Ontario Federation of Agriculture Commentary
By Steve Brackenridge, OFA Director
Farm property taxes are not a new topic for Ontario agriculture, but they can be a complicated one. Property taxes are intended to pay for municipal services. The residential rate is set to pay for services required by households, including recreation, health and protection services. Farm families pay the residential tax rate on their homes because our families need those municipal services like everyone else.
Property taxes reflect the assessed value of a property so as property values rise, so do the property taxes. This is for simplicity as well as reflecting the notion that higher value homes consume more services.
Because unserviced farmland does not demand nor consumes a lot of municipal services, it is taxed at up to 25% of residential tax rates. Lower taxes are paid because less service is required.
The legislation recognizes this fact but also has flexibility built in so that farmland rates can be less than 25% of residential rates if the situation demands a new proportion. This built-in flexibility is key – and accommodates the situation that Ontario is currently facing where farmland values (and hence taxes) are escalating faster than for residences.
Since 2016, farm property taxes have risen by an average of 64% across Ontario, while residential rates in rural areas have been relatively flat. And the shift continues, with farmers paying a disproportionate amount of property taxes compared to the municipal services they use. In other words, the municipal tax burden has shifted to unserviced farmland and away from the residences and enterprises that actually need and use the municipal services.
The Ontario Federation of Agriculture (OFA) believes some municipalities need to adjust their farm property tax rate, and that’s why we’ve been regularly meeting with municipalities for the past two years to discuss the system.
OFA will continue to work with individual municipalities and local federations to help municipal councillors adjust to a fair farm property tax system. Higher farm taxes to pay for services that farmers (and their land) are not using is simply unfair. The legislation provides the means to correct this unfair tax burden. We are working with municipalities to make the necessary changes to ensure competitive and sustainable farms across Ontario.
For more information on the farm property tax system, visit the Piecing Together the Farmland Tax Puzzle page of the OFA website.
For more info on tax assessment, visit the OFA’s resource page on Farm Property Assessment Notice Information.