Ministry of Finance August 18, 2015

Transcription

1 Ministry of Finance August 18, 2015

2 The purpose of this presentation is to provide an update on reviews being undertaken by the Provincial-Local Finance Division of the Ministry of Finance. 1. Status update on the implementation of the Assessment Review recommendations 2. Property Tax Reviews: Business Property Tax Capping Program Review Vacant Unit Rebate & Subclasses Review Provincial Land Tax (PLT) Review 2

3 The Province is implementing the recommendations contained in the report on the Assessment Review (Special Purpose Business Property Assessment Review) in collaboration with MPAC, municipalities and stakeholders, in time for the next province-wide reassessment in The report included recommendations relating to the assessment of specific complex properties, and also contained five broad categories of recommendations: Advance disclosure and assessment methodology Accountability, roles and responsibilities Data accuracy and integrity Appeals Municipal assessment at risk strategies To guide the implementation of the report s recommendations, in spring 2014, the Ministry established a Reference Committee with municipalities and stakeholders. The Ministry appreciates the input received from municipalities as part of this process. 3

4 In April 2015, the Minister of Finance issued formal direction to MPAC related to the implementation of key recommendations of the report. For identified property types, the Minister s directive provides guidance related to how MPAC will: 1. Establish a new advance disclosure process for the 2016 reassessment, including the release of market analytics and preliminary values in advance of roll return. This new process will involve forums and individual meetings that will enable municipalities and business taxpayers to contribute to the determination of assessed values in advance of the preparation of the assessment roll. 2. Develop detailed technical methodology guides that will serve as a useful tool for MPAC s assessors and will explain valuation procedures to stakeholders 3. Publish an information and data sharing policy, which explains what information MPAC requires from which parties and for what purposes. In addition, MPAC and the Ministry are piloting an Assessment Methodology Change Protocol. A key objective for this protocol will be to ensure that municipalities and taxpayers are consulted prior to assessment methodology changes. The Minister s directive is available in the April 18, 2015 issue of The Ontario Gazette at: 4

5 The Reference Committee has made a significant contribution to the implementation plans for key recommendations and is completing its work. Going forward, the Province will continue to work with MPAC, municipalities and other stakeholders to implement the Assessment Review recommendations. The Ministry is exploring ways to support ongoing engagement with municipalities on property assessment matters, building on the success of the collaborative approach established during the Assessment Review. As part of the implementation process, the Ministry will continue to keep municipalities and stakeholders updated on progress made. Most recently, the Ministry posted a bulletin update on August 11, 2015 on the status of implementation of the Assessment Review recommendations. This public progress update can be accessed on the Ministry of Finance s website at: 5

6 In response to recent municipal and business stakeholders requests for further enhancements, the Ministry is conducting a review of the Business Property Tax Capping Program (Capping Program). A number of municipal organizations, several municipalities and a number of business stakeholders have voiced concerns with the program continuing in its current state. The Review builds on past collaborative work and considers additional enhancements and changes to the program, addressing the concerns and requests made by both business and municipal stakeholders. Through consultations with stakeholders, the Capping Program has been enhanced several times since its introduction in 1998, providing municipalities with increased flexibility and options within the program. Properties removed from the Capping Program continue to benefit from the ongoing mitigation provided through the assessment phase-in program. 6

7 There has been a steady increase in the number of properties paying CVA level taxes and a reduction in the number of capped properties % Properties at CVA (excluding Toronto) % of Properties 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% at cva capped

8 Municipalities with 100% of Properties at CVA Level Taxes 70% 64% 60% 50% 40% 30% 20% 10% 46% 43% 0% Commercial Industrial All Classes Consultations on additional Capping Program flexibility are underway with a Municipal Reference Group (MRG) and a Business Reference Group (BRG) and will continue through the fall. 8

9 In response to municipal and business stakeholders requests, the Ministry is conducting a review of the Vacant Unit Rebate and Vacant/Excess Land Subclasses. Several municipalities have expressed support for more flexibility in the rebate program and have requested the Ministry to conduct a review. Business stakeholders, including Business Improvement Area associations and property owners, have expressed a range of suggestions from modifying the rebate program to maintaining its current form. Based on the Financial Information Returns (FIRs) prepared annually by municipalities, it appears that the municipal cost of the Rebate has generally increased from Municipal Cost of Vacant Unit Rebate $M

10 The review of these programs will allow all parties to provide input on and evaluate the current programs and identify opportunities to improve and/or update the programs in ways that balance business and municipal stakeholder interests. Consultations are currently underway with a Municipal Reference Group (MRG) and a Business Reference Group (BRG). Consultations will continue through the fall, concurrently with the Capping Review. 10

11 The government announced a review of PLT in 2013 in response to concerns raised by northern mayors. A key element of the review has involved consultations with northern municipalities: A PLT Northern Municipal Reference Group with staff from MFOA and a number of northern municipalities was established to provide input. The Ministry of Finance also held 21 sessions with unincorporated area representatives in the North that informed the review. The consultations formed the basis of a summary paper, Provincial Land Tax Review: A Summary of Stakeholder Consultations, which was released in December During the review there was broad agreement that all taxpayers should pay their fair share, but also that PLT reform should proceed at a manageable pace. 11

12 The PLT changes for 2015 and 2016 announced in the Ontario Budget mark an important first step toward reducing property tax inequities in the North. This is the first time in over 60 years that the Province has made adjustments to PLT rates that increase revenues. Changes include increases for all property classes and an increase of the minimum tax from $6 to $50 in Measures in the 2015 Ontario Budget will be fully implemented by 2016, however the PLT review will not end with these changes. The Province will continue discussions on ways to further address tax inequities in the North and modernize the PLT system. The Government is launching a new series of consultations with northern Ontarians, including the Municipal Reference Group. 12

13 Assessment Review Diane Ross Director, Provincial Local Finance Division, Assessment Policy & Legislation Branch Assessment Review website: Business Property Tax Capping Program Review Vacant Unit Rebate & Tax Class Review Provincial Land Tax Review Chris Broughton Director, Provincial Local Finance Division, Property Tax Policy Branch PLT website: 13

14 The Assessment Review report includes specific recommendations addressing issues relating to the assessment of special purpose business properties. Work is underway to implement these recommendations as follows: Billboards To be assessed based on structure cost (regulation filed on March 24, 2014). Further discussions are underway with MPAC and stakeholders to consider implementation details such as depreciation. Mills The Province has provided one-time financial assistance to a small number of northern rural municipalities most adversely affected by assessment decreases resulting from ARB appeals on mill properties. Industrial Lands MPAC is currently working on separate guidelines for the assessment of industrial properties located in designated employment areas. More information will be available soon on MPAC s website regarding the consultative process for preparing these guidelines. Landfills The Ministry of Finance and MPAC have continued working with stakeholders to arrive at a valuation approach in time for the 2016 reassessment. Farms MPAC is working to establish clearly-defined procedures to strengthen accuracy and equity of assessed values of farmland, including improving sales verification process. Grain Elevators A regulation has been filed which provides that licensed commercial grain elevators be classified as commercial; elevators located on farms that store only the farmer s own grain be classified as farm; and on-farm elevators be classified as farm or split farm/commercial classification, if farmer also has a licensed commercial elevator operation. The classification policy is effective from January 1, Wind Turbine Towers A regulation has been filed which provides that the assessment of wind towers be increased based on average increase in the value of industrial properties, which is approximately 3.3% per year for 2014 to The amount of increase will be updated with every four-year reassessment, beginning in