PICTURE THIS: A widow, recently retired, opts to use some of her spare time to knit shawls, many of which go to patients in hospitals or residents of nursing homes, but some of which are sold at the local farmer's market. A short time later, she gets a visit from an employee of Ontario's Municipal Property Assessment Corporation (MPAC) who notes what she's doing. Still later, she gets a notice from MPAC advising that her property taxes will be doubled because her house had been reclassified as "industrial."

Absurd, you say? Not really, in the strange world of municipal property assessment. Just ask the folks at Pfizer Canada Inc. or Ken Filsinger, owner of Sign Needs, who both happen to have addresses on Orangeville's Centennial Road.

Last June, Pfizer halted production of drugs at its plant and learned that under MPAC's rules it would save more than $50,000 in property taxes annually so long as the property wasn't used for any manufacturing.

Fortunately for Orangeville, but unfortunately for the company, Pfizer decided to resume production in January and no longer qualifies for the 72 per cent tax reduction that would accompany its property being reclassified as "commercial."

An even more absurd situation has faced Mr. Filsinger, who found his property taxes had roughly doubled as a result of moving his business to its current location in 2007, when the site was classified by MPAC as industrial instead of commercial.

His battle with MPAC has led to an Assessment Review Board hearing and the promise of a decision by the hearing officer within 90 days.

Unfortunately, the hearing was restricted to the issue of whether the Sign Needs operation was really industrial or merely commercial, rather than whether the classification should affect the level of tax payable.

Mr. Filsinger told the hearing that while his tax classification had changed since the firm moved from Third Street, the nature of his business hadn't, and a check of the local tax rolls showed him that all other signmaking companies serving the Orangeville area have retained a 'commercial' classification.

He said his property taxes had increased from around $6,000 to between $10,000 and $11,000.

MPAC's evaluation review specialist, Peter Gauthier, explained that the reclassification was based on Section 6 of the Ontario Assessment Act and a relevant regulation which defines industrial land, as "Land used for, or in connection with, manufacturing, producing or processing anything."

The Act defines a commercial property as one in which the activities are limited to taking a product and reselling it as is, such as a retail store.

The main dispute between the parties was over whether the definition of "industrial" was "overbroad," particularly when used for a business that is primarily commercial but includes some light manufacturing.

Under cross-examination by Chris Scott, Mr. Filsinger's counsel, Mr. Gauthier conceded that he personally feels the wording is overbroad, but during her summations, MPAC lawyer Shawn Douglas suggested it wasn't her witness's job to discern whether a business is really industrial or commercial. "A witness should not be asked to explain processing and manufacturing," she said. "He only needs to know what falls within the rules."

And that's precisely where the problem lies: the rules.

Those rules should be designed primarily to reach two objectives: fairness among classes of ratepayers and sufficient revenue for the municipality to cover the costs imposed by the particular property.

Fairness clearly should include similar treatment of similar ratepayers, and what could possibly be more similar than two local firms competing for the same business?

As for the need to cover the cost of providing municipal services such as policing, fire protection, roads, water and sewage treatment, the only real variables will relate to the volumes of water taken in and the volume and quality of waste waters. However, such differentials can be handled through water metering and special charges for sewage treatment.

It simply makes no sense to have drug manufacturers like Pfizer facing higher property taxes if they decide to produce some of their products locally rather than bring them all in from abroad.

(Our suspicion is that Amaranth Township will face a significant loss of tax revenue as a result of the new owners of Fernbrook having moved its bottling operation and the related employment out of the township.)

Dufferin-Caledon MPP Sylvia Jones has written Ontario finance minister Dwight Duncan, urging him to consider narrowing the Act's definition of industrial properties.

Although that would certainly help, we would much prefer to see the Act have a single industrial/commercial designation, so that properties are no longer penalized as manufacturing sites, particularly when our industrial sector is in such desperate straits.