With Higher Revenues, should Toronto’s Land Transfer Tax be Kept?

The city has just released new stats showing that Toronto’s land transfer tax is bringing in big revenues! But is it enough to keep the tax where it currently sits?

This year, the tax is expected to bring in $346 million in revenue to the city. That’s $25 million more than was originally predicted, and the reason for it is said to be because of more homes being sold, and the higher prices of those homes that are being sold. These findings were released during a September 3 budget committee hearing. And all of it means that the tax is expected to bring in a surplus of $167 million by year’s end.

That’s not topping last year’s surplus of $248 million, but it’s enough for three-quarters of the leftover cash to be directed towards capital works projects, and city reserves to cover unexpected expenses.

For homeowners paying the tax it means that with the purchase of a $500,000 home, they’ll need to fork over an extra $5,725; and that’s why realtors have worked hard to get rid of the tax altogether while Mayor Rob Ford has sworn that he will get that tax cut by 10 per cent. Whether or not the tax is cut at all though, will be decided upon in December or January when the budget committee completes their budget review.

“Our objective is to cut it by 10 per cent,” said Councillor Frank De Giorgio, the budget chair. “I need to see where all the other cost pressures are.”

But, he says, there’s a lot of support for the tax on City Council, and it’s this committee that will make the final decision.

“Council may decide there’s a use for the money,” he said. “I’m hoping that they don’t. But I think there are a growing number of councillors that would prefer that the money be used for transit and other things.”

One of those councillors that may vote in support of keeping the tax as it sits is Councillor Janet Davis, who has been against Ford’s plan to cut the tax since the beginning. She cites long waiting lists for housing and child care as two reasons why the tax is needed.

“There are people who think, as I do, that we should be investing in neighbourhoods and building the city, not tearing it down into the lowest-common-denominator kind of city,” she says. “It makes no sense to cut the revenues and put ourselves in a position where we’re forced to cut programs or increase user fees. It really is about your vision for the city: Is it a minimalist place that offers very little to residents, or a city that supports communities?”

What do you think? Do the big revenues justify the tax? Or do you think the City will be fine even with a 10 per cent cut, and won’t feel the negative side effects, such as becoming a city that’s been torn down to its lowest denominator?