The Philosophy of Assessment
The Empire Club of Canada Addresses (Toronto, Canada), 28 Oct 1976, p. 60-74
Meen, The Honourable Arthur, Speaker
Media Type
Item Type
The Ontario government's program for reassessing all the properties in the province at market value. The importance of property assessment as a factor in the economic and social life of Ontario, and the general lack of awareness of that importance by the general public. Details and statistics of the property tax. A history of the development of property tax. Results of a survey of the Assessment Branch of the Ministry of Revenue conducted to determine certain facts concerning the condition of the assessment roll in each municipality in Ontario. The recommendation to reassess at market value and what happened next to implement the recommendation. The advantages of market value assessment for the municipality, the province, and the taxpayer. Dealing with the contentious issues. Destructive criticism encountered. The need for the confidence and support of the majority of taxpayers. The challenge to create the fairest, most suitable and most acceptable tax system.
Date of Original
28 Oct 1976
Language of Item
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The speeches are free of charge but please note that the Empire Club of Canada retains copyright. Neither the speeches themselves nor any part of their content may be used for any purpose other than personal interest or research without the explicit permission of the Empire Club of Canada.
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Full Text
OCTOBER 28, 1976
The Philosophy of Assessment
CHAIRMAN The President, William M. Karn


Mr. Minister, Reverend Sir, distinguished guests, ladies and gentlemen: In introducing our guest of honour today, with your permission, I would like to quote from the second chapter of St. Luke, verses 1 to 3.

And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed. (And this taxing was first made when Cyrenius, who was also called Quirinius, was Governor of Syria.) And all went to be taxed, every one into his own city.

Checking further on this subject, and I stand to be corrected, because most reference texts differ slightly, I discovered that, then as now, there was a dual approach to financing the needs of the kingdom. Caesar in Rome in his day decided upon what he needed, and instructed the Governors of each state to collect the necessary revenue.

An enrolment or census was taken simultaneously, the first of which occurred in Syria in 23 B.C., followed by a second in 8 B.C., roughly fourteen years later as decreed.

Over in Judea, there was a slight nationalistic problem. The first enrolment or tax collection was delayed because of a war until the summer of 6 B.C., and then was given special status, being conducted according to tribes and households. It was quite peaceful. However, the second assessment which was made during the second governorship of Quirinius--still on the fourteen-year cycle--provided for no special considerations. This time the basic rules of Rome were applied universally, causing strenuous objections. And they had no golf courses.*

Note the similarity of governmental financing today, almost two thousand years later, under our federal and provincial systems. Narrowing the subject to Ontario, we have the Honourable W. Darcy McKeough, Treasurer of Ontario, and Minister of Economics and Intergovernmental Affairs, deciding upon what he needs and how he is going to spend it for his annual budget--not a fourteen-year budget as in Roman times. We also have the Honourable Arthur Meen, Minister of Revenue, devising ways and means of collecting that amount, hopefully on an equitable basis.

Our speaker today brings to his position in government a broad background of appropriate academic training and legal experience. After obtaining a degree in electrical engineering from the University of Toronto, in 1946, and later a degree from Osgoode Hall Law School, he practised law, and was made a Q.C. in 1965.

Since his election to the Legislature as M.P.P. for York East in 1967, and again in 1971 and 1975, Mr. Meen has served on several committees including those dealing with taxation, corporate law, pensions, and legislation.

After spending two years as Parliamentary Assistant to the Treasurer of Ontario, he was appointed Minister of Revenue in 1974.

In this position, Mr. Meen oversees the revenuegenerating statutes for Ontario; two income redistribution programs; the assessment of all real property for taxation; the enumeration of all residents in the province; and the


* There was much concern about the impact of revaluation on Ontario golf courses.


operations of the Province of Ontario Savings Offices.

Among the statutes which he has introduced and carried through the Legislature are the Land Speculation Tax Act, the Land Transfer Tax Act and the Ontario Guaranteed Annual Income Act, all in 1974.

It is my pleasure, ladies and gentlemen, to give you the Honourable Arthur K. Meen, Q.C., Minister of Revenue for Ontario, to speak on "The Philosophy of Assessment".


Mr. Chairman, distinguished guests, ladies and gentlemen: Thank you for your kind introduction. I can think of a great many complimentary things that I might say, in return, about this venerable institution of yours, but for reasons that will be obvious in a moment, I will take time to mention only one namely, the rather astounding precision with which you schedule and conduct these luncheons.

