Taxing grain elevators as industrial properties is big hit to bottom line

WINCHESTER —A small bureaucratic hiccup has cost Greg Vanden Bosch between $30,000 and $40,000 every year for over a decade and there’s no end in sight.

Like many other commercial grain elevator operators across the province, the president of Vanden Bosch Elevators Inc. in Chesterville has been classified as an industrial business for property tax purposes since 1998.

"It was quite a hit that first year let me tell you," Vanden Bosch says.

While property classifications are determined provincially, rates are a municipal responsibility and vary widely. The industrial rate can be anywhere from 6 to 25 per cent higher than the commercial rate. In North Dundas, which includes Vanden Bosch’s operation, the industrial rate is more than seven times the commercial rate.

Dave Buttenham, the chief executive officer of the Ontario Agri Business Association, says the industrial classification is meant to cover land used for manufacturing or processing, and grain elevators, which are primarily used for drying and storage, belong in the commercial category.

"We take in corn, wheat, soybeans and cereal grains and we ship corn, wheat, soybeans and cereal grains. We’re not manufacturing a new product out of those ingredients," says Buttenham.

In some cases, commercial operations paying the industrial rate compete with farm-based elevators, which pay even lower property tax.

The costs ultimately trickle down to grain farmers.

"We’ve had to work it into the formula we use to calculate the prices we pay to producers," Vanden Bosch says.

Despite a 2002 provincial report that recommended reclassifying grain elevators as commercial and the agri business association pursuing consultations each year, there’s been little movement on the issue.

For Vanden Bosch, it seems to be a lack of political will.

"It’s a fairy small thing that could be easily done, but then again, small things are often the hardest things to get done because they don’t make a headline for the government."