,000 Residential assessment of $525,000 or less

9 MA-AS-% Appendix I11 Snow Removal Subsidy Programs for Seniors & Disabled Taxpayers City of Mississauga City of Brampton Program Name Snow Removal Subsidy Snow Removal Financial Assistance Brief Description Annual subsidy for snow clearing costs of eligible applicants Annual subsidy for snow clearing costs of eligible applicants MandatorylOptional Optional Optional Legislative Reference Council Resolution Council Resolution Program Type Annual Benefit Amount Program Sharing Eligibility Criteria Subsidy $1 00 City years of age and in receipt of the GIs, or 2. Handicapped and in receipt of benefits under the OWA or ODSPA 3. Owner or legal tenant of the residential property in question 4. Must provide receipts or documentation to verify claim Subsidy $100 non corner lot $1 50 corner lot City years of age, or 2. Permanently confined to a wheelchair, restricted to the permanent use of crutched or braces, or otherwise permanently disabled in such a way as to restrict mobility 3. Own and occupy the property on which the application is made, not claimed a credit on any other property for the year 4. Make application by Nov. 3oth for coming year and provide receipts/documentation of expenses for snow removal by June 3oth of the current year -