Chapter 10: The Taxman’s Axe

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“The growth-rate of a tree slows as it reaches maturity until it no longer uses the full growth potential of the land it stands on. When this occurs the tree should be cut, since it is preventing the realization of the full growth potential of the site.”

-Ontario Department of Lands and Forests, 1967(1)

“We agree with the [Ontario government’s] Green Paper that land should not be allowed to lie idle.”

-The Prospectors and Developers Association of Canada, 1989(2)

In 1993, Ontario’s woodlots began to fall beneath the taxman’s axe.(3) That year the government, infamous for clearing public lands, turned its attention to the private sector. By dramatically increasing realty tax costs on privately owned forest lands, it forced their exploitation and development.

Provincial tax assessors had long discriminated against forest land, valuing it not at its current use but at some higher potential use, or theoretical “market value,” that a better financial steward than the forest owner could marshal.(4) The best potential use of most forest land, the entrepreneurial tax assessors decided, was not forestry, recreation, or wildlife protection but residential development. Thus all woodlands in Ontario, except Christmas tree plantations, sugar bush and others qualifying as farms, were assessed on their theoretical development potential, limited only by what local zoning bylaws allowed.

For two decades, a tax rebate shielded forest owners from market value assessment: the Managed Forest Tax Rebate, ranging from 50 to 100 per cent, was available to all who promised to maintain their forest cover for ten years. Citing budgetary constraints, the government cancelled the rebate in 1993. Forest owners would now pay full taxes based on their land’s development potential.

Market value assessment forced landowners who couldn’t afford to pay high taxes on low yields to destroy their forests. Property tax increases, in some cases measuring 500 per cent over three years, prompted thousands to reduce or abandon their management plans, terminate planting, or accelerate the cutting of their woodlands; others subdivided their property into estate or cottage lots.(5)

Forest owners vividly described the environmental effects of market value assessment in five submissions to Ontario’s Fair Tax Commission. Assessments based on theoretical rather than actual uses force owners to liquidate their forests, complained one tree farmer to the commission. Another woodlot owner elaborated that the tax burden imposed by the assessment of his forest’s theoretical highest end-use value left him with just three options: parcelling his land, selling it as one piece for development, or logging it unsustainably. He confessed to imprudently harvesting timber in order to meet his increased costs. “Wildlife will suffer first,” he mused. “We will all lose in the end.”(6)

Particularly hard hit by the tax changes was Peter Schleifenbaum, manager of the Haliburton Forest and Wild Life Reserve Limited, central Ontario’s largest privately owned forest.(7) Mr. Schleifenbaum’s parents had purchased the property in 1961, after a logging company had stripped it of its best timber and most of its market value. Using natural regeneration and selective cutting, they nursed the land back to a rich, productive, and profitable venture. The Schleifenbaums’ forestry program paid off: within three decades the forest boasted the highest volume of timber per acre of any comparable hardwood area in central Ontario.

The Haliburton Forest and Wild Life Reserve wasn’t just a working forest. It was also a recreational haven for thousands of visitors each year. Bordering Algonquin Provincial Park, its 50,000 acres encompassed 50 lakes, huge hardwood and evergreen expanses, and the homes of countless fish, fowl, and wildlife. Its 340 semi-wilderness campsites made it the largest private campground in North America. In the summer it offered birding, fishing, hiking, canoeing, 270 kilometers of mountain bike trails . . . and an “environmental music” course taught by the renowned Canadian composer R. Murray Schafer. Hunting dominated the three-week season each fall. Snowmobilers and cross-country skiers used the forest in the winter. Throughout the year, an old logging camp on the property served as a base camp for an extensive outdoor education program.

A government assessment based on the property’s value if subdivided into cottage lots pushed the annual realty tax bill to $200,000, and left Mr. Schleifenbaum wondering how he could resist destroying at least part of his wilderness. The Haliburton Forest’s revenues could not support such a tax bill.(8) Developers had offered considerable sums for lakefront land. Intensive logging would also pay handsomely; Mr. Schleifenbaum could strip his land in four years, invest the $20 million the timber would bring in, and live very comfortably on the interest.

