On June 5th the Toronto Real Estate Board (TREB) renewed its campaign to end the Toronto Land Transfer Tax. Partially, at least, as a result of an extensive poll of residents from the City of Toronto that showed the following results;
- 66% of Torontonians support plans to repeal the Toronto Land Transfer Tax;
- 77% of Torontonians who recently purchased a home in Toronto feel that they received little or no added value in City services for the amount of Land Transfer Tax paid;
- A third of first-time buyers indicated that they had to pay some Land Transfer Tax to the City, notwithstanding City rebates.
Incredibly, they also discovered a link between the existence of this tax and people making the decision to move away from the 416 area code, toward the 905 area code where no additional tax such as the Toronto Land Transfer Tax exists. Specifically a report released on June 5th summarizes, “A recent poll conducted by Ipsos Reid, found that 25 percent of Torontonians expecting to move in the next two years are planning to leave Toronto for the 905 regions. In contrast, only three percent of 905 residents expecting to move in the next two years are planning to come to Toronto. Looking at the cause of this trend, the poll also found important links to the Toronto Land Transfer Tax, with 75% of people in Toronto and the 905 regions who are expecting to move in the next two years saying that they are more likely to move outside of Toronto specifically because of the Toronto Land Transfer Tax.”
Stunning.
For those of you that aren’t familiar with Land Transfer Taxes, real estate transactions in most large parts of Canada can add a fee called Land Transfer Taxes. Or simply put, taxes that are levied on properties that are changing hands. In most places in Canada you pay one of these taxes (as in the case in the 905 area code). This is not the case for Toronto! When purchasing property in the 416 area code, you pay 2 of these Land Transfer Taxes, one that goes to Ontario and one that goes to the City of Toronto. The taxes are as follows:
ONTARIO Land Transfer Tax
Up to $55,000 X .5 % of total property value
From $55,000 to $250,000 X 1 % of total property value
From $250,000 to $400,000 X 1.5 % of total property value
From $400,000 up X 2 % of total property value
TORONTO Land Transfer Tax:
Up to $55,000 X .5 % of total property value
From $55,000 to $400,000 X 1 % of total property value
From $400,000 up X 2 % of total property value
The Toronto Real Estate Board is against the Toronto Land Transfer Tax for a number of really good reasons including:
- It Makes Toronto Less Fair: In any given year, only about five percent of Torontonians move. These are average people, who move for different reasons: a young family with a baby on the way may need more space; aging seniors may need to change their lifestyle; a family break-up. The list goes on. It is unfair, and wrong, to expect these people to shoulder so much more burden in taxes than the other 95 percent of Torontonians, for no additional services.
- It Makes Our City Services Less Reliable: Torontonians value their municipal services. To maintain those services, we need reliable and predictable funding. The Toronto Land Transfer Tax is far from reliable or predictable. The revenue it generates goes up AND down with the state of the real estate market. What will we do if real estate markets suddenly cool and Land Transfer Tax revenue drops sharply and quickly? If we want our City’s services to be truly reliable, we should end our reliance on this unpredictable tax.
- It Makes Our City Less Competitive: Over the years, Toronto has succeeded largely because people want to live here. In fact, about half of all immigrants arriving in Canada choose to live in the Toronto region. Once they settle on the Toronto region, however, the choice between municipalities becomes less clear, and the Toronto Land Transfer Tax doesn’t help our City’s chances. That’s because Toronto is the ONLY City in the entire country, let alone the Greater Toronto Area, to have two land transfer taxes: the Toronto Land Transfer Tax, AND the provincial Land Transfer Tax. Choosing to live outside of Toronto means paying only once, instead of twice. Clearly, this puts our City at a competitive disadvantage for its most important resource: people.
- It Risks OUR Economic Vibrancy: When people buy and sell homes, they create jobs for people. They hire movers. They have their new home painted. They renovate. They buy new furniture and appliances. The list goes on. In fact, studies have shown that about 40,000 Toronto jobs rely directly on this type of economic activity. By discouraging people from moving, the Toronto Land Transfer Tax threatens these jobs.
- It Makes Our City Less Affordable: Toronto should be a City for everyone. Anyone who wants to live here should be able to. The Toronto Land Transfer Tax makes that more difficult. Even average middle-class people struggle with this tax, which adds about $6,000 to the cost of an average home in Toronto, and about $15,000 to the cost of an average detached home in Toronto. That’s money that has to be paid in full, upfront, before moving in. That’s not easy, or realistic, for many average people.
- It Makes Our Government Less Accountable: As taxpayers, we all expect our hard-earned tax dollars to be spent wisely by City Hall. The Toronto Land Transfer Tax reduces City Hall’s accountability to taxpayers because it is hidden in housing transaction closing costs. It’s important, for our City’s finances, that City Council carefully considers their tax and spending decisions, and the best way to make that happen is for taxes to be out in the open so that all taxpayers know what City Council is doing.
- It Makes Our City Less Green and Less Livable: We are all tired of the traffic congestion that plagues Toronto and the entire region. Not only does it affect our quality of life, but the pollution generated by automobiles is bad for our health and our environment. Reducing the amount and length of commuting between work and home is a key part of solving this problem. That means helping people to live close to their jobs. The Toronto Land Transfer Tax does the opposite by creating an incentive to live outside of the City, farther from Toronto jobs, where home buyers don’t have to pay a municipal land transfer tax.
I Believe blog, “Toronto Land Transfer Tax:
Why we should get rid of it & the way to help do it!
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