Council at standstill over how to help farmers without shifting tax burden
Administrator | Jan 26, 2018 | Comments 132
Prince Edward County councillors have just over two weeks to mull over how to support agriculture and farmers without adding hardship on residential taxpayers.
At the Committee of the Whole meeting Thursday, several farmers joined John Thompson, president of the Prince Edward Federation of Agriculture in telling councillors how a 25 per cent increase in taxes would make a tough way to make a living even more difficult.
Elizabeth Johnston spoke to represent the young farmers in the County who are competing with large operations, land investors and city residents buying up land.
“This dramatic rise in property tax is crippling for our young farmers. In order to ensure small farms continue to exist in Prince Edward County we need to soften this blow and ensure they are in a financial position to be able to invest in land and keep it in agriculture.”
Johnston noted she is almost 35-years-old and at one time, her age would signal time for dismissal from the Young Farmers club. But recently, she said, the age limit has moved up to 40.
“I can bet you that by the time I’m 40, that number will be shifted to 45. It’s great for my ego. I get to be a ‘young farmer’ for quite a long time, but it makes you wonder why that number is going up. It’s simple. There’s no one coming up behind me. That should be really scary for our community.”
The deputations were a follow up to others, most recently in November, when council was asked to reduce the farm tax ratio from the current 25 per cent of the residential rate, to 20 per cent for 2018 and beyond.
Asking staff for a report, the recommendation came back to maintain the ratio at 25 per cent.
“Lowering the farm tax ratio would shift additional property tax buren to other classes, primarily the residential tax class,” staff’s report stated. “Reducing the farm tax ratio is not a fair and equitable policy decision for all ratepayers in the County of Prince Edward.”
Following extensive discussion, the staff recommendation was defeated, along with several amended motions.
Councillor Treat Hull stated council’s track record of delivery of promises to help farmers has not produced.
“This is our last term and repeatedly through the life of this council, we’ve said how important agriculture was to the community and how much we wanted to support agriculture. But to be honest, when I look back, in terms of our track record of delivering, I’m scratching my head to find anything really substantial.”
Councillor Gord Fox noted two deputations from two local young farmers “were game changers. You are the future and we have to look after our future.”
Mayor Robert Quaiff, reflecting on back-to-back years of weather devasting crop production (drought, followed by flooding) called the situation a connundrum.
“We’ve talked the talk since 2000 and maybe this is our opportunity to walk the walk… It’s council’s decision.”
He also reflected that the tax shift could burden other property tax classes, noting 90 per cent of County’s tax base is residential and 63 per cent of that is seniors.
“We’re the second largest senior community in Ontario and the fifth largest in Canada,” he stated. “But I am open to listen to amendments or alternatives as to where we can get the funds from.”
CAO James Hepburn made clear changes can be made for the tax shift this year, and “recommendations can be made for following years, but you can’t bind the future council to that. They will have the option of setting the tax ratio each year as required by the municipal act. You can’t let the farming community leave here thinking it’s a three-year deal.”
Options suggested but defeated included a 20 per cent increase this year; a 24 per cent increase for this year with recommendations for 22 per cent next, followed by 20 per cent and back to 25 per cent; a recommendation for 22 per cent this year.
Council decided to simply receive the report and will revisit the issue at the Feb. 13 meeting of council.
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Furthermore, political systems (read politicians, staff and or regular people) are self serving first. So, there is no such thing as clear impartiality in any recommendation, staff or otherwise. Those that think that we have impartiality may be considered foolishly naive.
The simple “my urban home tax increase” view point is way off base. The fair distribution of taxes to all is the point. The farmers already pay their share on their homes and that compares to your urban model. As far as land wealth, that is a Toronto centric “flip the land” for profit idea that needs to be corrected. The farmers are not selling to a suburban developer or a mall anytime soon! But keep pushing and they may very well have to and by then you will have moved back to Toronto!