That prospect held little appeal for one steeped in a European tradition emphasizing long-term stewardship over short-term gain and valuing the security that comes from knowing that the land and resources will be there for the next generation.(9) “We really are stewards,” Mr. Schleifenbaum lamented. “We believe in it. But we’re being penalized if we leave our land forested. This is not a climate in which private forestry can survive.”(10)

Other tax policies similarly penalized Ontarians who didn’t deforest their land. In 1994, the Erin Mills Development Corporation, faced with an annual $11,000 realty tax bill on ten forested acres that had survived urbanization in Mississauga, chopped down the trees and planted wheat. Lower assessments on agricultural land, along with a 73 per cent rebate on farm realty taxes, motivated the devastation.(11) From the company’s perspective it was an economically responsible action. As general manager Randy Griffin explained, “We don’t like to cut it all down. But when you’re trying to reduce your taxes, these are the things you’ve got to do.”(12)

Ontario’s non-profit Conservation Authorities had to sell off lands in order to pay their 1994 property taxes.(13) Like forests, conservation lands had long been subject to unrealistically high taxes as a result of market value assessment and the absence of a separate assessment category for conservation lands. The Ministry of Revenue relied primarily on nearby residential land values (rather than on current land use) to establish the value of conservation lands, as if flooding the residential market with the conservation lands would not have depressed land values. It even assessed flood plains and protected areas – lands that potential purchasers would be unable to develop – as residential lands, giving them a tax value higher than their market value. As municipalities implemented market value assessment in the 1970s, assessments on conservation lands skyrocketed. By 1980, assessments had increased between 139 and 428 per cent, depending on the category of land, and taxes had increased between 44 and 222 per cent.

Like forest owners, conservation authorities had been shielded from the increasing taxes by a rebate: the Conservation Land Tax Rebate. And like forest owners, when they lost the rebate in 1993 they faced huge tax bills. Property taxes on conservation lands increased by $3.6 million as a result of the tax change, with one authority’s bill alone nearing $1.2 million.(14)

Several conservation authorities had to sell lands as a consequence of the tax change.(15) The Ganaraska Forest, suddenly saddled with a $150,000 tax bill on its 11,000 acres of newly- minted “residential” land, had no choice but to shed some of its property. The prospect of losing forest to developers outraged Ganaraska’s chief administrator. “Somewhere in the tax shuffle,” she complained, “the environment got lost.”(16)

While discriminatory realty taxes have compelled the owners of forests and conservation lands to exploit or sell their land, discriminatory mining land taxes have forced owners of mining lands to give their property to the government. In 1991 the Ontario government proclaimed a new Mining Act. The act and its regulations introduced huge increases in the mining land tax: from $1.24 per hectare in 1991 to $8.00 per hectare in 1996, or more than a 500 per cent increase over five years.(17)

By changing the definition of mining rights, the act also extended the number of taxable properties. Its predecessor had applied to properties in which sub-surface rights had been sold separately from surface rights – the norm after 1913. In contrast, the new act encompassed mining rights on any land, including that for which the purchasers of the surface had been granted sub-surface rights.(18) The tax even applied to lands granted under the 1869 Mining Act, which had stated that the properties would not be taxed; “such lands, ores and minerals,” the government had then promised, “shall henceforth be free and exempt from every such royalty, tax or duty.”(19)

The tax hike made selling taxable properties increasingly difficult. No market existed for properties encumbered by taxes four times higher than their neighbours’. Even mining companies wouldn’t buy taxable land; they could lease land from the government for a fraction of what, as owners, they would pay in mining land taxes.

