PILT Decision Highlights Property Tax Subsidies to Higher Levels of Government

There is an opportunity, in light of the recent Supreme Court of Canada decision, negotiate fair compensation for the City of Hamilton that lessens the burden on the property taxpayers of this community.

By Terry Whitehead
Published June 20, 2012

Last Friday marked a very significant day for municipalities across the country. In its ruling on the Halifax Payments-in-lieu of taxes (PILT) case, the Supreme Court of Canada (SCC) ruled that the Government of Canada must pay its PILTs just as citizens and businesses must pay their property taxes.

This reinforces the principles underlying the PILT Act, which argues that the program must provide fairness and equity to communities providing services to federal properties within their jurisdictions.

Provincial Heads and Beds Tax

Currently, the Province of Ontario is using an antiquated tax system (Heads and Beds Tax) to compensate communities for municipal services that the Provincial Institutions in their communities receive - services like Fire, Police, Transportation, Infrastructure and so on.

As all property taxpayers know, these costs have risen significantly in the last 20 years, but the Province of Ontario has not increased their Heads and Beds Tax payments to municipalities since 1987.

So not only are the residents of the City of Hamilton expected to pay provincial tax, you are also burdened with carrying the additional cost to subsidize these provincial institutions on your property tax.

The Association of Municipalities of Ontario (AMO) represents the interests of communities across Ontario. They argue that if you are consuming City services, you should be paying fair compensation for those services.

The AMO has suggested that at the very least, the Provincial payments should be increasing with the cost of living. To date, the Province has not offered any solution.

In the City of Hamilton, we have four hospitals, College and University, just to name some of the institutions that are paying a fraction of what it costs to deliver services to them.

Time To Negotiate a Better Deal

There is an opportunity, in light of the recent Supreme Court of Canada decision, to strike while the iron is hot and negotiate fair compensation for the City of Hamilton that lessens the burden on the property taxpayers of this community.

Certainly, what the Government of Ontario should be paying should be reasonable and fair to both parties.

The cost of inflation would be a reasonable starting point, and consideration should be given to apply the cost of inflation rate retroactively back to 1987.

The Heads and Beds payments to municipalities was established by the Province of Ontario because they understood that they should be paying something towards the services that they consume.

The problem is they have fallen behind by 25 years. You are expected to pay your taxes for City Services and the Province should be expected to pay theirs and not treated differently.

Upcoming Motion

A motion will be going to Hamilton City Council asking the Mayor and AMO to begin negotiations with the Province of Ontario immediately in light of the recent Supreme Court of Canada ruling; and, failing that, to look at the merits of suing the Province of Ontario for tax fairness.

I believe local taxpayers should not be subsidizing Provincial Institutions through Property Taxes.

Terry Whitehead is the Councillor for Ward 8 (West Mountain).


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By MVH (anonymous) | Posted June 20, 2012 at 11:12:05

While all nice and good to say the province should pay more, the problem is that since we pay provincial tax we would just see our tax payments increase elsewhere. The services we receive are a function of our tax dollars at three levels. To shift payment between the three does not in essense change the total taxes payable for said services. To portray this as an injustice is in error.

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By lawrence (registered) - website | Posted June 20, 2012 at 12:47:46 in reply to Comment 78725

I won't pretend to totally understand this but would the fact that the burden switches to the provincial level mean that cost is spread across a province and mean a less overall tax burden in the long run for Hamiltonians rather then the current situation of us paying for all these costs?

Hamilton offers a hell of a lot of services other communities don't from my understanding so if people are specifically relocating to Hamilton or closer to it to utilize these services, why should the Hamilton taxpayer alone have to cover these costs?

I am not big on this whole suing our own government none sense however (aka Red Hill). We all lose there it seems in one way or another.

Does the City of Hamilton as a business entity have to pay separate provincial taxes? Can we instead withhold payment if they don't recognize this recent ruling and agree to pay us back or at least start covering these costs going forward? I guess that might mean the Province in turn sues us instead but there has to be another way to drive this home in a way that makes it a no brainer for them to adjust these costs?

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By Sky (anonymous) | Posted June 22, 2012 at 01:25:50

Thank you for this information Terry!

I have a hard time launching a law suit against another level of Government because; simply stated, it becomes my tax dollars in conflict and ultimately shuffled...

This article really hits home for me and as I read it...I too am in the EXACT situation!
How do I respectively as the City of Hamilton, to lower my taxes because I too am restricted (site specific), yet pay FULL COMMERCIAL taxes?

Any way of decreasing my $38,000.00 annual tax bill to the City would be greatly appreciated...
For the RTH readers...I have NO AMMENITIES, The City classifies me as 'RURAL', I AM SITE SPECIFIC AND THUS FAR NOT ALLOWED TO DO ANYTHING OTHER THAN AN ANTIQUE & FLEA MARKET...Yet I pay over $3200.00 per month in taxes...and I am open at the most two days per week.

Love that you are bringing this up Terry! How do we change the errors without law suits would be the question I pose back to you :)

Have an amazing day Everyone!


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By etc123 (anonymous) | Posted June 22, 2012 at 11:56:00

What I don't understand is why Hamilton's property tax seems to be double that of Toronto, and higher than other places like Kitchener and Guelph. I've been trying to find an answer online but I can't seem to find that is definitive.

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By ScreamingViking (registered) | Posted June 24, 2012 at 22:36:16 in reply to Comment 78813

One problem is the city's tax base has become very unbalanced over the past few decades. Residential properties bear far too great a proportion of the total assessment, compared to industrial/commercial property.

Two of the biggest reasons for this are probably the decline of heavy capital-intensive industry, and the city's failure to attract enough new business to compensate for that loss.

This is another reason why increasing local employment by attracting new firms or growing existing ones is so important; the benefit is not just local jobs for city residents, but a more sustainable tax structure for the city. But it's a long process, especially since SMEs make up such a large portion of business, and development of major facilities (like those of Maple Leaf) doesn't happen very often.

Hamilton's economy is very much in transition, and that will continue for a long time. But hopefully the tax base will gradually shift back to something more balanced.

EDIT - One element of Hamilton's transition relates back to the point raised in the original article: Hamilton's institutional employment has grown, as medical and educational facilities have been growing and developing. But if they're not paying a "fair" rate, the effect of that growth on the tax base is negligible. (Of course, those facilities do have other positive economic effects, but not in the same way as something like a new manufacturing facility or office complex)

Comment edited by ScreamingViking on 2012-06-24 23:19:47

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By seancb (registered) - website | Posted June 23, 2012 at 08:58:03 in reply to Comment 78813

Because there aren't enough people living here to cover the expenses of a city that is this large geographically. We should have a total population of a million with six or seven hundred thousand of those living in the "old city".

Unfortunately, we drained our downtown of residents through 50 years of bad luck and bad decisions.

The city needs to realize that the promises made by sprawl developers are empty ones, and the desire of outsiders to speed through the city is one of many direct causes of our high taxes.

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By angie (anonymous) | Posted August 23, 2012 at 22:48:13

Although I don't have the history to recognize the trend of increasing taxes in this community, I do realize there is a huge concern directly related to the assessment approach in our community.

We were looking at a home a month ago in Ancaster and current taxes on the home were about $6000...if the home is purchased at the $1.2 million, what will happen to this tax bill each year? Well, we have watched a home down the road go from this exact tax bill and currently, they sit at $13,000 per year just cause the home sold 4 years ago. Should there not be a cap on tax hikes - this is totally unethical. Moreover, this money is going to a support decision-makes who have mismanaged the city.

I am not convinced we have much control and if we alter tax contributions in one component, we will certainly have to increase towards another...

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