; -^ '^ 14 oJLSLc.^^ >^'^' 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 ^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 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 ,,