Susan,
If the staff report had said “Yes, the more than doubling in farm taxes (110%) is steep and it will cost the farmers an additional $1,395,000 over the 4 years but we recommend that the farmers should pay that much more” that would be one thing. It would be honest and blunt and Council would need to take responsibility for any decisions based on that advice.
Instead, however, the staff report, talked about affordability. By highlighting that the reduction of the FTR to 20% would result in a loss of revenue to the County of $544,000 over 4 years, it concluded that the County, especially its residential base, can’t afford the reduction. It talked about a revenue loss of over $38 per average residence in the County over the 4 year period.
The big problem is that the staff report highlights only the proposed reduction but does not mention that, even with the reduction, the farm taxes still would increase by $850,000 in that period. That works out to a net benefit of $58.80 for the average residence in the County (and leave 10% for the other tax classes). Does this sound like an affordability problem? Does it sound like a subsidy to farmers?
These numbers are based on staff figures and Census data. Anyone can compare the tables in the staff report (Jan 25 agenda of Committee of the Whole) with my tables in my addendum (Feb 22 agenda, Committee of the Whole). The addendum of Ben Lefort and that of John Thompson from the same meeting also contain important information related to all of this.
They still are only required to pay 25% of the residential rate all the while their net worth has increased. When you factor in the multitude of tax deductions from machinery,vehicles,fuel,fertilizer to mention just a few I believe that Council should follow the staff report and not lower the FTR.
Because residential makes up 90% of the County tax base, if residential assessments overall rise significantly, the County can and sometimes drops the tax rate in order to gain the revenue needed for the budget. But because the farm tax class only makes up about 2% of the County assessments, even the 110% increase in farm assessments is not enough to cause the rates to drop. That is why the provincial government gave the municipalities the authority to charge farms anywhere between 0 and 25% of the residential rates. This request is simply asking Council to exercise that authority and drop the Farm Tax Ratio from 25% to 20%. Even after doing that, the farm property taxes will provide 69% more revenue for the County by the last year of the assessment cycle than in 2016. In other words, the “subsidy” you mention is the actually other way, farms would still be paying a higher share of the County budget, even with the drop in the FTR to 20%.
It stands to reason if your property assessment increases your property taxes will as well. That has been the outcome for residential as their properties increased significantly in assessed value. Since there is no relief for residential, few are in the mood to subsidize the farmer. The farmers need to take their issues up with MPAC and the provincial government instead of looking for their neighbours to pay their bills.
We attempted to bring numbers and reason to show that the staff report was very incomplete. It highlighted the size of the FTR reduction but it did not make clear at all the much larger size of the revenue increase from which that reduction came. In so doing, it neglected to mention that farmers still would be contributing a much higher proportion of County revenues than they were before – but only a 69% average increase and not a 110% increase. John Thompson has been giving those numbers for months and I provided these numbers in a different form to Mayor and Council in a letter nearly two weeks ago. A number of us presented presented them again in various forms (graphs, charts etc) on Thursday night.
Interestingly, no one on Council or Staff has questioned or disputed the numbers with us, even though they have had every opportunity to do so. We were careful to use staff figures and Census Canada, and to use them conservatively, to make sure that we could not be accused of twisting the facts.
To be honest, from watching the Jan 25 Committee of the Whole meeting several times, it seems to me that the hesitance of some Council members to grant this reduction in the FTR is their worry about the non-farm vote if they do so (there are 30 times as many residences as registered farms in the County). I think what surprised some is that so few non-farm residents showed up as requested on Thursday night and that about half of those non-farm residents who did come spoke in favour of the farm tax reduction request.
I find that when non-farm residents understand the situation and the size of the farm tax increase, even if the reduction was granted, most are supportive of the farmers. Few want to see the reduction in the numbers of farmers in the County continue (down 10% from 477 in 2011 to 432 in 2016, according to the Census).
Exactly my point, why the meeting. I can only wonder since it is an election year they chose this route rather than making a reasoned decision based upon a strong staff report. They were elected to make these not so tough decisions. Politics!