Unable to either pay the mining tax or sell their land, owners were forced to surrender their property – without compensation – to the government. Depending on their location, some lost their sub-surface rights; others forfeited the land itself. According to Minister of Mines Gilles Pouliot, that was the whole idea: the tax, he explained, “has always been intended as a means of returning land to the Crown.”(20)

Those who lost “only” their mining rights had to put up with the disruption and loss associated with allowing others to mine their lands. Under the Mining Act, a mining company could enter private land with only a day’s notice in order to assess its mineral potential. If, after prospecting, exploring and excavating, it chose to develop a mine on the property, it had to compensate the landowner for damages. But the rules contained no provisions for compensation for intangible losses, such as disruption of a wilderness. Worse, it was the mining commissioner, rather than the landowner, who had the power to decide if the compensation were adequate.

The province’s rationale for taking mining rights and land? The government, valuing the wealth, jobs, and export earnings generated by mineral development, believed that too many private landowners allowed their property to lie idle.(21) In 1961, the Public Lands Investigation Committee had discovered the conservationist tendencies of those owning mining lands: only a small fraction of them actually mined their property. In an effort to encourage landowners to mine, or to free up their lands for others to mine, the government quintupled the mining lands tax in 1969. The increase had its desired effect: landowners returned 400,000 acres – more than a quarter of all lands under mining patents – to the Crown in the next 20 years.

But the taxes weren’t sufficiently high to force everyone’s hand. Some landowners continued to discourage mining by requiring companies working on their property to share their profits. Others refused outright to develop their mines. “Let me tell you,” Mines Minister Pouliot explained, “there are widows in Arizona who own property in Ontario, and because they own it mines are not being developed. The only way that mines will develop and Ontario will prosper is if we take their properties away from them.”(22)

Tax policies that drive environmental destruction are by no means strictly an Ontario phenomenon. Governments the world over, seeking the revenues and jobs generated by forestry, try to discourage private woodlot owners’ tendencies to conserve.(23) The latter generally place a higher value on their trees than do the former. They don’t cut at a loss, and they don’t cut to create jobs. When they do cut their trees, they generally command prices two or three times higher than those earned by their governments. They tend toward selective cutting, natural regeneration and other sustainable forestry practices. And they often simply refuse to cut their forests, instead preserving them for their recreational or spiritual value.

Sweden responded to such recalcitrance by forbidding wild, unmanaged stands of trees, and requiring its reluctant citizens to harvest at least half of their trees within a decade after they mature. Finland took the tax route, taxing the owners of standing woodlots on the amount they would have earned if they had harvested rather than preserved their trees.

Some American states, too, tax woodlot owners on their potential rather than actual revenues. A commission established by the U.S. Congress called property taxes one of the most significant problems facing privately held forest lands in the northeastern United States. It warned that by basing taxes not on current use but on what the land could theoretically be worth if developed, governments encourage owners to sell their forests. Many private landowners, it explained, simply can’t afford to hold on to undeveloped land.(24)

Governments use carrots as well as sticks to pressure private owners to deforest their land. In the 1980s the government of Prince Edward Island was concerned about the preservation of the private woodlots comprising 92 per cent of the island’s productive forest land:(25) landowners weren’t cutting their trees fast enough to supply the province’s mills. Although some made small clearcuts for firewood and lumber, few could afford (or wanted) to access remote parts of their property or to purchase heavy equipment or chemicals, and their woods didn’t provide sufficient returns to warrant large investments. And so the province, aided by the federal government, introduced subsidies to encourage woodlot owners and forest contractors to build roads into their woods, to rip trees out by their roots, to clear-cut, to burn, to create plantations of single species, and to spray herbicides and pesticides.(26)

Federal-provincial forest resource development agreements have done similar harm to the forests in other Maritime provinces. First signed in the 1970s in response to the threat of wood scarcities, the agreements have subsidized intensive forest man-agement practices such as clear-cutting, single-species planting, and the use of herbicides and pesticides in New Brunswick and Nova Scotia.

