The Citizens’ Tax Reform Group developed a system, Fixed Value Assessment, (FVA), to replace the dysfunctional Market Value Assessment method, (MVA), used and abused by the Municipal Property Assessment Corporation, (MPAC).
The fundamental requirements for FVA are that it must be fixed for the life of a property, predictable, and technically and politically feasible.
The FVA definition selected makes use of available data in the MPAC base, the "Building Area". This is fixed, and recognizes the public belief that larger houses should pay more, although the owners may not use more local services. We appreciate that this decision is not completely logical, but it is a practical compromise. FVA is based on MPAC data for 2001. hi that year, MVA had been in use for several years, and we assumed it had reached some measure of stability.
Anecdotal evidence suggested that MPAC assessments after 2001 continued to cause concern among the public, so 2005 data were also used in the Pilot Study for purposes of comparison. Our results indeed show that MPAC inequalities have grown worse between 2001 and 2005. The selection of 2001 as a base for FVA calculations is therefore a logical choice in a context where logic has been largely missing.
Lot size is not included in FVA, because it has no bearing on the use of local services. The same is true about out buildings, road frontage, location (eg; waterfront), subjective elements such as quality of construction, condition, and all of the other complications manufactured by MPAC to make work for themselves.
FVA could be base directly on building area, without further work. However, this would be unfamiliar to local authority staff, so the average value per square foot (from 2001 MPAC data) in each municipality is calculated, and combined with the building area (also from MPAC data), to provide a seamless transition for local municipal staff.
FVA will modify, but only once, the distribution of tax within a municipality, because of the vagaries of MVA and MPAC. Some assessments will go down, and some will go up. No-one will object to a decrease, but a "grandfather clause" is proposed in FVA, whereby a property will be protected from a large increase by assigning the lower of the FVA and MPAC assessments, until the property is sold. The beneficial effect of this modification is shown by the Pilot Study results.
MVA (or Current Value Assessment as it was then known) was introduced by the Harris government to make local taxes "fair and equal". It was not explained how this would be
achieved. How can the rich parts of Toronto be equated with any northern town, or indeed anywhere else in Ontario? In fact, the mil rate in Toronto is a small fraction of the rates in smaller communities with far fewer amenities than Toronto. So, each municipality must continue to function independently.
FVA may not be the final answer to the local tax issue. There is a groundswell of opinion, that the Province should reassume responsibility for large infrastructure and social services, with revenue generated from progressive income and consumer taxes. Local taxes should be small and used for local purposes. Another tax proposal considered here, but not used, is to base assessment on the "footprint", the area of ground occupied by the building regardless of height or other details. This would act as a deterrent to "suburban sprawl", would encourage efficient high-density construction and infrastructure, and is compatible with the current political interest in preserving green space and agricultural land.
Achieving Accountability for Oshawa Taxpayers' Rights
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