Ontario Mining Municipalities Want Fair Share of Tax Revenues – Gregory Reynolds

Gregory Reynolds - Timmins ColumnistThe fight by mining municipalities to win fair tax treatment from the Ontario government is entering a new phase. The drive is spearheaded by the two largest mining communities in Canada, Sudbury and Timmins. The two cities have accepted, finally, that in unity there is strength.

The second fact they have embraced is that there are too many voices attempting to get the ear of the politicians from the Golden Horseshoe.

There are just too many organizations that try to present the numerous problems facing Northern Ontario to Queen’s Park. This has enabled successive governments, and all three political parties are equally guilty when in power, to play the divide and conquer game.

Also part of the new reality accepted by northern representatives is that crying softly, or shouting loudly, doesn’t win friends or influence people. Hard facts, backed by statistics and logical arguments, are needed to achieve their goal of obtaining the financial help required to improve the quality of life in the region.“We are really struggling with infrastructure costs. We need to secure, long term financing for the basic structures, such as roads, sewer and water projects and transportation, of our communities,” said Timmins Mayor Tom Laughren. The mayor of the 43,000-person city also said municipalities everywhere are being crushed beneath rising costs and shrinking revenues.

While most communities outside the Golden Horseshoe can no longer maintain their existing roads, bridges, transportation systems and buildings, much less undertake new capital projects, mining municipalities are under extra pressure: they get a pittance from their main industry, mining. The federal and provincial governments take the bulk of the revenues generated by this economic engine.

A report prepared by a City of Greater Sudbury group, the Advisory Panel on Municipal Mining Revenues, is the key weapon of the mining communities.

Its primary recommendation is “the council of the City of Greater Sudbury invite the Province of Ontario to enter into negotiations with the city to establish a resource-sharing framework that will ensure a predictable and sustainable revenue stream for the municipality. And further that the council circulates this report and consults with other northern resource communities.”

While Sudbury wants to kickstart negotiations, the aim today is for every mining municipality to get the same deal.

Sudbury Mayor John Rodriguez brought the report to Timmins council on May 5 and won immediate and enthusiastic support. Other mining municipalities are joining the fight because they see a new deal with Ontario as the only way to end their long slide into decay.

They also accept that one of the organizations that is at the end of its life is the Association of Mining Municipalities of Ontario (AMMO).

The single voice for Northeastern Ontario is the Federation of Northern Ontario Municipalities. For many years it tried to be the voice of all of Northern Ontario but in 2007 it realized the area was just too big. In the last few years, the Northwestern Ontario Municipal Association has grown into a strong, effective lobby group for that part of the North. The change by NOMA was acceptance that a new era in problem-solving had opened.

The province finally allowed municipalities in 1973 to tax surface operations of mining companies but the assessment put on these operations were low and have remained low. Therefore the tax revenues from this change in Ontario policy are too small to meet the need.

The Sudbury report says hundreds of millions of dollars have been sent by the mining industry to the federal and provincial governments, contributing to their repeated budget surpluses.

“Ontario’s municipalities, on the other hand, and Greater Sudbury in particular, have witnessed a decline in the property tax revenue that they collect from the mining industry. In the City of Greater Sudbury, the major mining companies’ share of the city’s property tax levy has fallen from 25 per cent in 1970 to 6.5 per cent in 2005. In the period 2001 to 2005, federal taxation revenue has grown by 78 per cent. Provincial taxation revenue has grown by 110 per cent while municipal property tax revenues have declined by 4.5 per cent.

The Sudbury report says the “Conference Board of Canada has estimated that Sudbury requires an additional $30 million or more annually to achieve long-term fiscal sustainability and that this amount of money is a fraction of the differential between the amount of money that the senior levels of government take out of the community compared to what they put back into the community.”

Timmins has estimated that it requires $7 million or more annually to help reduce this tax imbalance.

All levels of government make it a policy to ignore the tax burden placed on Canadians. The Canadian Federation of Independent Business (CFIB) stated in 2004 that Canada has the second highest tax load as a percentage of Gross Domestic Product of the 30 members of the Organization for Economic Cooperation and Development (OEDC).

For mining communities, the residential taxpayer carries an unfair share of the tax burden.

In Timmins, the residential sector (individual home owner) accounts for 77 per cent of the total property values which translates into the residential taxpayer paying 61.1 per cent of the city’s total tax revenue. The commercial-industrial sector contributes just 35 per cent (2004 figures for all examples).

In the Greater Toronto Area (GTA), the ideal situation exists as the residential sector is 69 per cent of the total property values but pays just 36.7 per cent of the total city tax revenue. The commercial-industrial sector is 22 per cent of the total property values but pays 44.3 per cent of the total city tax revenues.

Another big contributor in the GTA is the multi-residential sector (all those apartment and condo skyscrapers). It represents 8.9 per cent of the total property values but pays 19 per cent of the total city tax revenues. This sector is not a major factor in the tax situation outside of the major cities. In Timmins, the multi-residential sector pays just 3.9 per cent of the tax revenues.

Queen’s Park knows the commercial-industrial base of the mining communities will never be large enough to relieve the tax burden on the homeowner. At least not as long at it and Ottawa take the bulk of the tax revenues from the mining industry.

When the province downloaded the cost of many of its programs onto municipalities and reduced its portion of many of its shared programs, it forced municipalities to make hard choices.

On one hand the commercial-industrial sector has a strong local voice (chambers of commerce, boards of trade and Business Improvement Areas) while residential taxpayers are passive. The voice of business is heard every year at budget time, asking for a reduction in the commercial-industrial tax rates. And occasionally they get one.

The problem is that for every dollar the business sector is saved an equal amount must be piled on the homeowner. It could be argued that the homeowner is subsidizing the business sector without having any say in the decision.

The residential taxpayer must not only pay the municipal tax rate, he must pay the newly created water and sewer charges, along with green box charges.

He can make a decision as to whether to buy his shoes or car or chainsaw from a local merchant but he has no choice about his tax dollars subsidizing that merchant.

We are supposed to have a free market economy, that is if a seller of goods and services cannot do so at a profit, then he folds his tent. Right?

Those who are on fixed incomes, not-indexed pensions and low-wage jobs cannot keep up with the cost of living these days.

Too many of them are falling below the poverty line.

When, and if, the mining municipalities win their fight for the right to share in resource taxes, one can only hope the new funds will be used to relieve the plight of the residential taxpayer.

Mining Tax Report: A Refined Argument-Report of the Advisory Panel on Municipal Mining Revenues

Gregory Reynolds is a Timmins, Canada-based columnist who writes extensively about mining and northern Ontario issues