OTA draws the line on railway propery taxes

TORONTO, Ont. (Sept. 25, 2001)-The Ontario Government’s review of the province’s property tax system has sparked yet another conflict between the railways and the Ontario Trucking Association.

A new report, commissioned by the OTA and conducted by Dr. Peter Tomlinson, a lecturer in economics at the University of Toronto and a member of the City of Toronto’s property tax reform advisory body, suggests that railway companies already enjoy property tax advantages that are denied to their competitors. However, the railways continue to argue they pay too much Ontario property taxes.

“It goes without saying that any new special advantages the railway companies may be seeking should be viewed with great caution,” the report suggests.

According to the report, railway rights of way are the only significant holdings of real property in Ontario that are taxed on their surface area rather than their value. Other non-rights-of-way railway properties are under-valued for assessment purposes because their value is calculated based on their current use only, not on what the property might be worth for non-rail purposes. A trucking company instead could have a terminal facility with a current use value well below its highest and best use value, but would still be assessed at the highest and best use value, the report stated.

Dr. Tomlinson recommended a number of changes to the way businesses in general are impacted by property taxation. A few are: seek a target equalized education rate in the 1% range by 2005; reduce permitted tax ratios where councils would otherwise be able to shift dollar tax burdens from residents to businesses, and reduce “hard cap” thresholds so as to protect more businesses from budget-related municipal tax increases.