What did they have the meeting for Mark?
Policy should never be determined by who attends and speaks loudest at a meeting. Staff have this right and Council needs to make a tax decision outside of farmers lobbying.
What a great presentation you gave last night.If these people were so great against this maybe they should have came to the meeting
Everyone in the County was invited to the meeting to give their views. It seems that in calling the meeting, some on Council thought that the hall might be filled with residents opposed to the farmers’ request. Instead, only a few turned up who were opposed and about an equal number of non-farm residents stood up to speak in support of the farmers’ request. The majority of the crowd, however, were farmers.
It is definitely not a “spin” that the cumulative net benefit of the huge farm tax increases over 4 years, after the request for a reduction of the FTR to 20%, would work out to $58.80 for every residence in the County.
Here’s the math in case anyone wants to follow it:
– The cumulative farm tax increase over the 4 years at the current FTR of 25% amounts to $1,395,394 (these numbers provided by County staff). That works out to a net benefit over the 4 years of $97.37 for every one of the 12,899 residences in the County (plus it leaves 10% of the total increase for other property tax classes)
– If the FTR is reduced to 20% as requested, the cumulative farm tax increase over the 4 years still amounts to $850,971. That works out to $58.80 for every one of the 12,899 residences in the County (and leaves 10% of the total increase for the other property tax classes).
So it is not a “give away” as it has been spun. It is simply that the big “windfall” of a 110% tax increase for the farms over the 4 years would only become a modest “windfall” of a 69% increase.
It seems like a very modest request to me. Too bad that people have been presenting it as an expensive “give away” to farmers.
Benefit????? What a spin!
For those not at the meeting the key information is as follows as referenced from the staff report. The average residence would benefit from the increased farmland assessments as follows:
2017, $9.83, done
If the farmland goes to the 20% ratio as requested:
2018, $8.49
2019, $16.32
2020, $24.16
Cumulative benefit to residential, $58.80
Not surprised to see a good turn out of farmers, afterall they have everything to gain if they are able to lobby Council into shifting a portion of their taxes onto others. There are times that a meeting to receive community input is appropriate. This issue was not one of them. Flooding a room full of farmers wanting a subsidy on the backs of residential really açcomplishes nothing.
Good to see so many farmers out last night.I hope council reacts in the favor of farmers.I just wish farmING was as good as Gary Mooney said it is.Wouldn’t it be great.
Great discussion everyone! Let me add another view.
The first thing Council is keep our taxes as low as possible. Has this been done? Have you looked at the financials? Do we know that every penny was spent in the best interest of the community? Our Roads, water systems, sewage and our institutions all have needs. After that where do we need to spend? Look at where the money is spent and ask yourself are there opportunities for savings? It is the job of Council to make the right budget choices. Then they must distribute the taxes fairly.
Next Council must keep the community whole. We need to stop talking about groups of people as if they are all the same and homogenous in their groups. We don’t need to even begin comparing anyone. Besides, all the groups have needs and some are more needy on average but the specific needs of any one resident or group is not the focus of Council. The focus is fair tax distribution to all groups through the absolute best budget!
There are savings in the budget. I suggest we talk about the budget not the tax rates. The tax rates have to be fair for all. And right now they are clearly unfair for the farmers.
Thank you Bob & Doug (the Macenzie brothers???) for fighting the good fight.
If I can share another perspective. There is a surge of folks (usually from the big city) who are getting bitten by a new ‘back to land’ bug and quitting their desk jobs to farm, it may be a bit of a trend – being called a farmer is becoming cool for a certain demographic as millennials and such are feeling disconnected from society and don’t feel as though their jobs matter in the grand scheme of things.
