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Feature Article February 26

Feature Article February 26, 2004

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Municipal Taxes 101

This is the second in a series of articles on the property tax regime by the Tax Committee of the Sharbot Lake Property Owners' Association. Our purpose is to share what we are learning so that property owners in Central Frontenac can take an informed position on tax reform when the time comes. We welcome comments, either by letters to this newspaper or by email to: www.sharbot.com/slpoa/taxcommittee or This email address is being protected from spambots. You need JavaScript enabled to view it..

There appears to be general confusion amongst taxpayers with regards to their local municipal taxes. Where exactly does the money go? How much of it actually goes directly to the municipality? What services are the municipality responsible for? Who in the municipality pays what? How come the taxes keep going up? How do they determine how much my taxes are? What is the relationship between property assessment and the amount of taxes paid?

Were not going to answer all of those questions in this article, but we can start with a few basics.

Firstly, each of your municipal tax dollars is apportioned to three benefactors [beneficiaries?]: the municipality; the county; and the province, for education. Secondly, we must understand there are many different types or classes of properties, including: residential, commercial, industrial, pipeline, farmland and managed forest. Within each of these there may be further sub-classifications such as vacant or occupied. Thirdly, there is a tax rate (formally called a mill rate) that is applied to each of the three portions. The tax rate is different for each of the three portions and may be different across each of the property classifications. Every property is assessed and assigned a value by the Municipal Property Assessment Corporation (MPAC). To determine the taxes for your property you take your property assessment value and multiply it by the tax rate for each of the three portions.

How tax rates are determined:

Since the education portion is determined by the province and we are limited in space for this article, Im not going to delve into the provincial portion of the formula. However, both the municipality and the county determine a working budget for the year to meet their jurisdictional responsibilities. Revenues to cover the budget are then collected in two ways: through municipal taxes; and through other offsetting sources, such as user fees, payments and transfers. The portion of the revenues to be collected through taxes is then divided by the total assessment value of all properties within the township. Tax rate multipliers are used to make adjustments in the formula to accommodate different weighting factors between some of the classes of properties. For instance farmland has a multiplier of .25, which cuts the tax burden on those lands to 25% of that of residential properties.

The bottom line is that your taxes are dependant upon the budget requirements of the municipality, county and education, multiplied by the portion that your property value represents as a percentage of all the properties within the municipality. This means that the overall property assessment for the municipality is revenue neutral while individual property assessments will determine their revenue portion within the fixed budget.

If overall property values rise and the budgets stay the same, then the tax rates should go down to yield the same amount of tax revenues. In other words, individual property taxes would remain the same while the tax rate would adjust. If an individuals property value increases relative to everyone elses, then that individuals taxes will rise while everyone elses goes down.

For more detailed information on the tax formula, you can go to our website at the address indicated above.

With the participation of the Government of Canada