TORONTO — The Ontario government is freezing property tax assessments for the next two years, all but guaranteeing that the controversy surrounding homeowners' skyrocketing tax bills will not become an issue during next year's election campaign.
Ontario Finance Minister Greg Sorbara announced yesterday the cancellation of tax reassessments for 2006 and 2007 to give the embattled agency that assesses residential property values enough "breathing space" to overhaul the system. He said he expects the Municipal Property Assessment Corp. can implement the changes by 2009.
"We believe that by implementing these changes, MPAC will bring further transparency, fairness and clarity to the system," Mr. Sorbara said at a news conference.
MPAC agreed to make changes in response to a scathing report in March by Ombudsman André Marin documenting serious problems at the agency. Mr. Marin slammed it as "aloof, mysterious and cloaked in secrecy" and said it has a "superiority complex" that leads it to disdain taxpayers and produce thousands of incorrect property appraisals every year.
He made 22 recommendations to change the day-to-day operation and culture of the agency, which oversees the evaluation of 4.4 million properties worth about $1.1-trillion. Municipalities use these assessments when they levy taxes.
MPAC has been controversial since it was established by the previous Progressive Conservative government in 1998.
The reason has more to do with how a property is assessed than with soaring real estate values in some regions. Every property in Ontario is supposed to be assessed each year at its market value. But MPAC relies instead on a computerized mass appraisal system that bases a property's value on modelling.
Mr. Marin said MPAC should rely less on its computer system and more on what a specific property sells for to determine its value. His report cited an example of a condominium that was purchased for $503,000 one day and assessed at $617,000 the next.
Homeowners who think their assessments are too high can go through the appeal process, Mr. Sorbara said. The deadline for appealing 2005 assessments is today.
"Every organization has challenges," Mr. Sorbara said.
"What we're trying to do is create an organization that has a high degree of confidence in the work that it does and has a strong relationship with the property owners of Ontario. I think we're doing the right thing here by giving the organization time to make the changes that are necessary in order ultimately to land with a better system."
But the opposition denounced the move as a blatant attempt to keep property taxes off the agenda when Ontario voters go to the polls on Oct. 4, 2007.
The Ombudsman began his investigation in 2005 after receiving hundreds of complaints from homeowners caught when assessments soared across Ontario by an average of 14 per cent. The constituency offices of MPPs were also flooded with calls from angry homeowners.
Premier Dalton McGuinty promised swift action on the Ombudsman's report and vowed last April to fix the system.
Progressive Conservative Leader John Tory accused the McGuinty government of freezing the assessments for "strictly political" reasons.
"Mr. McGuinty should not be hiding under his desk pretending it's going to go away, or trying to fool people into thinking this will somehow become any easier in 2009," Mr. Tory told reporters.
New Democratic Party Leader Howard Hampton said Mr. McGuinty is "missing in action" on his promise to fix the property tax system by putting an end to double-digit increases and helping seniors on fixed incomes.
"A political vanishing act -- that's what working families have seen from Dalton McGuinty on the important issue of Ontario's broken property tax system," Mr. Hampton said.
Roger Anderson, president of the Association of Municipalities of Ontario, said: "Any change to the property tax system, even a temporary freeze to the tax base, inevitably has some sort of impact on property taxes and municipal budgets."
In a letter to Mr. Sorbara dated June 26, MPAC chairwoman Debbie Zimmerman says that despite the agency's willingness to implement the Ombudsman's recommendations as quickly as possible, it is constrained by operational pressures, time and funding.
Ms. Zimmerman says the proposed changes would add an average cost of $3.75 for each property, for a total of $15-million to $16-million.
This would represent an 11-per-cent increase in MPAC's operating budget of $140-million.