Provincial governments, dependent on the revenues, jobs, and electoral support provided by large pulp and paper companies, have also acted on their own to encourage private woodlot owners to cut their trees and sell them cheap. In Nova Scotia, where 31,000 small woodlot owners hold 70 per cent of the province’s productive forest land, the Forest Improvement Act aimed at boosting pulpwood production on small woodlots. The 1965 act, passed in response to projected pulpwood shortages, directed forest operators to “use every effort to harvest all possible saleable wood of commercial value.” Not surprisingly, forest owners widely opposed the act on the grounds that it overrode private property rights. But the Premier defended the act in the name of the public good. “We are either serious about making the most of our forests or we’re not,” he explained. “I think if we are serious we have to carry through, and encourage our people to follow certain practices that will mean a great deal to our province in the future.”(27)

Governments have shown that they are not up to the task of preventing resource degradation or pollution; indeed, they have often actively encouraged it. In order to generate revenue and create jobs, they have gutted their holdings. Citizens have been powerless to prevent environmental degradation because they have had no formal claim to the threatened resources; they have lacked property rights to them.

Governments have also destroyed resources they don’t own, pressuring private owners to raze their forests and to mine their soils. When the owners have resisted, governments have overridden their property rights, forcing them through unreasonable taxes or outright expropriation to comply.

It is long past time for responsibility for natural resources to be shifted away from governments and back to the individuals and communities that have strong interests in their preservation. Such a shift can best be accomplished by strengthening property rights and by assigning property rights to resources now being squandered by governments.


1. Lambert, Renewing Nature’s Wealth, 413.

2. The Prospectors and Developers Association of Canada’s comments on Ontario’s Mines and Minerals, Policy and Legislation: A Green Paper, released by the Ministry of Northern Development and Mines in December 1988; cited in Ontario Ministry of Northern Development and Mines, Mining Act Backgrounder.

3. The phrase “falling under the taxman’s axe” comes from the Mississauga News, “Stop the Axes.”

4. The following discussion of provincial tax assessment policies and the Managed Forest Tax Rebate is based on personal communication with a number of bureaucrats, including Betty Vankerkhof, private woodlands policy officer with the Ministry of Natural Resources, and David Buttle, valuation analyst with the Ministry of Finance’s Assessment Division, March 14, 1994.

For more information on the impacts of federal and provincial tax policies on conservation, see Denhez, You Can’t Give It Away.

5. Personal communication with Lynn McIntyre, secretary/treasurer of the Ontario Woodlot and Sawmill Operators Association, March 16, 1994, regarding an informal membership poll conducted by the association in 1993; personal communication with Arthur Mathewson, chair of the Ontario Forestry Association’s Private Woodlands Committee, May 2, 1994; and the Ontario Forestry Association’s Taxed to Death. A poll of the 8,000 landowners who had lost the Managed Forest Tax Rebate revealed that 78 per cent of the more than 3000 respondents were reducing or abandoning their management efforts. Forty per cent planned to reduce or terminate planting and 31 per cent had stopped improving stands. Twenty per cent had sold or planned to sell their property.

6. Eyvind Fogh’s brief to the Fair Tax Commission’s Mississauga hearing and Arthur Mathewson’s brief to the Fair Tax Commission’s Kingston hearing. Both submissions appeared in Ontario Forestry Association, Forest People, 6-8.

These warnings did not fall on deaf ears: the commission recommended that managed forests’ assessments should be based on the forests’ current uses, rather than on their potential residential uses. (Ontario Fair Tax Commission, Fair Taxation in a Changing World: Highlights, 97, 126.)

7. For the following discussion of the Haliburton Forest and Wild Life Reserve I have relied on personal communication with Peter Schleifenbaum and dozens of brochures and (often undated) newspaper and magazine clippings provided by him. Also see the Globe and Mail, “Private Ontario woodlots under a tax.”

