;
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A BRIEF STATEMENT
OP
MUNICIPAL TAX EXEMPTIONS
./^- "V.
N TORONTO
FiioM 1869 TO 1890.
k
mth an Open Letter on the Assessment of Personal Property to
the Hon. Oliver Moxoat.
BY
JOHN HALLAM.
" Nevtr tax anything
That would l)e of value to your state, and
That cotild and would run away, or
That could and tcould come to you."
tOkONTO i ' ,
Printed by Imrie & Graham, 28 CoLborne Street.
TAX EXEMPTIONS.
The Limiteiiant-Goveruor proi'lftimed in his speech that the Ontario
Govenuueiit intended to deal with the Assessment Law, and the vexed
qucstiaii of Tax Exemptions, during the present Session. This has excited
renewed interest in tlve cjiiestion.
Numerous correspondents liave written to me for information rejyarding'
the nature and extent of exemptions from Municipal Taxation in Toronto.
The first return of Statutory Exemptions was made to tlie Council in 18<)9y
amountinji' to!?;3,SHr),!)r)0, and the agitation to do away with Tax Exemptions
began in 1H71. In 187;>, the lirst Assessment Committee met in the City
Hall, and dealt at length with Tax Exemptions, but recommended nothing
practical, beyond reporting that the Assessment of personal property is be-
set with difficulties, which are necessarily increased by the inquisitorial
efforts that have to be resorted to when information 'is not frankly
afforded .
By order of the City Council of 1874, Mr. *>. G. Ridout, then acting Assess-
ment Commissioner, made a return of all property exempted from munici-
pal taxation, which was $8,683,259.
In 1870, the Committee of the City Council on Exemi)tions from Taxation
dealt with all the facts and figures, and drew particular attention to the
vast amount of real estate, consisting of lawns, paddocks and gai'dens ;.
and tlie value as returned by the assessors in 1874 was .$1,158,549, and only
taxed as if valued at .$51(>,401. The Committee have every reason to be-
lieve thai: this valuation is merely nonunal, and would urge that every
foot of lanci be uniformly assessed, and taxed accordingly.
This report was laid before the Honorable Oliver Mowat, Attorney-General
of Ontario.
In 188t5 Commissioner Maughan made a return of all property of whatso-
ever nature exempt from taxation in the assessment of 188?/ which
amounts to the enormous sum of §12,779,(108. The Assessors were insti'ucted
for the first time to make a full return of all the lawns and gardens
exempted ; and there w(^re 5G7 lawns and gardensj valued at $912,092 not
paying one cent of taxes.
The Ontario Government collected a vast amount of information on " Tax
Exemptions," which will be found in the report of the Select Committee on
"Exemptions from Taxation," Appendix 4, in the Journals of the House
for 1878, but refrained from making any recommendation. The practical
result was that in 1871 exemptions on official incomes of the Ontario
Government were abolished, and the exemptions on lawns and pad-
"doc'lvs -were nliolished in 1888, and the assessment of churclios for local
improvements by petition, one-half in value, and two-thirds in number.
It will be seen at once that the reformation of the evils liomplained of lias
"been very slow.
In 1884 the " Anti-Exemption Association " of Toronto was formed. The
objects of this Association were to secure the abolition of all tax exemp-
tions. They printed a Constitution, and issxied an address to the citizens,
■covering all the {ground of tax exemptions. In the address is the follow-
ing" paragraph :—
''The Association entertains the opinion that the Legislature, In refusing
to permit the municipal aiithorities to deal with the <i\iestions involved,
are violating the spirit of our Constitution, which contemj)lated a Do-
minion exclusively to attend to Dominion affairs, a Provincial for Pro-
vincial affairs and a Municipal for Mujiicipal atl'airs."
In 1887 the Ontario Government apjiointed a Commission on Municipal
Institutions. This Commission collected a vast amount of valuable infor-
mation on this subject and tiie various systems of taxation adopted by
different countries, which is embodied in two reports ; but refrained from
making any recommendation. The evidence goes tu show that the taxa-
tion of personal property and income is attended with many difficulties,
and wherever tried is a failure.
The following are the returns of real, personal property, income and
exemptions for the last ten years. Taken from the Assessment Rolls of
the City of Toronto.
YF.AR. REAL PKOPEKTY. INCOME, I'KIISON'AI ruorEUTY. EXEMl'TION'S.
