Canada and Ohio consider green tax shifts
|June 24, 2008||Posted by Staff under Progress Report, The Progress Report|
Canada and Ohio consider green tax shifts
The Liberal Party and a pair of local officials get impressed by sense
We trim and blend two 20008 stories - a letter from Canada, June 23, and an article in a paper in Ohio, the Aurora Advocate, June 18.
by McOrmond and by Fredmonsky
Russell McOrmond writes the Green Party of Ontario has, for many years, have advocated a total green tax shift. The federal Liberals have chosen to put a Green Tax Shift off income, onto carbon as their primary platform plank for the possible upcoming election; they explain the shift at their website. If Canadians are seen to like the tax shift policy then an election will be forced by the opposition Liberals. This is the party that has been the federal governing party for most of Canada’s history. It is highly probably that they will form the government again in the next few years.
Two local officials explore land-value taxation, writes Matt Fredmonsky, a Ohio Record-Courier reporter, June 18. At least two government officials are examining the shift of the property tax from buildings to land in order promote improvements to buildings and land.
Land-value taxation, also known as split-rate real property taxation, is a method implemented in Pennsylvania in which land is taxed at a higher rate while the taxes on improvements to structures or the property are reduced or even eliminated.
State Rep. Kathleen Chandler and Kent City Councilman Rick Hawksley both believe the method is a fair means of taxation that would decrease blighted properties by encouraging improvements.
Hawksley said taxes are reduced on a property as improvements are completed. “So it encourages people to invest,” he said. “Our current property tax methodology discourages people from making investment in property by taxing them.
“It’s fair in the sense that if I invest $50,000 into my house and my neighbor lets his go to wreck and ruin, then it depreciates my property value for what he has failed to do,” Hawksley said.
“Yet he is rewarded when the tax bill comes with lower taxes. By shifting the tax onto the property instead of the improvements, I am rewarded.”
Chandler, a former Kent mayor, councilwoman, and Portage County commissioner, began investigating the possibility of adopting the new tax methodology with the Ohio Legislative Service Commission in 2007 after Kent council sent her a letter, at Hawksley’s prompting, asking her to do so.
Chandler called the method an excellent matter to pursue. “It’s discretionary, so it would give local governments the opportunity to choose it,” she said.
The debate about the tax method has been held in statehouses primarily in eastern states. Opponents argue land value taxation merely shifts the existing tax burden.
At the Center for the Study of Economics in Philadelphia, executive director Joshua Vincent works to convert school districts and municipalities over to land-value taxation.
Vincent said the tax method works by shifting the value of property from its size and structures to its location, proximity to amenities, available community services and other broad measurements. The presence, or lack thereof, of a building does not matter. Instead, land-value taxation is based on the old real estate mantra of location, location, location, Vincent said.
“For example, if you own 10,000 acres in Death Valley, it would be worth nothing,” Vincent said. “But if you own a quarter acre lot in Manhattan, it would be worth millions.”
The Kent native conducted an informal study in 2006 of his hometown as the center’s director. Vincent said reducing the community’s overall property tax revenue from buildings by 50 percent would result in a tax reduction on 60 percent of all residential properties.
Primarily, rental properties would experience a property tax increase if land value taxation were adopted in Kent, Vincent said.
And properties like the old Kent hotel? “They’d get hammered, of course, because they’re letting the place collapse,” Vincent said.
“Once the word gets out that you are in Kent, as opposed to Stow, and you know the tax rate on buildings is permanently lower … then people will invest in that area because it makes market sense.
“It’s a pretty simple cause and effect.”
But for Ohio, implementation is not a simple process.
In August 2007, Chandler received a letter from the Ohio Legislative Commission informing her that article twelve, section two of the Ohio Constitution requires uniformity in the rate of taxation and assessment.
The letter, signed by staff attorney Stephen Estelle, stated the Ohio Supreme Court interpreted “uniformity” as requiring the tax rate to be the same for all parcels, regardless of their use.
Implementing land-value taxation in Ohio would require a constitutional amendment, which hasn’t discouraged Chandler. “I’m trying to find alternative ways to accomplish the same thing,” Chandler said.
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