Property taxes are made up of three components: the municipal portion (roughly 60%), the county portion (24%) and the education portion (16%). The rate (also called the mill rate) for each portion is set independently by its own body (the province sets the education levy).
The total rate is called the blended rate. The town’s portion is the town-own rate. Usually the blended rate is used because that reflects best what homeowners see. The rate depends on the type of property you own: residential, commercial, industrial all have different rates. Single-family and multi-residential are also different.
Let’s look at how taxes were calculated in 2014 for a single-family house valued at $200,000:
Total taxes payable will be $2,526.31, broken down as follows:
- Education levy $406.00
- County levy $608.00
- Town levy $1,512.32
The value of your home – of every home in Ontario – is set by MPAC, the Municipal Property Assessment Corp. This is an independent provincial agency headquartered in Pickering. It sets the value of your home through a computer model that looks at the value of properties around you and at real estate sales in your neighbourhood.
This model means your home value can increase whether you do anything to it or not.
MPAC’s assessment is not done by people looking at your home, going door-to-door, seeing if you made improvements or whether your neighbourhood has improved. It’s done in an office on a computer. The municipality can’t affect how MPAC assesses your home nor the amount assessed. You can, however, challenge MPAC if you think your assessment is too high.
Check the MPAC website and Google for details on how to do this.
MPAC’s values are always a few years behind the current year and follow a four-year cycle. For this term of council, 2008 assessment values were used for calculating taxes in the years 2010 to 2012. The value used to calculate your 2013 and 2014 property tax was based on the 2012 assessment. That value will also be used for 2015 and 2016 (with a phased-in portion of one-quarter the total each year).
This lag also means that if we enter a recession or property values fall, it may not be reflected in your tax bill right away (or ever if the event is a short duration).
It also means that in 2013, your house value for tax purposes changed. It jumped its assessment value by four years to the rates computed for 2012.
In the fall of 2012, MPAC mailed a Property Assessment Notice to every property owner in Ontario. The 2012 Notices provided the classification and updated assessed value for property in Ontario based on a legislated valuation date of January 1, 2012.
The last province-wide Assessment Update took place in 2008. In each non-assessment update year, we prepare approximately one million Property Assessment Notices for owners of new properties or properties where a change has taken place.
To provide an additional level of property tax stability and predictability, market increases in assessed value between the January 1, 2008 and January 1, 2012 legislated valuation dates will be phased in over four years (2013-2016). The phased-in values for your property are indicated on your Property Assessment Notice. The phase-in program does not apply to decreases in assessed value, which are applied immediately.
What this also means is that even if the tax rates do not rise, what you pay is likely to go up when the assessment changes. If your house was assessed at $200,000 in the 2008 MPAC list, and the assessment increased two per cent per year, it was assessed at more than $216,000 for the 2012 figures.
The increase is phased in each year, so it doesn’t jump all at once. For example a simple two per cent per year increase:
- Value in 2008: $200,000
- 2009: $204,000
- 2010: $208,080
- 2011: $212,241
- 2012: $216,486.
You can see how it goes up. So even if the tax rates don’t change, the amount you pay in year four will be 8% higher than you paid when the starting amount was used: $2,734.55. MPAC’s own example shows a much higher increase than a mere 2% per year: it shows an assessment value of $220,000 going up by $30,000 in four years: a 13.6% increase in four years!
MPAC used a revised algorithm to calculate the value in 2012. That meant the assessed value of your home might have gone up even more than the previous phased-in values.
So you can see how taxes can go up without the tax rates increasing.
This council kept the blended tax rate to an average 0.45% per year this term – or about 1.6% per year for the town-own rate. Even in the years where we had no or negative changes in the town-own rate, the amount you paid in taxes may have increased due to MPAC’s assessment increase.
Finally: taxes pay for municipal services. Taxes pay for plowing and sanding roads in winter, and cleaning them the rest of the year. They pay for having police and fire to keep our homes and streets safe, for keeping the ball diamonds, the rinks and the pool running. They pay for parks, for replanting trees, for building sidewalks, for garbage pickup, for catching stray dogs, for collecting money from parking meters, for inspecting construction sites, for working with developers and builders. They pay for replacing burnt out street lamps, for maintaining property standards, for running your library and paving the streets.
We can – and have – cut costs and reduced duplication and inefficiencies to make the town run more smoothly for less money. We have a good, lean town staff and very little waste in our organization.
Every council has to decide during the budget process whether maintaining a service is worth the cost to taxpayers. But ask yourself: would you be willing to go without soccer pitches to save taxes? Go without a year-round rink or swimming pool? Would you be willing to clear your own sidewalks instead of having the town do it to save a few dollars on your tax bill? Would you be willing to pay more home insurance to have fewer firefighters or police? Would you be happy if we closed or stopped maintaining trails to save money? Or closed the dog parks? Would you be willing to take your own garbage to the dump instead of having it picked up? (the county does waste management)
Would you be willing to pay a fee (or a higher fee than already charged) to park? To use the trails? To swim or skate? For a dog licence? Or a building permit? Raising user fees simply shifts the costs, doesn’t really make you pay less in the end.
Councils and staff also have to deal with increased costs for staff, for union contracts, for benefits, for energy, for gas, for vehicles, for software, for infrastructure, for equipment, for legal fees, for sand and gravel, for salt… costs rise for everything we use and everyone we employ. These have to be managed during the budget debate (which is why you don’t want an inexperienced person as the finance chair!).
What would you give up to save a few dollars on your tax bill? That’s a difficult question. We can save money, shave a few dollars off your tax bill if we cut services. But which services? In every community there are some people who don’t use some of them, and others who use those same services regularly.
People live here because of our great quality of life. They love our trails, our parks, our library, our pool and our downtown. Anything we cut will affect that quality of life and make Collingwood less appealling, less people-oriented. Very few residents want to lose the services and amenities they have now.
During election time, it’s always easy to criticize incumbents, and for newcomers to make grandiose promises about how they will make everything better, lower taxes and still get things built. But when it comes to budget time, the reality sinks in. You can’t build those big, expensive facilities without raising taxes. You can’t cut taxes without affecting services.
It isn’t as easy as the speeches and the brochures make it look.