It is now seventeen years since the Ontario government began controlling property tax rates for education.1 In taking over taxing power from school boards, the government inherited a wide range of legacy tax rates.

On the residential side, tax rates were equalized from the outset; a uniform residential rate (0.203 percent in 2014) has applied province-wide since 1998. However, business education tax (BET) rates remain far from uniform; Appendix 1 shows BET rates set by the province for 2014.  

Ontario’s BET is arguably the most inequitable provincial tax in Canada.2 There is no correlation between BET rates in a school board’s district and revenue available to the board. A provincial funding model controls each board’s revenue, which is the same whether BET rates in its district are high or low.  

Inequity exists not just across local boundary lines but among businesses within the same municipality – most new construction is taxed at a lower rate than the rate on existing buildings. Businesses owning existing buildings obtain no benefit in exchange for the higher tax.  

The government has not commissioned an independent review of the BET since launching it in 1998, but did appoint an advisory panel a year earlier. Chaired by Cedric Ritchie (former CEO of Scotia Bank), the panel reported in July of 1997. Their report is attached here as Appendix 2.  

The panel rejected the policy later adopted by the government: i.e. tax rates varying across municipal lines; They noted that “this approach would maintain many of the competitive inequities which currently exist as a result of differing regional education tax rates;” 


Instead the panel recommended a uniform education tax rate on all businesses:  

A single province-wide uniform rate applied to a broad base with few exemptions would be fair, clear and simple. This approach would be consistent with many of the government’s other reforms which are predicated on the importance of a level playing field for tax fairness and tax competitiveness;”3

For a PDF of Complete Report