TORONTO - Ontario homeowners will no longer have to fret over an annual mailing that threatens increased property values and higher taxes, but critics say the Liberal government's strategy on the file simply delays the inevitable.
The Ontario budget proposes a move to "fair and predictable'' property reassessments once every four years instead of annually, and homeowners will not face increased taxes based on property values until the 2009 tax year.
When property value does go up, the increase will be averaged out and phased in over the same four-year period between reassessments.
Finance Minister Greg Sorbara said a review of the practices of the Municipal Property Assessment Corporation revealed a serious need for change, which he is "very proud'' to deliver.
"This budget directs itself on taxation methods that are unfair,'' Sorbara said.
"It just seemed clear that there were some fundamental problems with the system that couldn't be fixed with the idea of a cap (on increases)... We said, 'let's wipe the slate clean and start drawing something better.' ''
Property tax increases have long been a hot button issue, growing only more pressing after a strong real estate market saw assessments skyrocket. Some homeowners were forced to sell after they found their growing tax bills unaffordable.
The government had already responded to complaints about MPAC by freezing property tax reassessments for two years. The new four-year system will begin in 2009, based on the next reassessment to be made on Jan. 1, 2008.
That plan only delays the inevitable and would still price people out of their homes, said Conservative Leader John Tory, who favours a yearly reassessment with a cap on house values.
"The bottom line is (the Liberals) put a program forward now that says to people, 'Since we're going to average the increases over four years you've got four years to pack up and leave your house,' '' he said.
Sorbara countered that a cap on reassessments would mostly benefit the affluent and wouldn't be a good solution for all.
He said the government will also review another common complaint about MPAC and come up with a better appeals process that is less confusing and more efficient.
"This system is going to be more predictable, it's going to be fairer, and it's going to serve property-tax payers in the province very, very well,'' Sorbara said.
The government also announced it is putting an end to GTA pooling, which made Greater Toronto Area municipalities pool $200 million of revenue to share the cost of social programs in the region -- even though it mostly went to Toronto.
"I don't know why it got designed that way but I know one thing for sure: it was universally thought to be -- even in the City of Toronto-- unfair,'' Sorbara said.
The government is also cutting business education taxes by $540 million, which will affect 321 municipalities and benefit more than 500,000 businesses -- without having an effect on education funding.
The shortfall from the reduced taxes -- which in all contribute $3.5 billion to education -- will be offset by direct transfers to school boards by the government.
