HomeMy WebLinkAboutTR-3-81 Memorandum
TO: Chairman & Members of the Finance & Administration Committee
FROM: K1aas Degroot, C.G.A. , Treasurer
DATE: January 2, 1981
SUBJECT: Interest on Overdue Taxes
Item: TR-3-81
Recamlendat ion:
"ThAt the Finance & Administration Committee recommend the following
actions:
1. That the request of the Town of Lincoln not be endorsed.
2. That this Council request the Ontario Legislature to enact
legislation allowing Municipalities to set the rates of interest
to be charged on overdue taxes."
"That this recommendation be circulated to all Municipalities in the
Province of Ontario with a population of over 5,000 and they be requested
to forward their support of this resolution to both the Honourable Tom
Wells, Minister of Intergovernmental Affairs and the Association of
Municipalities of Ontario."
Report:
I share the concerns expressed by the Council of the Town of Lincoln
in their letter dated December 18th, 1980, however I do not beleive that the
resolution of this problem lies in asking the Legislature of Ontario to
amend the Municipal Act to set a different rate of interest to be charged.
This action has been followed in the passed, and the Province has from time
to time changed the interest rate, however in doing this we must wait for the
Province to react to Municipal concerns when jnXRct the Municipality must
deal with those as they become a reality. The only limitation I would suggest
in the legislation is that the Municipalities be required to have a period
during which they must advertise the change in rate, the period to be no longer
than three months prior to the implementation of any new interest rate.
4
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December 18th, 1980
.TO: The Councils of Local Municipalities,
Province of Ontario
RE: Interest on Overdue Taxes
The Council of this Municipality is concerned about interest rates on
temporary borrowings which now exceed the maximum interest rates
which can be charged on .tax arrears. Section 553 of The Municipal Act
presently sets a maximum interest charge of 1�4% per month on tax
arrears which translates into,simple interest' of 15% per annum.
During the past year, borrowing rates have varied spasmodically between
1234% to 17�% for Municipal borrowings. At the point of writing this
letter the rate is 17% and there are indications that the rate will
escalate in the future.
If the rate remains at its present level, and more so if it increases
from this level, Municipalities will be borrowing at rates that bxceed
those charged on tax arrears. It will be cheaper for people to let their
taxes fall into arrears rather than obtain financing from lending
institutions. This will adversely affect the financial position of
local Municipalities and will be especially unfair to those taxpayers
who will be directly subsidizing the sector of the community which
does not pay its property taxes.
The Council of this Municipality is requesting that the Legislature
immediately amend the Municipal Act to permit a charge of 1 3/4y per
month on tax arrears. This is the minimum action which should be
taken by the Legislature at this time.
Because of wildly fluctuating rates with apparently no sensible ceilings
some action should be taken by the Provincial Government to develop some
system whereby Municipal Governments can establish interest charges on
tax arrears that relate to prevailing borrowing costs in the economy.
To this end, the answer may be in completely removing any limitation in
the Act which would allow Councils to set rates that are realistic in
the light of borrowing costs. This letter is being addressed to local
Municipalities with populations of over 5,000 in the Province.
R E
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Municipal offices
206 King Street West �' Pow c /L-
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Box 1030 _ - 5
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BeamsviUe Ontario �' O/�� T® /i A° /�`�u 0 1! (L __. . . . .
563'8205 LOR 1 BO
t CORPORATION OF THE TOWN OF NEWCASTLE
µSO FA��S.�
", .. OFFICE OF THE TOWN CLERK
40 TEMPERANCE STREET TELEPHONE 623-3379
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BOWMANVILLE, ONTARIO
L1C3A6
February 12, 1981
TO THE COUNCILS OF ALL 'MUNICIPALITIES IN ONTARIO
WITH POPULATIONS OF OVER 5,000
RE: INTEREST ON OVERDUE TAXES
The Council of the Town of Newcastle, at the meeting held
on February 9, 1981, adopted the following resolution:
"THAT the kequut o4 the Town o4 L%ncotn Aetati,ve
to inteAmt on overdue taxes, not be endow ed;
THAT this Counc 't Aequest the Ontario Leg"tatuAe
to enact t egi6 t f i:o n at towing municipatit i a to
,set the Aates o4 inteAest to be cka ged on ovetcdue
taxes; and
THAT th is Aezotuti,on be ci tcu eccted to att munici..pa it i.ez
in the PAovince o4 Onta io with a poputat on o4 oven
5, 000 and they be Requested to 4oAwand thew. zuppotct o4
this Amotuti.on to both the Honounabte Thom" L. WeMJ.
Min steA o4 InteAgoveAnmentat A44a-i" and the
Association o4 Municipatiti.es o� Ontario".
Yours very truly,
Gertrude E. Gray
Deputy Clerk
c.c. Association of Municipalities of Ontario.