Sunday, January 22, 2012

Supreme Court of Canada Affirms Municipality's Right to Set Tax Rates

Supreme Court of Canada
Municipal Right to Tax Upheld by Supreme Court

Ontario Real Estate Source

By Brian Madigan LL.B.

A municipality has broad and wide latitude in assessing municipal taxes.
This follows a Supreme Court of Canada decision released on 20 January 2012 involving Catalyst Paper Corporation v. North Cowichan.

The company was a forest products company and major employer on Vancouver Island in the south east area. The appeal against taxes was based on what it felt was the disproportionate share of the overall tax burden of the entire municipality assessed against it. A municipality has the right to tax commercial, industrial and residential properties at different rates

While the Supreme Court of Canada upheld the municipality’s right to tax, and set the rates as it sees fit, it recognized the company’s right to:

1)     stay put and pay the tax, or
2)     close the mill and move.

Ultimately, the Court wants these types of decisions to be made at a local level without access to the court system.

As a matter of interest, in 2007 Catalyst paid 48% of all of the municipality’s taxes, and by 2011 that burden had been reduced to 37%.
Brian Madigan LL.B., Broker