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Motion to change Farm Tax Ratio defeated


The motion to change the Farm Tax Ratio, accepted unanimously at the last committee of the whole meeting, was defeated Tuesday night at council.

In a recorded vote 9-7, councillors who stated they wanted to support farmers but changed their vote, cited difficulty making the decision following numerous conversations with constitutents by phone, email and social media; a growing divide on the issue in the community; a lack of complete information and the need for more in depth information.

A few, upon learning MPAC announced the coming increases in 2012, were disappointed the issue had not been brought to council years earlier. A few also noted the farmers do have support and recourse through the Ontario Farmers Association and MPAC itself, through appeals.

Mayor Robert Quaiff said he has already booked meetings to gain more information with ministers and senior policy advisors related to the issue at next week’s ROMA (Rural Ontario Municipal Assocation) conference in Toronto.

Council did approve the motion that the Agricultural Advisory Committee investigate programs available, or that may be implemented to assist and encourage viability of young farmers and tenant farmers within the County as a result of the increase of farm tax property assessment.

Those opposed to the change in farm tax ratio included councillors Gale, Graham, Roberts, Turpin, Dunlop, Epstein, Ferguson, Fox and Mayor Quaiff.

* * *

UPDATE: As requested, a staff report on this issue was requested for a Committee of the Whole meeting in January.

Federation of Agriculture to suggest easing hardship on County farmers

The Prince Edward Federation of Agriculture will tell council it has serious concerns about the current Municipal Property Assessment Corporation (MPAC) assessed farmland value increases and the potential impacts that on farm families and associated business.

John Thompson

John Thompson

“We are asking council to take a very logical action to mitigate the damage,” said John Thompson, federation president, who is to be addressing council on behalf of the federation Tuesday at Shire Hall.

He is to present a formula to councillor to avoid a “property tax shift” onto farmland property owners for the next four years.

“We note that this request is not a tax break as farm property owners will still be paying more taxes each year, they will simply be paying the same 1.8 per cent of County taxes. The effect of these changes would raise the tax cost to residential properties including farm residential by about 0.4 per cent annually.”

“In the recent MPAC notices the taxable assessment of Ontario farmland has increased about 70 per cent. The Prince Edward County current value assessment has increased by an average of 112 per cent while residential values here have increased by about seven per cent,” Thompson notes in his deputation. “There are many factors involved in the sales at higher prices, but the income from farm commodities has been decreasing for four years. If increases were just driven by earnings, land prices would be in decline and this may in fact be the future.”

He shares an example from the previous drought year in 2012 when the North American fall harvest price for grain corn was about $8 per bushel USD, and this year, he says, is about $3.50 as the drought was local so did not raise the commodity price. He adds farmland prices in Iowa have declined for the last three years, a first in three decades.

“If no action was taken to address the high assessed values, the percentage of County taxes collected from the farm tax would rise from the current 1.8 per cent to 3.4 per cent by 2020 and our farm families would be facing a farm tax increase of around 100 per cent,” said Thompson. “This would be a hardship for many farms and would seriously impact the funds available to fund family life, as well as the current expense and capital needs for business retention and possible expansion.”

Thompson notes that when there was a major increase in residential values, it was possible to mitigate this with a decrease in the tax rate as the residential tax class makes up the majority of the County tax roll. But he says this will not be possible in the current situation with the farm taxes making up a small portion to the budget.

“The province caps the farm tax ratio at 25 per cent of the residential rate as the farm properties do not consume much in terms of municipal services. For example, a farm house on 100 acres does not need more services than a house on a residential lot and the farm residence is taxed at the residential rate. The farm land and buildings do not add much to municipal costs and we believe that services to people should be paid by the residential tax portion and services to farming by the farm tax. We see the current tax ratio of 25 per cent as being fair in the past and studies have supported this.”

He suggests that to avoid a property tax shift onto farmland property owners, adjustments to the tax rate would be required. Using calculations by a staff researcher with the Ontario Federation of Agriculture using all information currently available, he suggests the following formula:
2017 – 20 per cent
2018 – 17 per cent
2019 – 14 per cent
2020 – 13 per cent

“We recommend that council support farm families by taking this initiative for tax fairness, business retention and growth potential.”

Council meets at Shire Hall Tuesday, at 7 p.m.

