In an earlier post on the Parry Sound budget I said that I would provide my thoughts on the McSweeney report “A Commissioned Council Study of Tax Rate Comparisons” for the 2011 tax year. Here is a copy of portions of the report.
Here’s the ‘meat’ of the report, the relative levy rates (this is a cut and paste and I can’t really get the columns to line up as nicely as I’d like).
Comparative Taxation Rates 2011
Town Education Residential Total
Espanola 0.00231 0.02439743 0.02670743
Blind River 0.00231 0.01756255 0.01987255
Orillia 0.00231 0.01124481 0.01355481
Elliot Lake 0.00231 0.01716628 0.01947628
S.S.M. 0.00231 0.01711494 0.01942494
Parry Sound 0.00231 0.01049800 0.01280800
Sudbury(Gr) 0.00231 0.01158328 0.01655818
Valley East 0.00231 0.01347004 0.01560004
Sudbury(o) 0.00231 0.01274835 0.01505835
Timmins 0.00231 0.01826198 0.02057193
North Bay 0.00231 0.01441301 0.01672301
W. Nipissing 0.00231 0.01071797 0.01302797
Baldwin Twp 0.00231 0.01785700 0.02016700
Dryden 0.00241 0.01307466 0.01548466
Kenora 0.00231 0.01411000 0.01642000
Tax Calculation Formula for 2011
Assessed House Value x Total = Amount of Taxes Paid
$100 000 x 0.02670743 = $2670.74 (Espanola)
$100 000 x 0.01947628 = $1947.63 (Elliot Lake)
And by extension a house in Parry Sound assessed at $100,000 would be taxed at $1,280.80. So we must have a lower tax rate. Well, in theory yes, but in reality no.
Tax rates are set to pay for the services and investments the municipality is required to make. So if the municipality has expenses of $1 million per year and an assessment of $100 million, the levy is $0.01 per dollar of assessment. If for some reason IMPAC decided the value of the properties was $200 million, rather than $100 million, the levy would be $0.005 per dollar of assessment. The tax bill is exactly the same for each property owner, the levy is simply adjusted to meet the revenue requirements for the town.
Now, if you were to decide to retire in Elliott Lake would you expect to pay the same money for a comparable house, with the same amount of land, as you do in Parry Sound? Not likely. Elliott Lake real estate has a lower value, for the same package, than does Parry Sound real estate. There are several reasons for this, mostly related to the town’s proximity to the major urban centres of Ontario and the availability of federal and provincial services. So a $100,000 home in Elliott Lake presumably has more ‘house’ and ‘property’ than a house in Parry Sound, and would be considered to be a ‘better bargain’ if only square feet were considered.
Let’s take a look at a Parry Sound house with an assessment of $122,000 from the public tax records. It is a modest home on about 1/5th of an acre. Now take this property and move it to Mississauga. Would it be worth $122,000? Of course not, it would probably be worth $400,000 just for the lot as a tear down. So what we are seeing is that it’s effectively the assessed value of all homes in a community that determines the levy.
And if you were to go through the various levies you would find that the further a community is from Southern Ontario, the higher their levy. It’s geography, that determines the assessment which in turn determines the levy rate. There can be exceptions where a town and council have decided to over invest in some services that unreasonably raises the tax rates, but this is generally self-regulating.
So, rather than compare the relative taxes for a $100,000 house, compare the relative taxes for the ‘median’ house in a community. I think you will find the figures are much, much closer than this report suggests. But the report doesn’t provide those figures. It doesn’t work to the benefit of the Espanola tax payers unhappy with their taxes. Why didn’t they compare themselves to Sault Saint Marie or Timmins? Because the difference isn’t as great. Lies, damn lies and statistics. Well these really aren’t statistics, but people who understand numbers can too easily use them to confuse those who don’t.
Our tax rates in Parry Sound are reasonable for the value of our properties in the context of house size, lot size, town services and proximity to the Big Smoke. You can’t get the same house in Parry Sound for the same price as in Espanola or Blind River. As some people have found when you move to Parry Sound from Southern Ontario you can get ‘more house’ for less money, but your taxes will probably be about the same. And if you move to Elliott Lake or Espanola you will get even more house for your money, or the same house for less money, but your taxes once again will be about the same. It’s all about the levy multiplied by the assessment that determines your taxes, not just one or the other.
If you want lower taxes, move to a municipality that provides fewer services. We have a few of them right around us.
Think our levies would be as low as they are if the Big Sound looked like this all year round?