Political alliances are labels, are they not?
If you heard that somebody was a Republican, wouldn’t you automatically make a bunch of assumptions?
I know I would.
Maybe it’s worse in the United States than in Canada, but I find it interesting how a person can be labelled by the party they belong to, support, or vote for, and an assumption can be made about their general belief system.
I’m fascinated by what’s going on in the United States right now. I’m not the type to slow down at the scene of a horrific and gruesome traffic accident, nor would I watch a literal “slow train wreck,” but to see such a proud and successful country completely unravel before our eyes, and so predictably, is just fascinating.
Fascinating, and terrifying, perhaps. Imagine if Donald Trump won the election in November, I literally think the world as we know it could end. He’s essentially a dictator, or believes himself to be as much, and a large portion of the country has fought tirelessly for 3 1/2 years to stop him from maddening actions that no president has ever undertaken. I could see a world in which he eliminates term limits and becomes the president for life. Isn’t that a thought?
The ironic part about the two-party system in the United States is that somewhere in the neighbourhood of 35% of people will vote Republican, no matter what, and 35% of people will vote Democrat, no matter what. The reincarnation of Joseph Stalin could run for president as the Republican candidate, and those 35% of people would still cast their ballot in red. Same goes for the Democrats. So in essence, it’s the other 30% of the voting body that decides every election.
The dichotomy between Republican and Democrat is so fierce. I don’t know that there’s another example in the civilized world of a two-party system with such opposing values and interests. If the interests and values were a Venn diagram, I don’t know if there’s anything that would overlap. It almost seems as though every interest, value, decision, or favourite chocolate bar of one side simply MUST be opposed by the other.
I recognize that there’s a big difference between “red” and “blue” here in Canada. But I also think that the stereotypes of our two sides are less accurate than that of the United States’ two parties. The idea that a Republican loves guns, opposes abortion, believes in God, is anti-immigration, loves to hunt, and dislikes government is probably more accurate than a similar stereotype of a Liberal, Conservative, NDP, Bloc, or Green supporter in Canada, no? I would get into examples, but I’m not feeling that brave today.
I suppose my point is this: a Venn diagram of values and beliefs here in Canada, among the major parties, would surely show more common ground, would it not?
Talking about taxation isn’t the most exciting topic, but it’s a Friday, and I saw this press release from TRREB, so I wanted to put it up for a brief discussion.
I’m a fiscal conservative, admittedly. Don’t confuse that with being a social conservative, however. This is where those labels come into play.
I’m also not a first-time home buyer, nor will I ever be again. But just as I have lamented over the past decade that the City of Toronto should be spending billions and billions of dollars every year on transit and other infrastructure, which I will never use, I also believe that the land transfer tax that is thrust upon first-time buyers is punitive, and needs to be re-examined.
Don’t get me wrong – it won’t be.
The pandemic caused all the levels of government to hand out money which it may never actually be able to pay back.
The City of Toronto is not permitted to run a deficit, so cutting taxes is likely not going to fly.
But should it?
Whether you’re a fiscal conservative or not, do you believe in this tax?
I’ve told you this story before, so apologies in advance…
I was sitting with new clients a couple of years ago, discussing land transfer tax. They were looking to purchase a $900,000 home, and I told them that their land transfer tax would be almost $29,000. They were stunned, to say the least.
I told them, “You think that‘s bad? I had a client buy for $4,000,000 and they had to pay over $170,000 in tax!”
“Yeah, but they can afford to.”
As I have written before, I disagree with this in two ways.
First of all, the idea of affordability is all relative. The person buying for $4,000,000 and paying $170,000 in tax can’t really “afford” this more than the person buying for $900,000 and paying $29,000 in tax. I think people just have inherently less respect for expenditures made by those with more means.
Second of all, why does that matter? Yes, I’m slightly right-of-centre, but when I hear politicians grandstanding to their base, saying things like, “It’s time the top earners start paying their fair share,” in a system where the top earners pay 54-55% of their income in taxes, it irks me, a little. What does “fair” mean, in that context?
The land transfer tax is one of the more bizarre taxes I’ve ever seen. To pay $170,000 to move? What’s that about? It doesn’t cost much file papers and transfer title, and that’s paid for by the buyer anyways. What is this tax really for?
Some will argue that the tax itself need not be traced or linked to an actual expenditure or benefit, but am I naive for suggesting it could or should be?
I’ve always had problems with the land transfer tax, but I realize the tax is not going anywhere. I was in real estate long before the municipal land transfer tax was brought in by David Miller, so I remember times when lower prices, and only one tax, rather than two, meant a lot less money to fork over to the government, for seemingly nothing.
Today, we’re in a different world. And the tax is more punitive than ever.
Here’s a press release from the Toronto Regional Real Estate Board:
TRREB Urges City to Move Forward with LTT Relief for First-Time Home Buyers
With the City of Toronto’s Executive Committee considering a report today, with options to improve affordability for first-time home buyers by providing relief from the City’s Municipal Land Transfer Tax (MLTT), the Toronto Regional Real Estate Board (TRREB) is calling on the Committee to move ahead with longneeded adjustments to the MLTT First-Time Home Buyer Rebate.