1881
$ 44, 622,. 578
$3,329,725
$6,207,300
$ 9,418,158
1882
46,264,624
2,534,347
6,487,068
9,46.5,300
1883
49,007,680
3,639.033
6,914,480
9J11.044
1884
.'i4,l.'-)6,102
4,0r(i,315
7,452,980
10,139,124
188.T
.'■)7,r.46,816
4,105,412
7,572,886
10,787,540
1886
60, 69.'), ,505
4,338,025
7,682,003
11,040,858
1887
69,442,018
5,265,585
8,849,208
11,986,3.53
1888
84,2.56,933
4,906,097
9,132,821
13,755,043
1889
99,276,0.57
4,8.32,733
8,954,285
15,877,504
1890
122,651,244
5,108,546
9,470,988
18,922,458
The following is a Comparative Statement of Real restate, held by diff"erent
denominations, exempt from Municipal Taxation.
Church of England .? 996,000
Methodists 838,000
Roman Catholics, iiiclmling §60,000 Separate Schools 1,219,000
Baptists. 230,000
Coui^rogationalists 152,000
I'resbytei-iaus 703,000
^4,1.38,000
The property held by the following parties, entirely exempt from muni-
cipal taxation.
4
1889.
Dominion Govemmei.t $1,834,000
Ontario Government 3,125,000
City Property 2,302,000
Universities and C!olloges 2,593,000
Charitable Institutions 440,000
Public Schools 716,000
$11,010,000
CLERICAL EXEMPTIONS.
There are 116 clerymen belonging' to the different denominations, that are
exempt on $1,000 on their .salaries, and $2,000 on their residences.
30 Episcopal Clergymen receiving salaries from $1,000 to $5,000
32 Methodist Ministers " " " 1,000 " 2,500
13 Bajjtist " ',' " " S.'iO " 3,600
7 Congregational " " " " 1,000 " 5,000
1 Unitarian " " " at 1,500
23 Presbyterian " " " from 1,000 " 5,000
1 Roman Catholic Priest " " at 2,000
Each of the above gentlemen enjoy tax exemptions on $3,000, amounting
to $348,000. At 15 mills on the dollar would be $5,220. The tax payer has
to pay just $45 for the privilege of these clergymen teaching us.
" Therefore all things whatsoever ye would that men should do unto you
even so do unto them."
JUDGES AND DOMINION OFFICIALS.
We now come to a different class of Exemptions, wholly under the control
of the Dominion Government in Toronto. They are as follows :—
Inland Revenue 13 Officials Salary $18,090
Customs House 12 " " 18,!J00
Post Office 27 " " 37,050
Department of Agriculture.. . . 1 " " 1,650
Judges 18 " *' 72,132
$147,422
All the above are exempt from municipal taxation, receive good salaries
and enjoy all the privileges of municipal expenditure. There is no rea-
son on earth why they should not pay taxes on their income. In a free
State like Canada there should be no privileged classes.
GRANT FOR CONTRIBUTIONS IN LIEU OF RATES
FOR GOVERNMENT PROPERTY IN THE
UNITED KINGDOM.
With small exceptions the exemption from assessment of property occu-
pied by the Crown was maintained up to 1860. In that year as stated
above,, a Parliamentary Grant of £35,000 was taken to meet the cases of a
certain number of parishes most aggrieved by the exemption. This
grant in 1878 had been raised to £234,000, (for the years 1886 and 1887, it
amounted to £4,302,766), the Government having determined that all Gov-
ernment non-ratable property shall contribute to the Local Hates. This
concession was made concurrently with the change in law recently effected
by which various classes of properties (not being Government properties)
heretofore exempt have been made liable to assessment. The exemptions
here immediately referred to were removed by statute ; but the exemp-
tions in law of Government and Crown property from assessment still con-
tinues, and the grants in respect of this property are made by way of
bounty. Tiio principles on which the Government have proceeded in
fixing the contributions to be given may be shortly stated as follows.
They adopt the principle that property occupied by the Crown for the
public service (and theniby exempt from assessment) should contribute to
the Local Kates equally with the other property in the parislxts in which
it is situated , h avii>^r due regard to its character in each cas(^.
The contributions are to the poor and all other local rates levied in the
parish in which the property is situated, and no parish is excluded from
such contributions on the ground that the Government property is of
small amount. Considering how widely different are the various kinds of
Government property, and how impo.ssible it is to apply to all kinds the
rules of assessment applicable to private property, the Government have
felt it necessary to retain in their own hands the valuation of all Govern-
ment property, but they adopt in each case as far as possible the same
principles as area p pUcab T TtotneTaluatioii of p r ivate pro perty. Thus
property occupied as ex-officio residences or quarters for officers of the
Government, is assessed on the estimated, rateable value whi ch w ould
attach to such premises if they were in private occm)ation and liable to
assessm'jiit to the local rates.
