Metro Toronto's seven school boards are in serious financial trouble, thanks to a property tax strike by the owners of 35 shopping malls, 121 commercial and 24 industrial sites, and more than 1500 large apartment buildings. Among them are the Eaton Centre and the famed Toronto Domed Stadium.
The shortfall to the Boards is now $171 million, and climbing as successful corporate assessment appeals continue. Such appeals often cover several years, include interest owed by the Metro Board, and end up costing the public boards millions of dollars each. The 1994 appeals left the Metro Board with a $23 million deficit, described by Metro School Board Chair Ann Van Stone in mid-January as "a snowball" that in 1995 has left the boards in a state of financial "freefall."
How did they do it? They used the Market Value Assessment study done on Metro properties two years ago. Intended by the provincial government to split opposition to MVA in Metro, the study lives on long after MVA itself was defeated by a coalition of Metro municipalities and reform activists. The study proposes "equalized" assessments, which are neither fair nor equal, but which are lower than present assessments for many commercial, industrial, and apartment properties, along with large malls like the Eaton Centre.
But the real story isn't the MVA study, nor even the tax differentials between Metro and its bedroom communities of Pickering and Markham, which are favoured havens for corporate property tax evasion. Property taxes in Metro run at $6 a square foot, and in Pickering $2 a square foot. The difference is services. In Pickering business can access Metro's world-class transportation, communications, and other services, without paying for them. Municipal experts call this "the hole in the donut," the inner-city decay that is the logical outcome of corporate tax flight.
The really juicy story is the Metro Board of Trade and its new booklet and campaign, Killing the Golden Goose, which the public is told is really all about fairness. The Board of Trade demands that business be relieved of the costs of public education, which should be transferred onto homeowners, said to be "completely unaware of the free ride they are literally getting at business'... expense."
In fact, the tax reform and "fairness" the Board of Trade seeks would result in a huge tax shift from business onto working people. They want to equate the percentage of the value of Metro land owned and occupied by homeowners (62%), with an equivalent tax load (of 62%). Homeowners now contribute about 30% of property tax revenues generated in Metro. The Board of Trade's proposals would more than double existing property tax levels, while slashing property taxes and business taxes paid by big business.
In fact, tax reform is urgent, as Toronto Mayor Barbara Hall told the media after meeting with the Board of Trade last month. The kind of reform Hall and others want is set out in December 1993 report of the Ontario Fair Tax Commission, which the Rae government is studiously ignoring. The report recommends paying for education out of provincial general revenues rather than property taxes, plus a progressive tax policy based on ability to pay.
Business will fight tooth and nail against the second recommendation, which would put the load of public education and social services onto the corporations and the wealthy. While it's a social democratic government, the Rae cabinet's corporate agenda precludes passing such legislation. So the Fair Tax Commission report gathers dust, with the full support of both the Liberals and the Tories.
But the unilateral action by Big Business in Metro Toronto has forced the issue: huge cuts to dismantle public education, an 8.3% education tax hike, or more likely a combination of both are on the agenda, unless Queens' Park steps in with some cash or some legislation, or both.
The Metro Boards asked the province to freeze the assessment rolls in December, but the government declined. In early January the Boards asked for a $50 million undue burden grant - an emergency blood transfusion. By the end of January the request was upped to $75 million.
By late February, the province was expected to announce that starting in 1996 the Metro Boards would "go positive," becoming eligible for provincial education transfer payments after 6 years in a negative grant situation.
This would be a welcome development. But unless transfer payments equivalent to the revenue shortfalls kick in this year, public education will face a Code Red. The Metro Boards simply cannot cut a further $171 million in 1995, and more next year, without gutting public education.
Many parents are aware of the danger of privatization that is a driving force in corporate circles. Already, there are moves in some parts of Metro and Ontario towards a two-tiered system of education. Schools in flush neighbourhoods will use private funding from parent groups for field trips, equipment and "extras" that children in inner-city schools won't have. Furthermore, homeowners and tenants are right to demand tax fairness and some measure of tax relief. Their justified protests shouldn't be confused with the shrill demands of the Board of Trade, the National Citizens Coalition, and the Mike Harris/Preston Manning "tax revolt."
What's needed is a broad coalition of parents, students, teachers and trustees, and others, uniting efforts to preserve public education, to force the issue of public funding for public education now, and in coming provincial elections.
Property tax reform and progressive tax policies based on ability to pay have long been called for by the trade union movement, the Communist Party, and by successive NDP conventions. The Fair Tax Commission report provides one important handle to move the fight another step forward. No doubt there are others. Mass corporate tax appeals provide the impetus. Our kids provide the incentive!
The People's Voice is published monthly by New Labour Press.
Editor: Kimball Cariou
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