Province scraps municipal land transfer tax proposal

Yorkregion.com
Dec. 3, 2015
By Lisa Queen

Homebuyers will continue choosing York Region and other 905 regions over Toronto after the provincial government backed off plans to allow municipalities outside the city to impose a land transfer tax, the president of the Ontario Real Estate Association says.

Toronto will still be the only municipality where homebuyers pay a municipal land transfer tax in addition to the provincial tax, a policy that has already driven thousands of people to purchase homes in the regions surrounding the city since it was implemented in 2008, Patricia Verge said.

“I think (the government scrapping extending the municipal tax outside Toronto) will just keep helping you guys sell homes because some people tried to avoid it, so they go outside Toronto proper so they don’t have to pay the tax,” she said.

“It already has helped your area. We’ve proven with our studies that Toronto has been seriously hurt by this tax and even though they have a wonderful market and all is well, it could be that much better. We certainly know people who are looking outside Toronto proper so they don’t have to pay the tax. So, that will continue, unless it’s repealed in Toronto.”

A homebuyer purchasing a $450,000 home in Toronto has to pay $4,725 to the city in addition to $5,475 for the provincial land transfer tax.

On Tuesday, Municipal Affairs and Housing Minister Ted McMeekin announced the province is backing off plans to extend the tax to municipalities outside Toronto following a review of the Municipal Act.

“While we are currently reviewing the feedback from our partners, it is clear that there has been no call for a municipal land transfer tax,” he said in a statement.

“I was pleased to communicate our government’s position (Tuesday) that other than in Toronto, where the power already exists, our government will not be extending municipal land transfer tax powers to other Ontario municipalities.”

Verge was at home when a fellow realtor called her with the news.

“We’re just thrilled. I didn’t see it coming. We were very hopeful but you never know, right?” she said.

“We want to thank Mr. McMeekin for his leadership on this issue and standing up for Ontarians who said by the thousands they didn’t want this unfair and inequitable tax.”

About 32,000 people voiced their opposition to extending the tax to municipalities outside Toronto through a five-week donttaxmydream.ca campaign launched by the real estate association.

However, not giving cash-strapped municipalities struggling to provide services the option of imposing a land transfer tax leaves them in the same position of funding programs only through property taxes, Prof. James McKellar, director of real estate and infrastructure at York University’s Schulich School of Business, said.

While no one wants new taxes, new taxing power may have been justified if municipalities spent the funds on needed services such as social programs, affordable housing and public transit, he said.

The Newmarket Taxpayers Advocacy Group (NTAG) is pleased the government walked away from extending the tax.

The tax, in addition to proposed 2016 property tax increases by local municipalities and York Region, as well as increases to hydro and water rates, would have made the dream of owning a home unattainable to many, president Teena Bogner said.

“This potential myriad of taxes would be a nightmare to anyone in Newmarket hoping to ever own their own home,” she said in an email.

Vaughan Councillor Gino Rosati said he likely would have voted against imposing a land transfer tax in the city or across the region.

“From my point of view, I think people are already paying enough taxes. This is one more tax I don’t believe we need. Just taxing (home) buyers is a bit of an unfair tax. I’d rather collect from everybody, collect a little bit from everybody, rather than a big chunk from individuals who are buying property,” he said.

“If you’re cash-strapped (as a municipality) and don’t want to increase property taxes, you would be going after the person who can, perhaps, afford it the least when they are buying property and facing a mortgage. A young family that is struggling, it doesn’t make it any better. It makes it worse, in my opinion.”

Although a surprise move, it was nice to see the government back off the prospect of imposing an unpopular tax when it has ignored strong opposition to other initiatives such as the sale of Hydro One, the Ontario Retirement Pension Plan and the Green Energy Act, Conservative York-Simcoe MPP Julia Munro said.

“I can only assume that they realized they could back down on this without it incurring any cost,” she said.

“Most of the things people are unhappy about, whether it’s the Green Energy Act or the Ontario pension, are things the government has a huge vested interest in pursuing and they can do this one without impinging on their own economic position.”

While Munro is pleased to see the municipal land transfer tax plan was scrapped, she acknowledged it does leave municipalities without a new revenue tool to fund services.