The Dominion and Local Governments have no excuse for not contributing
to local rates, for the English Government now contributes annually large
amounts in lieu of rates where their property is situated.
INCOME.
The same reasons can be urged against the assessment of income, as
against personal property. I have no patience with those who would tax
income derivable from bonds, debentures, railway stocks and mortgages,
which are only paper evidences of land and its improvements, and which
have already been taxed in .some shape or other. The income from per-
sonal exertion is just as objectionable and as unreliable as the assessment
of personal property.
The sources of income are various, which makes it almost impossible to
get at its true value for assessable purposes. The result of this tax is so
insignificant that makes it unworthy of our consideration, and should bo
abolished for a tax more reliable, more certain and just to all.
If we take the year 1881, and add real and personal property together, the
total was $50,829,878, the assessable income was $3,329,725, or a little less
than six per cent., and for 1890 the real and personal property is $132,122,-
228, tho ass('SHJi1)lo incoino is $5. 108,5 1(5, or Iuss than four por cout.; suroly
there is soinetliiii^- wroii;--, and the system of ass ssnient tliat niak(\s this
possihl<>, must be politieally unsound, and a sad reliection on tlio wisdom
of malvin^'- such laws.
In conclusion it is to bo hoped that after tlu; lon;>- years of a^-itation on tliis
much vexed (piestion of tax (sxemptions and assessment reforms, tliat the
Ontario (Jovcwnment will, this siission, make a radical cl»an>;-e in the
assessment laws, and abolish all tax excnnptions on real estate in < Mitario.
There is no '^nod reason, why property enjoyiny all the benefits of Muni-
cipal expenditure! should not pay a fair share of such expenditui-e.
The nature and aim of all taxation ou^'ht to Im; t\w public ^ood, and all
taxes riffhtly expended, secure a full return of beniitits to the tax-jjayer.
The cleaning', the liffhtiny, the police of a city and the education of our
children, secure results which everyone participati!s, and no casci but that
of poverty ouffht to justify exemption from payinji' a share of tho cost of
advantages, which none could dispciuso with, and which are so necessary
to the safety, health and prosperity of all.
Every case of exemption, just or unjust, is in itself a tax upon the rate-
payer, whether the object exempted 1)0 an institution, a society, a cluirch,
a jud.n'o, a clergyman, a customs house ofHcial or a post-otlice chu-k. The
ratepayer has not only to pay his oAvn tax, but he has also to make up
the deficiency caused by these exemptions ; in this case, " Not to tax, is to
tax."
To me it seems, that the proper basis of municipal taxation is land values
tog'cther with improvements. To the.se the municipal government renders
service. All such i)roperty should be taxed to its real value, and T can see
no reason for exemptions, ecclesiastical or any other kind.
THE ASSESSMENT QUESTION
Aid. Hallam Strongly Recommends Changes in the System.
To the Ilonnrahh Olirer Mowat : —
De.\r Sih,— I am sure that all municipal tax reformers will l)e i)leased
that your Government is going* to deal with the assessment of property for
the purpose of municipal taxation, and also the vexed question of exemp-
tions from local assessnunits.
I think this was the most pleasing feature in the whole of the Lieutenant-
Governor's address.
I hope you will bring' in a bill that will abolish all taxation on personal
property and income. If this is done it would create more exemptions,
but we would g'ain immensely by the simplification of our assessment
laws and by making" real estate or land values the only basis of taxation
for municipal purposes.
The amount of personal property, as returned by Commissioner
Maug'han for the past ten years, has not increased in the same ratio as
real estate, plainly showing that there is something radically wrong in
taxing personal property.
7
Th(! followiu;,' ar<i tho offii-inl returns of real and porHonal property for
the City of Toronto, from the year 1881 to tlie present time :—
lleul rersonal
Year, Proiiorty. l'ro)M'rty.