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  1. Dennis Fox says:

    John, I have just re-read the original article(above). It reports that you stated – “The effect of the changes would raise the tax cost to residential properties including farm residential by about 0.4 per cent annually.” So what false narrative did the media spin?

  2. John Thompson says:

    Snowman, the media had some success in spinning a narrative that this would have been an extra cost to the residential sector, rather than a reduction in the amount of County costs which would be shifted to farmland to the benefit of residential. Defeated now for various reasons.Thanks for your understanding.

  3. Snowman says:

    I’m just thrilled that I will have an extra $35 dollars per year ($2.92 per month) to put in my tax free savings account!
    County Council had the mechanism (given to them by The Province) to assist local farmers. They agreed at Committee but wilted under pressure 25% of Residential Mill Rate is the maximum that can be levied, as we all know.
    Mayor Quaiff knows full well that when he talks to the Provincial powers that be at ROMA that is the first thing he will be told. Local problem,local solution available.
    As for more time? This issue was well known in early December. How much more time do you want?

  4. Dennis Fox says:

    The message doesn’t seem to be getting through – the taxes everyone pays is determined by the same formula … mil rate X assessment. Since the farm assessment was determined by MPAC, any complaint about what farmers have to pay should have been appealed to them. Any dollar difference between residential and farm is due to the assessment difference – something totally out of the control of our local council. The OFA should have taken their complaints to MPAC. Council finally made the right decision – now let’s move on.

  5. John Thompson says:

    As one can see from the staff report, page 1, the end result of maintaining the same tax ratio for farm assets is that while farmers pay a tax hike of 25% and increase their share of Municipal funding from 1.6% to 1.9%, residents share of costs will drop from 90.2% to 90.1%, a saving of $13.00 per $100,000 of assessment. Time to move on.

  6. Dennis Fox says:

    The problem that I had with John Thompson’s idea was that it asked for other taxpayers to pay for a situation that we were no more responsible for than what farmers were. He should have taken his challenge to the Province and to MPAC – and asked for the support of the community and council. Who knows, it may have worked?

    Now, after getting angry with my councillors and mayor over their initial support for Thompson’s idea, I don’t feel like getting back into it again – and I don’t feel like supporting anyone who first thought that it was just dandy to have me pay taxes on their increased land wealth. I won’t forget this one for a long time – none of us should.

  7. John Thompson says:

    The defeated motion would have had the effect of reducing the shift of the County tax burden onto the farm tax class from residential. The farm land would still have had an increase of 20% in the second year. Residential would still benefit from the higher land valuations but to a lesser extent.

    The farms will now pay a 25% increase on average, effective this year with most of the benefit landing on residential. Not enough to be very noticeable though.

  8. John Thompson says:

    As a correction to the article, MPAC did not announce coming increases in 2012. That happened in the fall of 2016 but you would not have learned that from the meeting.

  9. Gary Mooney says:

    I agree that it was a good decision (vote 9 to 7 against reducing the farm tax ratio).

    There were three main points of view:
    1. Provide relief now to all farmers, whether large or small.
    2. Need more information, more discussion, more time.
    3. Not appropriate to shift taxes to homeowners.

    There was universal sympathy for farmers starting out or operating small farms.

    John Thompson’s proposal was an attempt to take the easy way out and shift the cost to other taxpayers who have in no way contributed to the problem.

    Now there will time to obtain more information, engage in discussions with all parties, and consider a targeted approach.

  10. Dennis Fox says:

    Well I have to congratulate my two councillors (Gale and Roberts) and the mayor for listening to reason and maintaining common sense in this issue. The OFA needs to take their issue to those who are responsible for it – MPAC and the Province.

  11. Gary says:

    A well reasoned result on this file.

  12. Susan says:

    Why isn’t council listening to Mr Hepburn? He certainly makes sense on this one!!

  13. Mark says:

    I think a lot will. Pretty good deal to buy as much farmland as you can, get rich on the value increases and a nice tax break shifted to residential to boot.

  14. hockeynan says:

    If a farmer is in the position that he can’t make it he isn’t going to end up rich,the bank is going to.He will end up with nothing.I think all off you that think owning a farm is so great why don’t you buy one and see how good it really is

  15. Gary says:

    So if this passes some farmers who have accumulated great equity wealth will receive tax relief while they enter into leases with Industrial Wind Turbine developers. This whole issue is absurd! If you gain equity you get relief. The low middle class and poor take another hit.

