Opinion Editorial

Tax loophole needs to be closed up

By Dave Dawson, Orillia Packet & Times

Even Liberals will likely concede it has not been a good year for Kathleen Wynne, who was roundly booed as she officially opened the International Plowing Match earlier this week - a telling indictment of her reign as premier. Ironically, she also served as minister of agriculture in her first year at the helm of the province, so these were, in a way, her people.

While Wynne has a lot to answer for, her government deserves credit for listening to the concerns of municipalities like Orillia and, perhaps more importantly, stepping up with cold, hard cash to address those concerns.

A few months ago, Orillia's city council was irate when they learned the province had decided to exempt non-profit long-term care homes from paying property taxes. While the province gave notice of their plans in 2014, when it actually happened, many municipalities were unprepared for the massive financial hit.

In Orillia, for example, the decision made at Queen's Park suddenly meant that Spencer House on West Ridge Boulevard would no longer pay municipal taxes; that translates into a loss of $473,000 in revenue the city expected to receive this year. To make up for that dramatic and unexpected shortfall could have meant a 1% increase in your municipal tax bill. It's significant.

So, council sent a letter to Minister of Finance Charles Sousa asking for relief. And, to many people's surprise, he agreed to the plea. However, there's a caveat: this is one-time 'transitional mitigation' funding. This year, the province will cover the $473,000, but after that, the city has to find a way to make up that loss.

Orillia Mayor Steve Clarke was happy the province listened, because, as he described it, "it was a source of cash flow that we experienced on an annual basis which was shut off." He plans to further lobby the province for more long-term relief.

While grateful for the cash, some city councillors still believe the policy change is wrong-headed. Sousa, in his letter to the city, defended the tax-exempt strategy, noting the intent of the regulation is to "provide consistent and equitable property tax treatment to all charitable and non-profit long-term care homes across the province."

But Coun. Ted Emond correctly pointed out the hole in the theory. He noted that while Spencer House is set up as a not-for-profit with a board of directors, it is owned by Sienna Senior Living, a publicly-traded company on the Toronto Stock Exchange.

"(Spencer House) is still owned by a profit-making corporation," said Emond. "I would strongly urge the mayor "¦ to query how the province allows this sort of manipulation of what I think is a genuinely important mechanism to encourage non-profit long-term care housing."

Emond is dead-on. That loophole needs to be closed. This provincial directive may be well-intentioned, but when profit-making enterprises find a way to avoid paying taxes, something is not right. The province needs to address this issue post-haste.


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