This is potentially a hidden gem in terms of attracting local business. But instead there will now be a higher likelihood that when small farm properties (< 25ac) go on the for sale market, that people will sever off the land, sell them to the big land farmers for monocropping and the original farmhouse will be left with the one acre and a big old rotting barn that someone can turn into a art museum or wedding chapel…
The back to landers will find someone else to go to for sure…
Just 2 points in response, Dennis Fox. I know that you won’t likely be persuaded but other readers might be interested:
1. I and all the other farmers that I know do not want to sell out and profit from our farm land values. Our goal is to pass it on to the next generations. I don’t want farming to be so difficult financially that young farmers either give up or never become farmers in the first place. Already the number of farmers is in steep decline and the average age is rising rapidly.
2. When a similar kind of assessment increase hits the general residential tax base (and some say that it will in the next MPAC cycle), that property class is so large (90% of County assessments) that Council will be able to drop the mill rate to compensate. Years ago, when one category of residences was faced with large assessment increases, the mill rate dropped by 5%, which at least partially compensated.
However, the assessments on the approx. 400 farms in the County are not large enough as a proportion of County assessments that the recent increases in assessments materially affects the mill rate.
I don’t believe that some readers have followed this conversation closely. It has gone on now for the best part pf a month – which is good to see that many people are engaged in this issue.
Just to respond to some of the more recent comments – as far as I know, no one has said that they don’t care about farmers or their families and the tax increases they are facing. HOWEVER – what the farmers need to remember is that many residential taxpayers faced similar increases – costing them a great deal more too. Where was the concern for those people and for their families? The farming community has remained silent, for years, about MPAC and high assessments – that is until it affected them. AND no one asked for farmers to help pay their taxes. The fact is that farmer land is taxed at a much lower rate (25%) than residential properties – and your property has greatly increased in value. Your story is not one of poverty nor hardship – it is one of wealth. I believe that farmers have a nerve for even asking for help – take care of your own business and leave the rest of us to do the same.
Doug Rogers has given most of the relevant facts in this case but I think it is possible to state things a different way:
– I have examined the staff report and it is clear that it missed the big picture of farm taxes. It’s exclusive focus on the cost of the reduction reminds me of what my wife used to say when I exclaimed about a 35% discount at a store in our former home town. She’d say, “Don’t focus on the discount; remember that particular store tends to start with prices about double of what they should be. Your focus needs to be on the actual price in the end.”
-In this case, the staff report focuses exclusively on the “discount” but not on the fact that farm taxes are going up about 110% in the four years. Even after the discount, the farm tax load is about 65% higher.
– The staff report shows that the “discount” would amount to about $12 per residence in the County. But it misses the fact that the more than doubling in taxes for the farms still results in a net increased contribution from farms of about $25 per residence in the County, even after the discount
– Even if the FTR is reduced to 20% for farmers, the average farm will still be paying $700 more in property taxes per year in 2020 than it did in 2016.
– The OFA request is for only three years because it believes that the residential assessments will likely soar in the next round of MPAC assessments. If and when that happens, residents will rightly be protected by Council from a massive increase by a reduction in the mill rate and that will also benefit farms. The only mechanism for Council to protect farmers from an increase at this time when it is only their assessments which have soared so much is through reducing the FTR.
– remember that farm residences and the surrounding 1 acre are taxed on the same basis as other residents in the County. But we do have to provide our own water and septic (about $20,000 total cost for our home, plus ongoing maintenance costs etc).
We complain that our schools are getting shut down, that there’s no full-time work or future for our young people, that our population is decreasing so there’s less federal/provincial funding, and that grocery prices are going up.
How can you not see that hitting young farm families with a 112% average tax hike is making all these problems worse??? How is a young family expected to take on an increase in annual fees of $3000.00 to $6600.00? Then they also have their residential tax to pay.
(FYI: average farmer makes $30,000)
When did “pay up, or find a new place to live” become what the County is about?