  16. Dennis Fox says:

    I can see how some might think I said farmers had a guaranteed incomes,but that’s not quite what I said. Instead, I did say they had “guaranteed jobs with job security and incomes” – meaning they will never be unemployed nor in a position where they could lose their jobs and income – at least not as easily as other not in farming – and if the do, then they can make a cool million or so for the land. I have no doubt that farmers work hard, but so do many other people – and they are not being considered for a tax break – instead they are being asked to pay for those who have just gotten a lot richer because of real estate values.

  17. Fred says:

    How many farmers or farm land owners sit on Council?

  18. Emily says:

    Has any other Municipality taken this position?

  19. hockeynan says:

    A farmer does not have a guaranteed income every year.Most farmers have to depend on the markets and the weather.

  20. Dennis Fox says:

    The issue of increased farmland values is not unique to PEC, however, what is different here is that our Council has bought into the idea that young farmers need financial assistance in paying for their increased land values. Gee, don’t we all wish for the same? How about those young people who didn’t inherit a farm or have a guaranteed job with job security and income? Sorry, but this pulling on the heart strings is taking place for the wrong group of people. If you doubt my opinion, then check out the Community Foundations Report for PEC. I don’t mind sharing what I have (including my tax dollars) – but this subsidizing land rich farmers is crazy and should not happen.

  21. Gary Mooney says:

    This is an issue throughout Ontario. Increases in farmland values occurred earlier in western / southwestern Ontario, and eastern Ontario is now catching up. Some farmers west of the GTA are selling their property and buying in eastern Ontario for less money.

    If I didn’t mention earlier, the sales used by MPAC to establish farmland values are farm-to-farm sales only, not including purchases of farmland by developers.

    The Eastern Ontario Treasurers group has recommended against reducing the Farm Tax Ratio.

    One further point. The increase in farmland values is effectively a contribution to each farmer’s retirement plan.

  22. Chuck says:

    Has any other Municipality dealt with this issue, or is it born in Prince Edward?

  23. Susan says:

    OMB challenge is already being prepared. Curious why this is just a Prince Edward County issue?

  24. Mark says:

    Shifting tax responsibility from those gaining wealth from their property market value to residential is very much an issue that could go to the OMB for a decision. One party is gaining wealth and paying less while the other is taking on an additional tax burden.

  25. hockeynan says:

    Also,all you complainers must remember that farmers feed you

  26. hockeynan says:

    Why don’t you guys try farming.You would want this tax break.The property value has nothing to do with the income you make .This year was a good example

  27. Gary says:

    Could be another OMB on this one.

  28. Chris Keen says:

    @Gary Mooney: I believe you can add the descriptor “absentee owner” to the wealthy trio who stand to benefit most if this unwise precedent is established.

    @ Emily: No, relief is not available to all. Waterfront property values had a similar spike within the past ten years and there wasn’t a whisper about tax relief. Why would there be? That would be political suicide! Apparently an increase in property value is a good thing for everybody except farmers who, I believe, can deduct some or all of their property tax as a business expense anyway – something the rest of us cannot do.

  29. Emily says:

    If they approve this, how can they then refuse a residential home owner whose property has escalated in market value? Is relief not fair and available to all?

  30. Gary Mooney says:

    The proposed tax shift from farmers to hoeowners and business owners will come to Council for ratification on Tuesday evening. The topic will be hashed out again, with more information being provided to Councillors, and a new vote taken.

    There’s a good article in last Wednesday’s Wellington Times. In it, Rick Conroy points out that the tax shift would apply to farmland owned by Andy Stronach (Frank’s son, who has bought up thousands of acres in S. Marysburgh), the Thomson family (richest family in Canada) and Bob Hunter (hundreds of acres in Hilier).

    There might be a rationale for assistance to a starting-out farmer who has maxed out his/her available credit to buy farmland and equipment. But for established farmers, the tax shift is not justified, and especially not for Stronach, Thomson and Hunter.

  31. John Thompson says:

    The motion to amend the written motion to 20-20 for 2 yrs passed on a 13-1 vote and the vote on the motion as amended was approved unanimous. If anyone needs more information they can listen to the whole meeting on the County website.