For instance, I notice that my address today was scheduled not for 1:00 p.m. or 1:30 p.m., or even for the quarter hour of 1:15 p.m. No, your program committee people are more precise than that. My starting time was set for 1:10 p.m., and I was mildly surprised when the meeting began without your chairman asking us all to synchronize our watches.

Don't misunderstand me; I think punctuality is a great virtue, and if I sound uncommonly apprehensive about offending you, please remember that I've had a lot of conditioning as a Cabinet Minister in a minority government.

In that respect, I feel rather like the old Irishman whose time had come for Last Rites. The priest sat at the bedside, urging the old fellow to accept God and renounce the Devil.

"Father," the old man said, "I am certainly willing to accept God, but let's skip the other part. At this particular time, I don't feel that I'm in any position to antagonize anyone."

In that same spirit, I offer a word of apology to all those who showed up here today hoping that I would somehow, after all, turn out to be Ronald Reagan.

So much for levity and customary pleasantries. Mr. Chairman, this is a serious occasion, inasmuch as your club has a well-earned reputation for dealing with important matters of public concern. My topic today--the Ontario government's program for reassessing all the properties in this province at market value--is one that fully meets the criterion as a subject worthy of your thoughtful consideration.

The importance of property assessment as a factor in the economic and social life of this province is perhaps not widely recognized, although it is easily demonstrated.

For example, most people, I am sure, know that assessment is the fundamental factor in the computation of property tax; but I doubt whether many people realize that assessment is also a basic determinant in the payment of massive financial transfers from the province to local governments.

The property tax itself amounts to some $3 billion this year and is larger than Ontario's personal income tax and corporation tax revenues combined. In addition, transfer payments from the province, which are determined by the assessment base, currently account for another $3.1 billion in local government revenues. In other words, the assessment base is the determinant factor in the flow of more than $6 billion into local government coffers throughout this province of Ontario.

Clearly, then, the government's program for reform of property assessment and taxation is of fundamental importance to all Ontarians.

Property taxes were not always so important. In earlier times, when life was simpler, municipal services were sparse and cheap and, consequently, property taxes were low. In some municipalities, the annual levy was scarcely more than a nuisance tax.

Those were the so-called "good old days" when towns were isolated from each other, people were less mobile, and each town's financial situation was pretty much its own affair. In every town there was an assessor who sized up all the properties and placed a value on each of them, as the basis for the taxes which the owner, in each case, would have to pay. This figure was known as the assessed value. Theoretically this assessment was synonymous with the market value--a requirement of the Assessment Act since 1904.

But the relationship between assessed value and market value was by no means the same from one municipality to another. And, as the years went by, assessed value became haphazard and increasingly unrelated to market value. Assessments were established by a complicated and somewhat mysterious process which was understood by very few people other than the assessor himself--and there were instances where one had to wonder, too, about his grasp of the subject! Certainly, for the average property owner, assessed value came to be a meaningless figure with no relationship to the realities of the marketplace.

These shortcomings in municipal assessment practices were perhaps not serious in earlier times. But during the 1950s and 1960s it became increasingly apparent to the province that the system was seriously weakening the financial bases of local government and that inequities to taxpayers were reaching intolerable levels.

At first, the province tried to remedy the situation by strengthening the municipal assessment system. Early in the 1960s, the Assessment Act was amended in a manner intended to improve the quality of personnel engaged as assessors.

In southern Ontario, counties were empowered to hire county assessment commissioners and staff to serve all the municipalities within their jurisdictions. In northern Ontario, an amendment to the Act empowered the Minister of Municipal Affairs to appoint district assessors and to supervise their work.

The province provided generous grants in support of these county and district assessment offices. It developed new valuation manuals, it set up training courses for assessors and it encouraged the use of electronic data processing machines to facilitate the maintenance of records and the preparation of assessment rolls.

These actions resulted in certain improvements, with respect to records, in small municipalities that could not afford their own full-time assessors, and worked well in the north, where the assessors now came under provincial supervision. But in the broader context of valuation, they generally failed in the south, where county support was half-hearted and provincial assistance was not accepted. And, ironically, it was in the south that improvements in the system were most urgently needed, because this was where the population was heaviest and where the growth of towns and cities was occurring most rapidly.