18.S1 Hi, ll,tiL'2,r)78 !?ti,2(i7,:{00
18M2 4t;,-J(i»,t')-_'4 (5, !rt7,0t)S
1883 -19,007, <i30 (5,914,180
1884 r.4,lf.t5,10:i 7,4.'i2,980
imr, 57,r)4tJ.Slti 7,572,88»J
18H« GO, «!),'.. r.0r> 7,«S2,003
1887 t)lt,442,018 8,84».208
1888 84,2rit),!i;i:{ », l;t:.',82l
18.S9 !i!t,l.'7tJ,0r)7 8,!»'i4,285
18H0 122,tir.l,244 9,470.988 '
The for<';;:oiMg' table is a record of the folly of assessinjjf personal property
for taxation. No one can think for a monxMit that .^!>,4T0,08h is anything
like, the value of personal property assessable in Toronto. If you can'fully
examine tlu; fij^ures in the above table, you will find that in IKSi the
assessed value of real (istate in Toronto for taxable ptirpos(!S Avas
•SH ■'>--, "iTs, and personal property for the same purpose was .^(i,i?OT,.'50O, a
littl(! less than one-seventh of the real property and in 1890 w«! lind the
value of real estate was .■?12J,(i51,-J44, and personal property 5i'J,47D,988, or
about one-thirteenth.
Now if pi'.rsnnal property had increased at the same ratio as real estate,
we should have had .^17,012,(100 of pcu'sonal property assessable. Even this
is notoriously below the real value of personal property in Toronto.
There is no doubt that there are many uncertainties as to the meaning- of
the law with respect to the assessment of personal property, and there
have been so many amendments thereto that no ordinary individual can
understand the provisions of the Act.
The tax is, in consequence, a most unpopular one. It is a tax on capital,
and its operations are unequal, arbitrary and uncertain, and subject to
gross evasion.
To meet the difficulty, if it can be met, will require extraordinary means
whereby such property can beg-ot at, ''enrolled or valued for assessment."
These means will be of such a repulsive nature and so inquisitorial that
the people will neither respect the law nor subnut to it. This is fully
borne out by the Hon. David A. Wells, who says :— " Oaths as a matter of
restraint or as a guarantee of truth in respect to official statements have,
in ^reat measure ceased to be effectual"; or, in other words, "p(!rjury,
direct or constructive, has become so common as to almost cease to
occasion notice."
It is well understood that the uncertainties of the Assessment Act in a
larg^e measure justify many in evading- its provisions. Wherever the
assessment of personal property for municipal taxation has been tried, it
has been found a failure.
The returns of personal property for the purpose of taxation in every
county, city, town and village throughout Ontario is out of all proportion
to the reality. In some places no returns of personal property have been
made.
The real estate returns in Vork for the year 1888 were |5,507,350, and per-
sonal property, 1231,760. The CommiHsioners on Municipal Institutions,
commenting on this state of affairs, said "That the proportion of assessed
personal property for taxation is absurdly small in all parts of Ontario, an
well as everywhere else."
S, B. Harman, the late City Treasurer, described the trouble that is met
with in assessinff personal property, and the unfairness that seems un^
avoidable in many cases. The amount we g-et is absurdly small.
If we go to the United States— where the assessment of personal property
has been reduced almo.st to a science, and where ttie ingenuity of the
statesman and the lawyer has been taxed to devise iws to enforce the as-
sessment of personal property and the taxation thereon— what is the re-
sult ? That the law is evaded, and all oaths, as checks, and voluntary
statements are disregarded.
The Governor of Ohio, in a special message in April, 1887, said:- "The
great majority of the personal projTerty of this State is not returned, but
entirely and fraudently withheld from taxation. The idea seems largely
to prevail that there is injustice and inequality in taxation, and that there
is no harm in cheating the State, although to do so a false return must be
made and perjury committed."
The State of Ohio is not singular in this respect, for the late Mayor of
New York, A. S. Hewitt, in his message to the Aldermc.i for 1888, speak-
ing of the assessment of personal property, says : — "This tax is notorious-
ly impossible of collection in this city."
Professor K. T. Ely, in his work on "Taxation in American States and
Cities," says :— " Nearly all Americans who have given the subject of tax-
ation attention, and can make the slightest claim to be considered authori-
ties, reject the personal property tax as unjust and impracticable."
Then, what is the remedy for this lamentable state of affairs ? The facts
and the evidence so far seem to be against the assessment of personal
property for municipal purposes.
We want a system of taxation that will encourage thrift, and that will
bear on all classes equally according to their ability to pay. This system
I believe to be the single tax on land values as being the most practical
and certain, and sure to be distributed amongst all classes, remembering
that the best of all taxes is the least.
John Hallam.
Toronto, Feb. 3.
■} i ,,