8. In 1993, the Haliburton Forest’s gross revenues from logging and recreation approached $1 million a year, with expenses eating up about half that amount.

9. In fact, Mr. Schleifenbaum’s forest would become far more valuable in a generation. Three decades of growth would allow the high-quality hardwoods to reach maturity, after which time they could be sold for lumber, bringing in higher revenues than the poorer quality trees cut in previous years for pulpwood or firewood.

In addition to providing current and future revenues, the uncut forest had considerable non-monetary value for one who loved nature. Clearly, for Mr. Schleifenbaum these values combined exceeded the $20 million he could have earned from stripping the forest.

10. At the time of writing, Mr. Schleifenbaum had not yet chosen a course of action. Pressing for changes in provincial tax policies, he hoped to avoid having to choose between selling off land for development and increasing his logging operations.

11. Unlike forest land, agricultural land is not assessed at its market value. Farmland’s value is based on the price that a farmer would pay for land that he intended to farm. In addition, farmers with a gross farm production value of over $7,000 benefit from the Farm Rebate Program. Since its introduction in 1970, the program has enabled farmers to get back between 25 per cent and 100 per cent of their land taxes. Not surprisingly, the elimination of the forest rebate has sent many scrambling for the farm rebate.

12. Mississauga News, “Developer denuding land for tax break”; and personal communication with Randy Griffin, March 14, 1994.

13. The following discussion is based on: Financial Post, “Conservationists blast ‘nature tax'”; Toronto Sun, “This land is your land?”; personal communication with Rebecca Goodwin, coordinator of Natural Heritage League, March 23, 1994; personal communication with Russ Powell, natural heritage coordinator, Ministry of Natural Resources, March 28, 1994; personal communication with Murray Stephen, general manager, Halton Region Conservation Authority, March 25, 1994; and the Halton Region Conservation Authority, “Submission to Fair Tax Commission,” May 31, 1993.

14. The Metro Toronto Conservation Authority’s extensive holdings pushed its bill to almost $1.2 million. The Hamilton Region Authority, with holdings just one-quarter the size of Metro’s, faced a bill of almost $600,000 – a whopping $78.55 per acre per year.

According to Jan Street, manager of communications for the Association of Conservation Authorities of Ontario, the Ministry of Natural Resources later provided some funding to ease the Conservation Authorities into their new tax situation (personal communication, November 29, 1994).

15. Jill McColl, at the Association of Conservation Authorities of Ontario, surveyed the province’s 39 authorities. Seven had sold lands in 1993/94 (three of the sales, however, were not prompted by tax increases). Nine others had initiated sales in that period. Seven or eight had decided not to sell lands (personal communication, May 2, 1994).

16. Personal communication with Gayle Wood, staff chairman of the Association of Conservation Authorities of Ontario and chief adminis-trative officer of the Ganaraska Conservation Authority, March 23, 1994.

17. Mining Act, Revised Statutes of Ontario 1990, Chapter M.14. Bill 71 was introduced as An Act to Amend the Mining Act of Ontario by the Liberal government in October, 1989, and received royal assent six weeks later. The NDP government proclaimed the act in June, 1991.

The following discussion is based on personal communication with Michelle Watkins, land tax administrator for the Ministry of Northern Development and Mines, March 8, 1994, and November 29, 1994; Ontario Ministry of Northern Development and Mines, Mining Act Backgrounder; personal communication with Charles Ficner, an owner of mining land and mining rights who has strenuously objected to the new act, March 9, 1994; and numerous documents provided by Charles Ficner, including communication with several MPPs.