To give you a more vivid impression of how bad the system was at that time, and how urgently it was in need of reform, let me quote from some remarks made in 1965 to a conference of municipal assessors by the Minister of Municipal Affairs, the Honourable Wilf Spooner. After noting the need for a program to improve the knowledge and judgment of assessors and to convince all municipalities that they must adopt a consistent and uniform approach to assessment, Mr. Spooner told his audience exactly what he thought of their work. He did so in a manner that reminded me of the old definition of diplomacy: "Diplomacy is the art of telling someone to go to hell in such a gracious way that he actually looks forward to making the trip."

In this case, Mr. Spooner had no illusions of the power of diplomacy, and chose instead to be brutally to the point.

"It would be much more enjoyable and pleasant were I to attend your functions merely to praise your good work. I am sure that such an approach would make you happy. I, of course, would be happy to do so and, undoubtedly, the municipalities would be happy as well. Unlike Marc Anthony, however, I come neither to praise nor bury you--I simply do not believe that we have yet reached the position when we can, in conscience, establish a mutual admiration society. This being the case, I am going to cite certain statistics which, while not flattering to assessors, clearly show that our assessment standards must be improved. Last year the Assessment Branch of my Department conducted a survey to determine certain facts concerning the condition of the assessment roll in each municipality in Ontario. 940 assessment rolls were examined in some detail.

Among a dozen points, he listed:

604 municipalities had neither revised nor adjusted assessed values since 1956. (Mr. Spooner was speaking in 1965, so that was nine years without any readjustment.)
405 municipalities did not use an integrated assessment system or manual, although some of them used parts of several different systems.
164 municipalities had no appraisal records of any kind.
133 municipalities did not prepare their assessment rolls in accordance with the Act.
283 municipalities did not assess properties for part-year taxes.
162 municipalities did not bother to assess or collect business tax.

In every county there was an unacceptable deviation in the ratio of assessed value to market value for the various municipalities. In the better counties the variance was more than 10% and in most counties the variance was between 15 to 30%. It was true that county equalization reduced the impact to some degree. But Mr. Spooner pointed out that no equalization program, no matter how well considered, could remove these inequities.

Mr. Spooner went on to say: "The survey produced other startling evidence of poor assessment practice such as assessable properties missing from the roll; summer cottages assessed for business assessment; and what must be termed deliberate over and under assessment of property . . . It is safe to say that if the administration of the tax base by the senior levels of government were as inadequately administered, the nation would probably be bankrupt."

From there, he went on to urge the assessors and their municipalities to join with the province in working toward better standards of assessment, through improvement in procedures, training for the assessors themselves, adoption of the provincial manual to achieve consistency and uniformity, adoption of centralized systems of record-keeping for greater efficiency, and so on.

Mr. Spooner's appraisal of the situation and the need for fundamental reform was verified in 1967 by the report of the Smith Committee on Taxation in Ontario. In fact, it quoted the same parts of Mr. Spooner's speech which I have just read to you and noted dryly that ". . . it has not been necessary for us to convince the Department of Municipal Affairs of the shocking state of assessing that has prevailed in this province."

The Ontario government's next step was to appoint in 1968, an all-party committee of the Legislature under the Chairmanship of John White, who was later to serve as Minister of Revenue and subsequently as Treasurer of Ontario. One of its major assignments was to examine the Smith Committee's recommendations on property tax reform in consultation with the public. I had the honour of serving on that committee myself, and I can attest to the thoroughness of the Committee's work as the basis of our present program.

In dealing with Ontario's property tax system, both the Smith Committee and the all-party White Committee unanimously recommended that all real property in the province be assessed at market value.

By this time, it was obvious that the only way to create a uniform and equitable system was to take over the assessment function and have all assessors working under common supervision and applying uniform rules and guidelines. Within six months from the time the White Report appeared, the government announced that it would indeed, take over the making of assessments and get on with the job of valuing all property at market value. In my view, the government's decision was courageous, and I am proud to have played a part in making the decision.

The scale of the undertaking was truly enormous. It included the reassessment of nearly three million properties at market value, and also we had to retrain 1,500 municipal assessors and relocate them in 32 offices throughout the province. We had to cope with some 200 different systems which the municipalities had been using for processing assessment and tax information, with the objective of ultimately replacing them by one single effective system.

