|
May
1998 Newsletter
Tax
Crunch in Hamilton-Wentworth
The
cost of the north-south Red Hill Expressway project is one
piece of a complex tax picture which guarantees huge increases
on residential taxpayers. There are four main features to
this picture: the imposition of actual value assessment,
tax increases imposed by the local council, shifts in the
tax burden onto residences and away from business and commercial
properties, and provincial downloading of social service
responsibilities. The final impact on a property taxpayer
will come from ADDING these four elements together.
Actual
Value Assessment
Property
taxes are determined by multiplying the tax rate by the
assessed value of the property. In the Hamilton area, many
homes and businesses have not been re-assessed for decades.
The provincial government has now forced municipalities
to do a completely new assessment. This means that many
older homes are getting huge increases in their assessments
and consequently will be hit with greatly increased taxes.
New homes, on the other hand, because they have been built
(and therefore assessed) recently will likely have their
taxes reduced. The hardest hit area is lower Hamilton, especially
Wards 1-4, which extend from Dundas to Red Hill Creek. In
Ward 1, taxes will be increased on 90% of the homes. Two-thirds
of these will go up by 20-75%. In Wards 2 and 3, the taxes
on over 75% of the homes will go up, most of these by 10-50%.
Nearly 70% of the homes in Ward 4 will also bear increases,
the majority between 5% and 20%. The older residential areas
in Ward 5 and the three mountain wards will also see increases.
Taxes will also go up on half the homes in Dundas, and about
40% in each of Stoney Creek, Flamborough and Glanbrook.
About 20% of Ancaster homes will see increases. However,
assessments on commercial and industrial property will go
way up in many of the suburbs. As a result, councils may
lower their tax rates and increase residential ones (see
below).
Tax
Rates Imposed by Council
The
regional government has decided to raise the tax rate by
5% this year. This will apply to the new assessed value
of residences. Even before these increases, the City of
Hamilton has one of the highest tax rates in the province.
Regional politicians claim much of the tax increase is caused
by provincial downloading, but they have also significantly
increased spending in other areas. At the same time, they
have delayed adding on the cost of the expressway. This
will show up after the borrowing for the construction, but
then will remain for 20-25 years. The operating and maintenance
costs will also appear later. If the expressway borrowing
ruins the Region's credit rating, as staff are warning,
then these costs could be much higher.
Tax
Shifts onto Residences
At
present, large apartment buildings as well as commercial
and industrial properties pay a much higher tax rate than
houses and small apartments. The rate for large apartments
is three times that of houses, for commercial property it
is 2.5 times and for industrial sites it is 4.5 times. The
province is pushing that all these rates be equalized. This
means lower taxes for large apartments, industries and business
properties, and much higher taxes for houses. The Regional
government has not decided how quickly it will make these
changes, but it is afraid that if business and industrial
taxes are lowered more quickly in neighbouring regions,
it will make Hamilton-Wentworth more uncompetitive.
Downloading of Social Services
The
tax shifts between the provincial and local governments
mean that much of the costs of welfare, social housing,
health services, and other social programs has been transferred
to local governments. These costs make up more than one-third
of Hamilton-Wentworth's budget and they are dramatically
affected by recessions and downturns in the economy. This
threat imposes huge risks on local governments.
|