18. Michelle Watkins, land tax administrator for the Ministry of Northern Development and Mines, denies that redefining mining rights affected the number of properties eligible for the tax (personal communication, March 22, 1994). The act, however, seems to contradict her position. Section 189 (1) (c) indicates that “all mining rights in, upon or under lands in a municipality patented under or pursuant to any statute, regulation or law at any time in force authorizing the granting of Crown lands for mining purposes” are liable for the tax. The definition of mining rights therefore appears to be essential in determining which rights are liable to the tax. If, as Ms. Watkins asserts, no new properties were put on the tax roles when the definition was changed, it is possible that the province was taxing properties that it should not have been taxing.

At least one MPP believes that the definition of mining rights is critical. On June 7, 1993, MPP Bob Chiarelli introduced Private Member’s Bill 43, An Act to amend the Mining Act, in the Ontario Legislature. The bill would restore the previous definition of mining rights in order to “prevent landowners whose surface rights and mineral rights have not been dealt with separately from being taxed under Part XIII of the Mining Act.” As of March 1994, the bill had not received second reading.

19. An Act Respecting Mining, Revised Statutes of Ontario, Chapter 29, Volume 1, 1877.

When the government contemplated changing the Mining Land Tax, it was aware of this early provision. See Ontario Ministry of Northern Development and Mines, Ontario’s Mines and Minerals, 36.

20. Financial Post, “Confiscating Ontario private property.”

In its Mining Act Backgrounder, the Ministry of Northern Development and Mines confirmed the Minister’s statement: “An ‘acreage tax’ was never intended for the sole purpose of generating revenue. Since its inception, the tax was applied to encourage the holders of mining rights to return those rights to the Crown if there was no intention to explore, develop and produce the mineral resources on their lands.”

The rules governing the forfeiture of sub-surface and surface rights are somewhat ambiguous. The act empowers the government to “declare the lands or mining rights . . . forfeited to and vested in the Crown” if a landowner is three years in arrears on his mining land tax payments. According to ministry staff, those paying municipal or provincial land taxes forfeit “only” their mining rights, while those not on realty tax rolls forfeit both their mining and surface rights.

21. The Ministry of Northern Development and Mines proclaimed mining’s virtues in Ontario’s Mines and Minerals, 1. In a section entitled “Retaining Title,” after noting that many mining lands lie dormant and unexplored, the ministry explained, “[A] basic principle is to ensure that the limited amount of mining lands within the province is actively explored and developed in an orderly and expedient manner to the benefit of Ontario”; it then recommended establishing “a mechanism that would encourage continued exploration of mining lands conveyed in the past” (15).

The mining land tax’s main target is clearly undeveloped land; the act permits the minister to exempt from taxation lands that have been subdivided, farmed, or used for a variety of other purposes, such as natural gas production.

22. Financial Post, “Confiscating Ontario private property.”

The government defends itself on the grounds that it is only trying to encourage people to use land for the purpose for which it was originally granted. The General Mining Act, however, under which some of the taxed lands were sold, permitted “mining lands” to be used for many other purposes, including some, such as cultivation, that would prevent mining.

Furthermore, the original-grant justification is not in keeping with other government policies. For example, the government doesn’t object to lands originally granted as agricultural lands now being used for other purposes.

23. For more information on governments’ incentives to destroy forests, and private woodlot owners’ tendency to conserve, see Solomon, “Save the Forests – Sell the Trees,” excerpted in Dolan and Lindsey, Economics, 887-8; and Sandberg, Trouble in the Woods, 18, 169.

24. New York Times, “Property Tax Changes Are Urged to Help Preserve Northeast Forest,” reporting on recommendations of the Northern Forest Lands Council.

25. The ownership estimates for PEI and Nova Scotia (following) appear in Forestry Canada’s Forestry Facts, 53, 55.

26. Cooperman, “Cutting Down Canada,” 61; personal communication with Gary Schneider, Environmental Coalition of PEI, March 15, 1994; and Bruno Peripoli, “Forest policy misguided,” 7-8.

27. Nova Scotia Debates, February 22, 1965, 536-7; and Sandberg, op. cit., 1-3, 13-4, 18-9, 142-3, 170, 178-80.

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