Getting very frustrating. The mil rate is set to obtain the needed taxes from the number of ratepayers based upon assessments. Farmers only pay 25% of what a residential ratepayer does. They get the bargain rate under the theory that they require fewer services. The argument that the wealth gained in land value assessment means little , can be used by many ratepayers. Your house that was valued at $200,000 is now assessed at $350,000, but how do you sell it and replace it at today’s market value? But at the end of the day the fact remains that if your land or property wealth did not increase neither would your taxes unless the mil rate is set higher.
What I don’t understand is that folks can be so upset over $12? Really?! Show your support for Agriculture in the County and your farming neighbours!
If we keep one young family here supplying us with fresh meat & veggies, I’m in. Hey Dennis, send me your email and I’ll send you the $12. Problem solved!!
Susan, please explain what statement I made that you find to be untrue.
There’s just a general poor understanding of how property taxes are set, both residential and farmland. I am just trying to help by providing some clarity. The fact that the residential tax class payees believe that their taxes can double as a class is a clear case of misinformation by posts and the media. It cannot happen. But it can happen to farmland. No tax class should be put under the terrible pressure of a doubling of taxes. It is ludacris. Especially when it can be prevented by using tools set in place designed specifically to prevent this from happening.
My argument is that this shouldn’t happen to anyone. We all know that to cash in on MPAC assessments means you have to sell your home and move somewhere else. That’s all possible if you are retired with little debt. A farmer has to sell his home, lose his business, and leave a community he/she was most likely born in. Cashing out is only a possibility if you have significant equity to support your move and new career search. Most young farmers do not have that yet. So they are stuck. Stuck paying an unheard of increase in property tax (112%) that pushes them closer to losing it all. This increased “perceived wealth” is not beneficial to most farmers until they get to retirement. There are decades of hard work and living season to season until things may just work out for them. No wonder that the suicide rate is the highest amongst farmers versus any other occupation.
Again, my argument is that no tax group should be faced with increases like these. How do we prevent this? We have to start somewhere. We temporarily support this tax group through it. Set an example that no other tax group should experience rate increases of over 50%. We all know the damage this causes.
THANK YOU Susan! When I tried to say that there was a lot of misinformation being promoted by some writers – CountyLive deleted my comments! Glad they allowed you to be able to speak your mind.
Supporters of this are presenting it as a tax correction. Truth is their assessment has increased due to the value of their land. It is fundamentally wrong and unfair to pass taxes from one class to another when their wealth has increased. We have all faced it. Farmers have great tax deductions and I support that. But I do not want to pay their taxes.
That’s pure B.S.!You pay taxes against the mil rate based upon your assessment.My urban property has more than doubled in assessment and likewise my taxes have increased. When a farmers land assessment increases they pay more which is fair and reasonable. However they only pay 25% of the residential tax.
Well, we’ll just have to agree to disagree. We will just have to see what council decides on the 22nd -if they reverse their previous decisions, it will not be popular and it will be challenged. However, they won’t because what is being asked for by the farmers is just wrong!
I did in fact answer your question Dennis. It is in the first paragraph of my last reply. Every time the mil rate is adjusted for residential, the money comes from another tax class. Either directly or via a fund that all the tax classes pay into. Happens all the time
Also those 8 other municipalities who adjusted the famrland mil rate spread it over the other tax classes.
It is tool commonly used to keep the tax burden fair amongst the various tax classes. Let me remind you that it is in fact the residential class that is getting a decrease in the portion of the budget they are responsible for at the expense of the farmer.
Dear D. Rogers –
The fact (as you do recognize) is that many of us did fight the good fight by appealing our assessments to MPAC (after much public complaint, the province did change their assessment schedules by spreading them over 4 years) – BUT WE DID NOT come to our neighbours asking them to pay for us! I think you and the rest of the farmers should do the same.
You have also failed to answer the basic question that I have asked before….
“I don’t ever recall hearing about nor ever reading about when one group of taxpayers asked any level of government to tax another group of taxpayers because their properties increased in value so much, that they claim they can’t afford to pay their taxes. And just what makes their request right and fair to the others? The answer is obvious – it doesn’t!”