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ONTARIO TO PHASE IN TAX INCREASES ON BUSINESSES

In an effort to smother a rising tax revolt by small business facing staggering tax increases, Ontario's finance minister announced his property tax reforms will be phased in in smaller, 2.5 percent bumps over the next three years.

For weeks, commercial property owners have been seething over a provincial reassessment plan, which would mean tax increases of 100 percent or more for 70 percent of the city's businesses.

Now, Finance Minister Ernie Eves has said the move to adjust property taxes from the 1950s to 1996 values will be phased in.

"No commercial or industrial properties (will) face more than a 2.5 percent increase" in taxes as a result of the reassessment plan, he said.

But he did not explain how the remainder of the planned tax hikes will be implemented and rejected the notion of a 20-year phase-in.

Eves also expanded the classifications of property tax rates, allowing for different rates on commercial and industrial sites depending on their size and usage. Office buildings, shopping centers and parking lots have all been given new classifications.

Owners of residential properties also got some relief from Eves in the form of a pledge to phase in those reassessments over an eight-year period, instead of four.

Under the reassessment plan, 60 percent of Toronto homeowners will see their taxes fall, while 40 percent face higher levies. Sixty percent of apartment buildings are also slated for higher taxes, and many fear this means rising rents.

While Toronto Mayor Mel Lastman cheered the provincial move, many others felt the deal to stifle the tax revolt was as ill-conceived as the reassessment plan.

John Bech-Hansen, economic adviser to the Toronto Board of Trade, said enlarging the number of tax categories will only make the system more confusing and less efficient.

Paul Pagnuelo of the Canadian taxpayers Federation said Eves' plan was "not a solution, but a quick political fix" and predicted the tax revolt will "burn brightly" once all parts of the province see new tax bills this summer.

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