“Eye on City Hall”
A column of Information, Analysis, Comment, and unfiltered opinion
Bill Longworth, City Hall Reporter
October 11, 2010
This is a question that comes up in every mayoral debate and is one that Mayor John Gray gloats over in mentioning the courthouse and university and their location here in attracting high level employment to this area.
Neither, of course, have anything to do with his efforts or city council policies. City policies neither encourage nor discourage government or educational facilities from locating here since city tax policy does not apply to such buildings which, along with churches and government buildings, are property tax exempt.
City policy, under John Gray’s leadership, does provide active discouragement for the location of industrial/commercial businesses with its job growth here.
Besides having the highest residential tax rates in the GTA, Oshawa also has the highest commercial/industrial tax rate in the GTA. In 2010, Oshawa’s Industrial tax rate was 5.144417. Throughout the GTA these rates were as low as 2.14 in Markham, to 2.49 in Whitchurch Stouffville, to 2.46 in Vaughn, to 2.46 in Richmond Hill, to 2.64 in Newmarket, to 2.75 in Mississauga, to 2.53 in King, to 2.92 in Georgina, and to 2.66 in Caledon. Industrial concerns would pay only half the property taxes in any of these cities mentioned than they would in Oshawa….so why locate in Oshawa?
The tax rate means big dollars to the location of an industrial plant. A plant costing $25M would be taxed at $1.361M in Oshawa and at $535,000 in Markham in 2010….If you were a businessman with $25M to spend, why would you bring your plant and your jobs to Oshawa when a Markham location would save you $826,000 in taxes every year? Oshawa high taxes actively discourage industrial concerns to locate here.
The only jobs growth we can attract are government and university jobs, which because of their tax exempt status are not discouraged from locating here, by the high Oshawa industrial/commercial tax rates.
Both the courthouse and the university are great for the city, but neither pays property taxes to assist with the costs of administering this city, and so neither contributes to providing any tax relief for residents.
In driving into Oshawa along the baseline, the 401, or Taunton Road, you can see loads of commercial development right up through Whitby until the Oshawa border, and then the commercial development stops to be replaced by vacant fields, due to the abrupt increase in commercial rates once you hit the Oshawa boundary.
Commercial establishments like the OC shopping centre and the big box stores along Taunton just have to grin and bear our high taxes for the sake of having Oshawa outlets. The high Oshawa taxes would, however, make these stores less profitable than their neighbouring stores in Whitby, Scugog, or Clarington. Perhaps that is why outlets like Home Depot located in Whitby first, and Oshawa customers had to trek over there to the baseline store for a number of years to make their purchases.
Similarly, Oshawa’s 2010 residential tax rate at 1.704499 was highest in the GTA. GTA residential tax rates ranged from Oshawa’s highs down to Toronto’s lows of .0831, to Vaughn’s .977, to Richmond Hill’s .979, to Oakville’s .983, to Mississauga’s .982, to Milton’s .878, to Markham’s .963, to Halton’s .995, to Aurora’s 1.077.
So a $350,000 Oshawa house in 2010 would be taxed at $5966 and $2901 in Toronto, $3419 in Vaughn, $3490 in Richmond Hill, $3441 in Oakville, $3437 in Mississauga, $3073 in Milton, $3335 in Markham, $3500 in Halton and $3770 in Aurora. The second highest taxed place in the GTA is Brock at 1.530 which would result in a tax of $5355 on that $350,000 house, still $611 less than Oshawa’s sky high taxes.
No wonder we have a tax revolt underway in Oshawa. One homeowner told me his city taxes were like a mortgage he could never pay off!
Like the high industrial/commercial tax rates that make Oshawa a less attractive place to do business, our high residential tax rates make Oshawa a less attractive place to live. This is why Oshawa has the lowest priced housing in the GTA.
High taxes depress house values robbing homeowners of tens of thousands of dollars of home equity. Lower taxes, after an adjustment period, would see a rise in housing values and a lowering of the tax rates to produce the same city revenues.
As we continue to be unable to attract industry, and are only able to attract tax exempt institutional uses like the university, a higher proportion of the costs of administering the city will be transferred to the residential tax rate, causing even higher taxes into the future unless we take the bull by the horns and cut our industrial commercial taxes.
If we don’t do so, any high tech job spinoffs from UOIT will locate in Whitby, Ajax, or Pickering where a $30 million factory investment would generate an annual real estate tax of $1,543,325 in Oshawa but would save the investor $226,060 annually if built in Pickering, $219,577 annually if built in Ajax, and $206,480 annually if built in Whitby.
So if you were an industrial investor, why would you pay from $17,207 to $18,838 more monthly to locate farther from Toronto in Oshawa than the lower taxed, and closer to Toronto, Ajax, Pickering, or Whitby?
The city is going to take a revenue hit when it does significantly cut taxes to attract industry and all those millions spent on the needless city hall reconstruction and the $40M spent on the GM Centre to increase the value of the Oshawa Generals, so they could be sold by their owner for a considerably improved price based on the taxpayer arena investment, might well have been spent in transition spending subsidizing the city’s reduced industrial/commercial tax rates to attract industrial/commercial jobs investment in this community.
Attracting industrial/commercial development is crucial to Oshawa’s future. We have to not only get our residential tax house in order, but we have to start lowering our industrial/commercial tax rates if we are going to attract industry and jobs to the city.
The costs of doing business is everything! If we don’t lower the industrial/commercial tax rates, Oshawa will become more of a bedroom community with more mass outflows of residents, along packed highways every morning, crawling into Toronto, and Oshawa shall continue as the lowest priced housing but highest taxed place in the GTA.
The Mayor and council with their rose coloured glasses which block them from seeing the serious consequences of the high tax rates facing this city have to be replaced before more damage is done to this city.
High taxation levels are resulting from a city council that believes in spending our way to prosperity. This is a pipe dream that has driven many into uncontrollable debt and bankruptcy…something this city council with its high taxation levels seems intent on doing to our citizens. City hall spending reminds me of the “big-time” spender with the high life style struggling behind the scenes to pay the bills to keep up the appearances. Diamonds bought with borrowed money soon lose their gloss!
This city council is one that believes if you zone for industrial parks, etc., industry and jobs will come. On the contrary, the high taxes “smell” from a mile away and scare industry away just as effectively as a cornered skunk. Without lowering industrial/commercial tax rates, industry would not locate here even if the land was free. Industrialists know that you can pay off construction costs of new plants, and that a skilled workforce is mobile, but that taxes go on forever.
Oshawa's sky-high industrial/commercial tax rates not only rebuff business from locating here, they act as an "eviction notice" for companies already here.
But hey, what kind of economic understanding do you expect from a Mayor whose “real job” was as a part time bookkeeper and who has council members like Brian Nicholson chairing economics committees because he claimed to have a degree in economics and political science only to recently come clean admitting that he is a high school graduate with some economics courses, and Louise Parkes who claims an honours degree with her 4th year incomplete which means she doesn’t have the degree claimed.
Let’s get some bright and honest people on council before these incompetents destroy this city beyond repair.
every Monday, 6-9 pm EST, on http://www.ocentral.com/thewave/