“First-time home buyers have been unfairly penalized by the MLTT for years. Adjustments to the MLTT first-time buyer rebate are long overdue,” said Michael Collins, TRREB President.
The average price of a residential property in the City of Toronto at the start of 2008, when the MLTT was first implemented, was $415,000, and the MLTT first-time buyer rebate was allowed up to a maximum of a $400,000 home, meaning that first-time buyers were almost completely exempt from paying any MLTT, as was City Council’s intention. The average price of a City of Toronto residential property is currently $881,000, and the MLTT first-time buyer rebate is still only allowed to a maximum of a $400,000 property. This means that a first-time buyer purchasing an average priced property today would pay $9,620 in MLTT, on top of about $10,000 of Provincial Land Transfer Tax (PLTT), for a total of about $20,000 in land transfer taxes, which must be paid up front on closing of the real estate transaction.
“Clearly, City Council’s intention of providing relief for first-time home buyers, up to the average priced property, is no longer being met,” added Collins.
Not only are first-time buyers not being given the relief that was intended by City Council, they are being forced to pay MLTT at the highest rates, even if they purchase a below average priced home. This is because the MLTT rate structure is such that the highest rates kick in starting on homes priced at only $400,000, which is 55% below the current average price. As noted by the City staff report being considered by the Executive Committee, two-thirds of first-time home buyers purchase homes priced between $400,000 and $800,000, well below today’s average home price in Toronto.
“The City is essentially forcing people, including first-time buyers, purchasing BELOW average priced properties to pay the highest MLTT rates. This is simply not progressive or fair,” said John DiMichele, TRREB Chief Executive Officer.
The City staff report, and TRREB survey research (conducted by Ipsos Public Affairs), show that the number of firsttime buyers entering the real estate market has been declining significantly in recent years. TRREB believes that this is largely because of affordability issues.
“First-time buyers are increasingly being priced out of Toronto’s real estate market and the Municipal Land Transfer Tax has exacerbated this. It is time to make adjustments to the MLTT rebate for first-time buyers, so that they receive the relief that was always intended by City Council,” added DiMichele.
I already know what many of you will say, and that’s okay. I know where you’re coming from, and we’ve had this discussion many times.
If you own your home, and aren’t going to move, then you’d much rather see the existence of land transfer tax than an across-the-board increase in property taxes, since only the latter affects you.
But you can’t ignore the fact that, before 2008, most first-time buyers didn’t pay land transfer tax. And now they do, and through the nose.
I laugh when I see the “sliding scale” that shows the first tier of tax applying to the amount between $0 and $55,000. I mean, really? How out-dated is this? It’s such a slap in the face, and while I realize that some properties across Ontario do cost a fraction of what those in the GTA cost, we need to realize that the GTA is the engine that keeps the province running. It’s where an overwhelming majority of people live, and thus where an overwhelming majority of the provincial land transfer tax will be coming from.
During last year’s federal election, there was so much talk about “helping first time home-buyers,” but with the First-Time Home Buyer’s Incentive essentially being a flop (I haven’t had a single person ask about this, by the way), couldn’t the other levels of government look at the land transfer tax(es) as an actual way of helping buyers?
Since the election, it seems as though there have been more measures to punish first-time buyers, rather than to help them. Most of the changes through the CMHC, while perhaps not directly targeting first-time buyers, surely affect that segment the greatest.
Should the “average” first-time buyer in Toronto really be expected to pay over $20,000 in transfer tax?
Tell me you’re a Liberal, or a Conservative. Tell me you’re a die-hard NDP’er, or that you’re a happy supporter of the Green Party. But tell me that this really shouldn’t be a party-specific debate.
While I understand that a true “fiscal conservative” is more likely to oppose this tax, I just don’t think this is a political issue as much as essentially every issue is, like wearing face-masks, south of the border.
Can we not appeal to common sense here?
In 2018, the City of Toronto collected a whopping $818 Million land transfer tax, which represented 6% of their operating budget.
It’s impossible to replace $818 Million from the city’s bank account, but it can’t be ignored that before 2007, the city didn’t have this revenue, and yet they found a way to make the city run.
In July of 2007, Mr. Miller’s motion to bring the tax into effect was defeated.
In October of 2007, Mr. Miller’s motion passed.
The land transfer tax was expected to bring in $175 Million in 2008. Nowadays, we’re looking at almost a billion dollars.
Mr. Miller was going to bring this tax into effect, no matter what. And since then, the City of Toronto has continued to increase it, over and over again, each time they need to raise more revenue.
As we drive down the main drags of our neighbourhoods and see more and more stores and restaurants boarded-up or now featuring “FOR LEASE” signs, we would all probably agree that this isn’t the right time to be talking about cutting taxes. The timing of TRREB’s press release and lobbying of the government shows just how tone-deaf and out-of-touch they are, but that’s nothing new.
At the same time, if not now, then when?
There’s probably never a good time, and that’s the problem.
People talk about others “being left behind,” especially as it pertains to the younger generation, and/or the proverbial have-nots.
So what’s wrong with discussing a better way for those folks to get ahead in the real estate market?
I don’t think a discussion about decreasing land transfer tax for first-time buyers has to fall into the “fiscal politics” category. I think it could just as easily be labelled “human interest,” could it not?Back To Top Back To Comments