Much Ado About Land Transfer Taxes

Nobody likes the thought of paying more taxes. So, whenever the dreaded “T” word is thrown around, it’s understandable that many would take pause.

That happened yesterday, following an article which alleged the provincial government was going to expand the Municipal Land Transfer Tax (MLTT) to all municipalities in Ontario.

Currently, only the City of Toronto has the authority to levy an additional land transfer tax. Believe me, when we purchased our townhouse in Toronto a few years ago, the additional tax definitely stung the wallet.

Rough figures from the city have indicated that the MLTT brings in upwards of $300 million annually to Toronto’s coffers. Given the size of the city and it’s property values, no other municipality would likely see as big a windfall from implementing an MLTT.

Before going any further, let’s take a look at some facts:

  • The Minister of Municipal Affairs and Housing (the official responsible for the Municipal Act which provides governance guidance for municipalities other than Toronto) has said that this legislation is under review and that while lots of items are being considered in the review, no decisions have been made.
  • Also, IF the decision is made to provide municipalities with additional revenue tools, such as the MLLT, that does not mean that it will be automatically implemented province-wide. Municipalities would be able to decide if implementing such a tax in their respective jurisdiction makes sense and they would need to pass a bylaw to enact the provision. During that decision-making process, there should be plenty of opportunity for citizens and organizations to provide their local Council with feedback about the proposed action.

The history on this matter is long. Municipal groups, such as the Association of Municipalities of Ontario (which represents most of Ontario’s 444 municipalities not including Toronto) have argued that all municipalities should have the same revenue-generating opportunities that Toronto has. Real estate bodies, development and citizens groups have argued against the MLTT noting that it will hurt the industry and individuals by creating an additional barrier for homebuyers. And taxpayer groups have been against any additional taxes, always, anywhere, regardless of the industry.

This is obviously a tricky public policy issue. Municipalities are always looking for new revenue streams to pay for infrastructure and other capital expenses. On the surface, dangling this new revenue-generating lever in front of them seems like a no brainer to implement.

However, in reality, one would assume that municipal officials understand the political ramifications that implementing such a measure could bring. While we don’t have a crystal ball into the future, it’s reasonable to believe that many Councillors would carefully consider all sides of this issue before voting. As the previous Mayor of Toronto discovered, repealing such a lucrative bylaw proved to be an insurmountable task.

It will definitely be interesting to see how this all plays out.

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3 Comments Add yours

  1. themofman says:

    Property taxes are genuinely kept low in Hamilton in order to attract businesses. That’s been well noted for at least the past decade.

    All aspects of housing in Hamilton is currently far more affordable than Toronto but still, of course, there are those factions who are trying to Torontoize Hamilton in terms of these and other property costs. It’s not a good fit as most Hamiltonians cannot afford to live with such costs.

    It’s hard enough for Torontonians who, although generally make more money than Hamiltonians, many have left that saturated city and moved to Hamilton over the past 10 years because it’s cheaper to live.

    A new tax burden is not a positive prospect at all.

    Like

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