In all, our earlier appraisal of the poor state of the assessment system was confirmed. We identified thousands upon thousands of inequities--properties where the assessment, even by the old system, was far too low and others where it was obviously too high. We knew from the outset that there also were properties that had never been assessed at all, and we identified 270,000 of these and had them placed on the tax rolls for the first time.

Meanwhile, as we moved ahead with the main task of reassessment at market value, along came the real estate boom. Prices began rising so quickly that some assessments became outdated almost overnight. It was impossible for the assessors to keep up with the realities of the boom.

Consequently, we realized quickly that the methods and techniques we were using would have to be improved or we could never make the market value system work as it should.

At the outset, we had optimistically set 1974 as our target date for having the market value system in full operation. Now the only sensible thing to do was to pull back, let the real estate boom subside, and meanwhile improve and re-test our assessment procedures. As a result, we have developed methods which are accurate and are capable of dealing with future market disruptions; while we have also gained invaluable practical experience from successfully implementing market value assessment in some two hundred municipalities across the province--most recently in West Carleton. Market value will become the basis for property taxation in 1978, and the assessment notices containing the new figures should go around the middle of next year.

Market value assessment is a system with enormous advantages for all parties concerned.

For the municipality, it means there is no need, any longer, to manipulate local assessment figures in order to calculate provincial grants and transfer payments. And it means that the municipality can count on receiving its fair share of money from the province.

For the province, it means that grants can be paid out according to assessments arrived at fairly and uniformly, on solid market evidence, and not on the somewhat artificial and often inconsistent components that were built into the old system.

For the taxpayer, it means receiving an assessment notice that can be readily understood. The property owner can compare his assessment with the actual market prices of properties similar to his, and he can weigh this same figure against the price he believes his property would command on the open market. In short, he can judge for himself whether his assessment is fair.

So far, Mr. Chairman, I have dealt with our program of market value assessment as a new base for property taxation. I wish to turn now to the important question of the rules or policies which we must develop to govern how municipalities use this base for local tax purposes in keeping with overall objectives concerning equity among taxpayers.

In keeping with its policy of asking taxpayers themselves to help determine the provisions and measures necessary for the fairest and most equitable system, our government is seeking reactions to 15 proposals it put forward last spring, by way of supporting and augmenting the changeover to market value assessment.

To gain the widest possible consensus, we set up a special commission, under the chairmanship of Willis Blair. This commission has just completed a series of some 27 meetings throughout Ontario, at which any resident of Ontario was not only free to appear but was encouraged to appear, on his or her own behalf, or on behalf of any organization, to offer comments and opinions about our proposals.

Naturally, the Government has been monitoring this exercise closely and while we cannot expect to receive a formal report from the Blair Commission for some weeks yet, we can see already, from presentations made to the commission, that some of the government's proposals have evoked broad discussion and concern the type of concern which the government is pleased to see expressed to the commission.

Accordingly, the government has taken particular notice of the first-rate presentations made to the commission with respect to independent schools, farmlands, charitable institutions and recreational facilities like golf courses.

In regard to farms, we originally proposed taxing productive land at 100% of market value, with these taxes to be paid not by the farmer but by the province.

Some farmers have said they don't like that idea. They would rather pay their own taxes--or, at least some part of them. That will be fine with the Treasurer--he's always anxious to save money! Also, some farmers are unhappy with the recovery provisions, and we are looking at them to see if the procedure is really necessary.

On the issue of golf courses, the Blair Commission (and the government) has been hearing a great deal about the recognition of the need to preserve open space in Ontario. The Premier has already stated that the concern with respect to golf courses, in particular, will be responded to. So you needn't get rid of your golf clubs just yet.

In recognition of the power of public opinion with regard to business tax, under revisions we proposed, merchants who now pay a 30% rate would pay a 50% rate. In this instance, may I say, our commitment to profitability and a continued vital business sector will also have a determining factor on our decisions concerning the business tax rate.

Finally, there has been some criticism of our proposals concerning the taxing of private and religious schools. The commitment which this province has to an educational mosaic in Ontario, a public system with freedom of choice provided by independent schools, will not be eroded. This will directly influence our ultimate response on tax proposals in this area.

Each of the apparently contentious issues among our proposals could be dealt with in any one of a variety of ways, and of course we will be anxious to see the alternatives that come to us in the Blair Commission Report, around the end of December.

