As a result of the province’s property tax valuation structure, owners of active gravel pits sometimes pay less tax than homeowners and small business owners
By Kate Ayers
Representatives of several counties in Ontario recently expressed concern over the property valuation and taxation processes for aggregate sites.
“Property valuations for aggregate sites generate significantly less revenue for municipalities than other uses for the land. In fact, 100-acre gravel pits pay less property tax than some middle-class families and a fraction of the property tax incurred by adjacent industrial properties,” Ken DeHart, Wellington County’s treasurer, said to Farms.com.
“Property taxes are zero-sum, meaning that lower rates for one class of properties (including aggregate sites) translate to higher rates for other classes of properties (such as single-family homes or small businesses – including farms). This (situation) means that residents and businesses in aggregate-producing municipalities pay higher than their fair share of taxes to fund the break that gravel producers receive” under the current valuation structure, DeHart explained.
Municipal Property Assessment Corp. (MPAC) classifies gravel pits among the lowest forms of farmland, an August release from Wellington County said. This assessment leads to low property taxes.
Under the existing valuation structure, community members may be disadvantaged, DeHart said.
“The flawed assessment process leads to artificially low valuations for aggregate sites, meaning that communities miss out on millions of dollars in lost tax revenue every year – funds that could go to critical services, such as improving roads or supporting community programs. Municipalities have infrastructure deficits that we’re trying to fund and (we’re in) an economic climate where there is little appetite for tax increases,” he said.
“If gravel pits and quarries paid their fair share in taxes, we could fund more programs, services and infrastructure without a tax impact to residents and businesses.”
So, representatives of Wellington County and other Top Aggregate Producing Municipalities of Ontario (TAPMO) presented Government of Ontario officials with policy-driven solutions that could make MPAC’s property tax valuations more equitable, the release said.
One solution would be for officials in Ontario’s Ministry of Finance to create a separate property class for aggregate-producing sites, the release said. The ministry took a similar approach to the classification of landfills in 2015. This change enabled municipalities to maintain stability in local taxation levels and meet community needs.
Another alternative would be for the ministry to support MPAC in assessing aggregate-producing properties based on the sites’ true industrial or market value, the release said. Such directives could include using the same land values as comparable properties in the area or removing the exemption of aggregate in the Assessment Act that limits MPAC’s ability to assess the full value of properties, the release added.
Wellington County and TAPMO have taken initial steps to establish an improved valuation approach.
These members have “provided a submission to the Ministry of Finance to be discussed for the MPAC review that the province announced in the 2019 budget. As far as I’m aware, the review is ongoing and decisions have yet to be made on how to assess these properties in the future,” DeHart said.
Municipal government representatives highlight the importance of a policy-driven and equitable approach to MPAC’s valuation system to better support residents and businesses, especially during these unprecedented times amid the COVID-19 pandemic, the Wellington County release said.
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