Xelebes
Aug 31, 2007, 6:14 PM
Cities deserve fair shake on taxes: court
Government grants should be realistic
Elizabeth Thompson, Montreal Gazette; CanWest News Service
Published: 2:40 am
OTTAWA -- In decisions that could have repercussions for cities and towns across the country, a Federal Court judge has ruled that the federal government and its Crown corporations have a duty to pay their fair share to municipalities for the properties they own.
In three cases that pitted the City of Montreal against the federal government and two of its Crown corporations, Justice Luc Martineau ruled that federal officials cannot arbitrarily decide how much they will pay the city and overturned decisions by bureaucrats to pay the city considerably less than the city would have received from a private owner.
If upheld by higher courts, officials estimate the three rulings could mean $18 million in additional revenue to the city of Montreal alone.
"It means in the future we'll be able to collect more taxes and that's always good for projects and for the overall quality of life for residents of the city," said Patricia Lowe, spokeswoman for the city of Montreal.
Lowe and lawyer Luc Lamarre, who represented the city, say the rulings mark the first time the city has tested the laws governing the complicated relationship between cities and the federal government when it comes to property taxes.
In theory, the federal and provincial governments and Crown corporations are not subject to municipal property taxes because they are higher levels of government. Instead, Ottawa and the provinces -- which own billions of dollars of property -- pay grants in lieu of those taxes to municipalities.
"It's the first time that the constitutional immunity of the tax laws has been really questioned or brought before the courts so the courts could interpret that article," said Lowe.
Lowe said the rulings could have a significant impact for cities across the country and for other federally owned properties such as airports.
The events that led to the rulings began in March 2004 when officials at the Montreal Port Authority challenged the amount the city of Montreal was claiming it was due in grants in lieu of taxes. Triggered by the city's decision to get rid of its business tax and increase property taxes, the port decided to send the city $1.3 million for the year rather than the nearly $2 million the city said it was owed.
A year later, Radio-Canada followed suit, knocking millions off of its grants in lieu for its building in Montreal for 2005 as well as retroactively for 2003 and 2004 by applying a different tax rate than the one the city charged other non-residential buildings.
The third case focused on a decision by a federal official to not compensate the city for $177,404 in unpaid property taxes by subtenants at Trudeau International Airport.
In all three cases, Justice Martineau ruled that while the federal properties are not subject to property taxes in the same way as private property, they should refer to the tax rates set by the city when making out the cheques for the grants in lieu of taxes.
© The Edmonton Journal 2007
Government grants should be realistic
Elizabeth Thompson, Montreal Gazette; CanWest News Service
Published: 2:40 am
OTTAWA -- In decisions that could have repercussions for cities and towns across the country, a Federal Court judge has ruled that the federal government and its Crown corporations have a duty to pay their fair share to municipalities for the properties they own.
In three cases that pitted the City of Montreal against the federal government and two of its Crown corporations, Justice Luc Martineau ruled that federal officials cannot arbitrarily decide how much they will pay the city and overturned decisions by bureaucrats to pay the city considerably less than the city would have received from a private owner.
If upheld by higher courts, officials estimate the three rulings could mean $18 million in additional revenue to the city of Montreal alone.
"It means in the future we'll be able to collect more taxes and that's always good for projects and for the overall quality of life for residents of the city," said Patricia Lowe, spokeswoman for the city of Montreal.
Lowe and lawyer Luc Lamarre, who represented the city, say the rulings mark the first time the city has tested the laws governing the complicated relationship between cities and the federal government when it comes to property taxes.
In theory, the federal and provincial governments and Crown corporations are not subject to municipal property taxes because they are higher levels of government. Instead, Ottawa and the provinces -- which own billions of dollars of property -- pay grants in lieu of those taxes to municipalities.
"It's the first time that the constitutional immunity of the tax laws has been really questioned or brought before the courts so the courts could interpret that article," said Lowe.
Lowe said the rulings could have a significant impact for cities across the country and for other federally owned properties such as airports.
The events that led to the rulings began in March 2004 when officials at the Montreal Port Authority challenged the amount the city of Montreal was claiming it was due in grants in lieu of taxes. Triggered by the city's decision to get rid of its business tax and increase property taxes, the port decided to send the city $1.3 million for the year rather than the nearly $2 million the city said it was owed.
A year later, Radio-Canada followed suit, knocking millions off of its grants in lieu for its building in Montreal for 2005 as well as retroactively for 2003 and 2004 by applying a different tax rate than the one the city charged other non-residential buildings.
The third case focused on a decision by a federal official to not compensate the city for $177,404 in unpaid property taxes by subtenants at Trudeau International Airport.
In all three cases, Justice Martineau ruled that while the federal properties are not subject to property taxes in the same way as private property, they should refer to the tax rates set by the city when making out the cheques for the grants in lieu of taxes.
© The Edmonton Journal 2007