Canada's Condominium Magazine

Ontario’s realtors oppose any new land transfer taxes

Mississauga wants it, Ottawa says it doesn’t. Realtors all over the province really don’t want it, neither do home buyers, and the Ontario government says it hasn’t made up its mind whether to give it to everyone or not. At the moment, only Toronto has it, and that bothers some of the other municipalities, the ones who want it for themselves. It is quite valuable, so it’s easy to understand why they want it.

It is, of course, the municipal land transfer tax, the result of former Toronto mayor David Miller’s request that the province give Toronto greater powers to raise revenues. The MLTT came into effect in Toronto in 2008, with the result that homebuyers in the city pay two such taxes, one to the province and one to the city. The total tax, depending on the cost of the home, could be $10,000 or more. It brings in hundreds of millions of dollars to the city, which is exactly what it was intended to do.

The Toronto Real Estate Board has opposed the MLTT bitterly from day one. Rob Ford campaigned on a promise to abolish it, but didn’t do so when he became mayor.

Now the province is looking at revising the Municipal Act to give other cities and towns the right to levy their own land transfer taxes if they wish to. Mississauga is one city that wants it. Last week the Mississauga city council received a staff report that recommended the granting of new taxation powers. Toronto’s neighbour considers it unfair that Toronto gets to rake in all that extra revenue while it can’t.

Former Mississauga mayor Hazel McCallion took the typically sensible position that taxes were a necessary evil. Politicians had to raise money somehow, or cut services. One Mississauga councillor, Carolyn Parrish, has said she would rather press the new government in Ottawa to give cities a greater share of income taxes. The mayor of Ottawa, meanwhile, said a land transfer tax wasn’t a priority for him, though his city is struggling with a projected $52 million deficit.

The Ontario Real Estate Association has been vocal in opposing the idea, saying that home buyers will have to bear a double tax burden if it goes ahead. In a press release yesterday, OREA urged Ontarians to visit its anti-tax website, donttaxmydream.ca. and express their opposition.  The site uses various statistics from a 2014 study that claimed Toronto’s land transfer tax had cost the city’s economy more than $2 billion in lost economic activity and jobs. It also cites an Ipsos Reid poll showing that the majority of Ontarians, not surprisingly, do not support a new MLTT in their area. More than three-quarters say they would likely need to delay buying a home if the tax were in place.

If the government does extend the right to collect a land transfer tax to other cities, it will still be up to them to decide whether they want to do so.

Doing Business does not comment on individual countries’ performance, except in a general way to illustrate a point. It does say that efficiency and quality “go hand in hand” and that economies that have efficient regulatory processes also tend to have good regulatory quality. The ideal is to have both. Very few countries, Doing Business says, have high-quality regulation but complex processes for implementing it. In the getting electricity category, it appears that Canada is one of these.

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