  32. Susan says:

    There is something fundamentally wrong when a property owner increases his wealth significantly from property values but at the very same time has a portion of his taxes shifted to someone else to pay. In fairness when a particular residential property increases significantly in value what recourse do they have to seek relief? There is a disconnect here.

  33. Dennis Fox says:

    I hope that members of the OFA can understand that when a study conducted by them, for their own purpose needs to be carefully interpreted, by those outside of the OFA. I doubt very highly that it can be shown accurately just where a portion of anyone’s taxes go. What I can tell you is that I pay taxes -yet none of us up here have municipal water, sewer, sidewalks, no arena, library, museum, community or senior’s centre – heck we don’t even have a convenience store! Nor do we have the many tax breaks that farmers already have – and we have to pay 100% of the assessment based taxes – not only 25% like farmers do. So please don’t give me the hard luck story of how farms subsidize residential taxpayers – if they do, they are doing one poor job of it!

    But John, you have not answered any of the questions posed – most importantly you have not explained why the OFA has come to ask one set of taxpayers to subsidize farm taxes. Like everyone else, farmers can appeal their MPAC assessment – I haven’t heard of that happening here – why not?

    You mentioned the word “business” – good, so lets talk business. If I help pay your taxes, then I think it is only good business for me to own a portion of the farm. Or do you and other farmers just believe that you should get “free money” and carry on as usual? Sorry, but the world doesn’t work that way. Quite frankly, like anyone else – if you can’t afford your home and business, then sell it. Let’s be honest, the OFA hasn’t fought very hard with the Province on this matter – instead you took the easy route by going through a soft municipal council. Even you would have to agree that our council’s position is totally opposite of that of the other Eastern Townships – and our illustrious Mayor is the Chair of this organization! Go figure?

    BTW, it was not an unanimous council vote. However, I do believe that Council owes this community a conversation about this matter and to have the matter sent back to the province for both the OFA and them to work out. That is where the solution lies and not in taking money out of the pockets of other hard working people who have had no say in the matter – and most importantly have never been asked for their input.

  34. John Thompson says:

    Dennis, dollar amounts have also been mentioned at the January meeting and probably the December meeting as well. A typical family farm is not for sale and would be paying the full residential tax on the farm house and about $3000/yr on the farm property. The normal residential increases apply and if no action was taken by Council, the annual increases on the farm family over the 4 year scale up would be $750 + $1500 + $2250 + $3000 = $7500 in total.

    The OFA has lobbied the Province for a different method but the only response is that the Municipality can set the rate at 25% of residential or less. A study done by the OFA has found that for each dollar collected at the 25% rate, 50 cents was providing services to farm and the other 50 cents was a subsidy to residential. This was OK by us until the balance was poised to further shift the residential servicing costs onto farm property.

    Business people know that equity is not cash flow and viable farms are a key asset for the County at large. The younger generation would find themselves especially squeezed by high taxes and land costs.

    The final vote was unanimous.

  35. Snowman says:

    With a committee vote of 15-1, I think Council has decided on this one. lol. The reality is that Democracy isn’t always “fair” to 100% of the people 100% of the time. My Hydro bill is affecting my pocket book a whole lot more than this issue. Time to “moooooo-ve” on.

  36. Dennis Fox says:

    The problem is that this discussion talks only in percentages and not in dollars. Despite this, the idea of one set of taxpayers paying more to alleviate the tax burden that government has placed on another group of taxpayers can only be described as imposing the wrong solution on people. People who have had no opportunity for input!

    When I owned a waterfront property, despite the protest by many, I didn’t see anyone – not a farmer nor even our council step up to assist us – all we got was “OH gee that’s the fault of the province.” Council should have given the same response this time. So John tell us, what is the average dollar amount for a farmer to pay in property taxes in PEC? How much do you pay? What dollar amount did this new MPAC assessment mean for the average farmer? Why didn’t the Federation of Agriculture go to the province to solve their problem?

    I’ll tell you what John Thompson – anytime you or any farmer wants to trade the farm for my house – then lets talk. Just don’t ask me to pay your taxes and then expect me to pay my own as well. Since when did farmers expect handouts, particularly when their property value has increased more than most. It is called equity – and you complain??

  37. John Thompson says:

    Anyone who would like to follow topic this should listen to the meeting presentations and debate as archived online.