From these last few comments, you will have inferred, quite correctly, that we are ready and anxious to listen and respond to the comments and suggestions of the taxpayers of Ontario. It may sound like a cliche to say so, but we really do welcome constructive criticism. We even welcome negative reactions, when they are objective, well thought out and in line with the facts.

I think it's perfectly legitimate, for instance, for a merchant or a group of merchants to tell a government, or one of its commissions, that if such-and-such a measure is introduced, the effect on their class of business will be deplorable or disastrous or whatever. I use merchants only as an example: I think it's the government's function and duty to listen to all segments of the taxpaying public, if they have something meaningful to contribute to a public discussion.

But I must say, ladies and gentlemen, that our tax reform program and the proposals we have put forward have encountered far too many negative reactions of the destructive kind. By that I mean criticism based on ignorance, on deliberate distortions of the facts, and on political opportunism.

I find it hard to pick up a newspaper these days without reading of someone proclaiming that market value assessment will mean enormous increases in property taxes. This is nonsense, of course. As this audience will appreciate, there is no reason why an overhaul of the assessment base has to mean higher taxes. To raise the same revenue as before, the municipality will simply lower the mill rate proportionately. Unless a council deliberately sets out to increase its revenue, the only increases in taxes, generally speaking, will be those which should have occurred anyway and which are probably long overdue.

I also hear a great deal about the taxpayers of low income, especially the elderly, being threatened by reassessment. Again this is nonsense, not only for the reason I have just outlined, but also because it ignores our record of concern for the elderly. We have a whole system of tax credits and guaranteed annual income payments already in place to help such needy people. In fact, our financial assistance to the elderly is richer than that of any other province.

The misconceptions are bad enough, but the one that makes my blood boil the most is the accusation that the government of Ontario is dictating all these reforms without consultation, with the object of shoving them down the taxpayers' throats.

Does anyone seriously believe that we would ask the Blair Commission to conduct public meetings and accept briefs from all comers in more than two dozen locations all over the province if we did not put a high value on public participation?

I suppose it's asking too much to expect our identifiable political opponents to study the facts and put forward criticisms that are well founded in fact; but I do appeal to reasonable people not to jump to hasty conclusions about our tax reform program and not to repeat, and thus perpetuate, every disturbing rumour that is going the rounds these days. These, I suppose, are among the hazards of the process of public consultation, but I don't mind admitting that it stirs my wrath to see false and often malicious information being circulated in regard to a government program that is essentially sound.

By now, I would hope you have begun to see that I, and the government of which I am a part, have a philosophy about property taxation which might fairly be described as one part idealism and one part pragmatism. The idealism comes easy. It is possible to set out, on paper, a tax system that happily ignores tradition, precedent and emotional bias. But an idealistic system fitting that description would suffer from one serious lack -the lack of the very thing that is essential to the working of a good tax system: namely, the human factor. And that is really what I am talking about when I speak of pragmatism.

To me, it seems a simple and obvious fact that no system can survive and perform as it should unless it has the confidence and support of the great majority of taxpayers. And that is why, even after all these years of government research, tax studies, committee hearings, recommendations and reports, we, as a government, are still making new proposals, listening to public reactions and refining and reshaping the system.

It is a long and arduous process, and in one sense it will never really end. For what we are doing is trying, by every way we know how, to create what the people of Ontario will feel is the fairest, most suitable and most acceptable tax system to be found anywhere in the world.

The appreciation of the audience was expressed by Mr. J. A. Wm. Whiteacre, M.M., C.D., Q.C., a Director of The Empire Club of Canada.

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The Philosophy of Assessment

The Ontario government's program for reassessing all the properties in the province at market value. The importance of property assessment as a factor in the economic and social life of Ontario, and the general lack of awareness of that importance by the general public. Details and statistics of the property tax. A history of the development of property tax. Results of a survey of the Assessment Branch of the Ministry of Revenue conducted to determine certain facts concerning the condition of the assessment roll in each municipality in Ontario. The recommendation to reassess at market value and what happened next to implement the recommendation. The advantages of market value assessment for the municipality, the province, and the taxpayer. Dealing with the contentious issues. Destructive criticism encountered. The need for the confidence and support of the majority of taxpayers. The challenge to create the fairest, most suitable and most acceptable tax system.