    To address some points, when residential goes up in a major way the tax rate calculates to be lower than would otherwise be the case, providing automatic relief. This does not happen with a large increase in farmland assessment as farm property taxes only make up 1.6% of the County budget.The reduction of the farm property tax rate from 25% of residential to 20% for this year means that farm taxes will go up only at the residential rate and continue to make up the same share of the budget. By holding this rate into 2018, the farm property tax bill will increase by at least 25% as the higher assessments are phased in. The farm residence is charged the residential rate.

    Any resident who would like to trade their increases for a farm tax increase would be most welcome.

  38. Susan says:

    So as farmland equity wealth grows, residential picks up the tab so that they accumulate more wealth. This is absurd. So much for the staff report that identified the pitfalls of this action.

  39. Dennis Fox says:

    You have asked a very good question – Council has no idea of what bag of worms that have now opened. If they give one property owner a break, why not the rest of us?

  40. Gary says:

    So the incoming Toronto market has increased my residential homes market value by $150,000. Can Council provide me tax relief similar to that favouring farmland?

  41. Dennis Fox says:

    RESIDENTIAL and SMALL BUSINESS gets their SECOND tax increase of the year, without any chance for input – thanks to our Council!

    As I stated earlier, I did contact the Mayor and both Sophiasburgh Councillors – asking… Why did they support this motion to decrease farm assessment and asked what this meant for the average residential taxpayer? The mayor responded by telling me to look up the answers to my questions online (which doesn’t exist BTW) Councillor Roberts is not responding again and Councillor Gale was the only one to explain that he is opposed to the decision and will bring it forward for further debate at the next council meeting. At least one of our councillors understands the situation – now support him!

  42. Fred says:

    Oh come now! Sophiasburh’s huge City population put him out of office. Lol!

  43. hockeynan says:

    Councilor Thompson was one of the best and the reason he didn’t get back in was the people that moved here from the city didn’t like him so it was bye bye

  44. Fred says:

    It appears whatever former Councilor Thompson lobbies Council for, is adopted. The last one has us paying for an upcoming OMB Hearing.

  45. Argyle says:

    Why not, this reduced FTR fits in very nicely with the marketing boards, crop insurance, and low interest buisiness loans that the farming community has come to expect. Again , council has failed to look at and consider the ” big picture “. Residential gets hammered again……

  46. Chuck says:

    The door is now open for other ratepayers to come forward with their hat in hand looking for relief. I do not recall prior when a party that had gained significant equity was provided tax relief. Residential is being duped.

  47. Gary Mooney says:

    Someone asked about the increase in MPAC assessments that resulted in the potential increase in farmland municipal taxes.

    Regarding farmland qualified for the 25% tax factor, here are MPAC’s total market value assessments, based on farm-to-farm sales:
    2012 = $229 million
    2016 = $482 million
    Increase = $253 million.

    Over the past four years, County farmers have become wealthier (on paper) by a quarter of a billion dollars in their total farmland assets.

  48. Dennis Fox says:

    Gary – thank you for this information. I will be contacting my two Sophiasburgh Councillors (Gale and Roberts) and asking them how they voted and why? I will also contact the Mayor – I hope the rest of the community does the same. I have to question the motives behind such a decision. Where was this council when waterfront property owners were hammered by MPAC – I would think there are more of them than farms.

  49. Gary Mooney says:

    At Committee of the Whole on Thursday, Council voted to reduce the Farm Tax Ratio (FTR) from 25% of the residential rate to 20% for 2017 and 2018. The vote was 15 to 1 (I don’t know who was the lone dissenter).

    County staff had recommended that the FTR not be lowered, which was also the position of The Eastern Ontario Country Treasurers (same issue throughout eastern Ontario).

    As the budget and total tax levy have already been approved, other classes of taxpayer will have to make up the difference. For 2017, the tax shift will be $128K, with 90% of this amount to be paid by residential taxpayers.

    If the 20% rate is continued for four years until the next MPAC assessment, the total shift in taxes will be $900K. If John Thompson’s proposal is subsequently accepted, the tax shift will be $1.2 million.

    Council will have to ratify this decision at the next Council meeting.

    Note: The 110% increase in MPAC farmland assessment was based on farm-to-farm sales only, excluding sales of farmland for non-farm purposes.

  50. Chuck says:

    Perhaps the farm tax is not high enough. We cannot have ratepayers advantaged by high property values and looking for others to take on their taxes.

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