Yesterday at Queen’s Park, David Miller’s new tax proposal was defeated by a 23-22 margin.
This allows home owners to move homes without being severely penalized, and in the process keeps it affordable for first-time home buyers to enter the market.
The real estate market has been fueling the Toronto economy for years now. Why kill your cash cow? That’s a question for David Miller.
Not familiar with his proposal? Let me explain.
Land Transfer Tax is payable each and every time the registered property owner of a given residential property is changed. Simply put, when you buy a property, you get taxed.
The tax is implemented by the Province of Ontario and works on a sliding scale as follows:
- 0.5% on amounts up to and including $55,000
- 1.0% on the amount exceeding $55,000 and up to and including $250,000
- 1.5% on the amount exceeding $250,000 and up to and including $400,000
- 2.0% on the amount in excess of $400,000
Let’s work through an example so we may feel like we are in Grade-10 again:
My last condo sale in the Beaches was for $359,900:
- 0.5% of $55,000 = $275.00
- 1.0% of ($250,000 – $55,000) = $1950.00
- 1.5% of ($359,900 – $250,000) = $1648.50
Total: $3873.50
SO WHY DON’T WE JUST GO AHEAD AND DOUBLE THE TAX??
That is what David Miller was proposing.
He figures since the province is making so much money off the transfer of ownership on residential properties in Toronto, perhaps the city should as well.
I can just imagine the conversation that ensued when he decided to go after the tax, kind of like ordering off a menu at a restaurant:
“Land transfer tax eh? Wow, that sounds good. I’ll have some of that.”
“Um, but David, the province already collects land transfer tax and has been for decades.”
“Right. So….what is your point?”
Keep in mind, that the tax proposal set forth by David Miller was not to increase the land transfer tax; because it is charged by the province and thus he can’t increase what he doesn’t control or collect. His proposal was to implement the exact same tax on the exact same sliding scale, to be collected by the City of Toronto.
He wanted to effectively double the tax.
He wanted to charge us twice.
He wanted to rake us over the coals each time we make the largest, hardest, and most exciting purchase decision of our lives.
But twenty-three distinguished Toronto councilors disagreed with him, while only twenty-one others followed his lead.
After weeks of debate, hours of television coverage, and dozens of articles written on this subject, only one conclusion can be drawn from this: There are twenty-three more intelligent people working for our Toronto government than I previously thought…
wild-e-pinon
at 3:34 pm
While I enjoy reading your blog on a daily basis I find myself (almost surprisingly) taking issue with this post. I am not in favour of Mr. Miller’s proposal to double the land transfer tax, and as a perspective first time buyer it would surely affect how I approach a housing purchase.
What I take issue with is that your post decides to look at the issue without considering why the tax was necessary in the first place. It is never an easy decision for a politician to levy new taxes, because it wins few electoral friends. The harsh reality is that city of Toronto is running a massive deficit to the tune of $500M+. The provinces downloading of services to the city has made the economics of running Toronto untenable.
The provinces solution to ease the financial pressures of downloading was granting the city taxation rights. This is why we as Torontonians are going to suffer, because we are highly taxed by the province, and the province is not funding Toronto equitably. Toronto’s only way to stave of bankruptcy is to tax its citizens even more, fair or unfair this is the reality.
Another note, the bill was not defeated, but rather deferred until the fall. The hope being the city will be able to influence those running for provincial office this year to get Toronto more of its tax dollars. If this does not work, and there are many who believe the province will not be ponying up hundreds of millions of new money to the 416, Mr. Miller’s land transfer tax might be the only viable option to help the city out of its financial hole.
If Toronto gets no new money from the province, and if Mr. Miller’s bill fails a second time this fall, what will happen? A noticeable drop in “non essential” services we have come to expect and increased property taxes. An increase in property tax would be even more detrimental to the housing market then an increase in the land transfer tax.
Tough times in Toronto the good
David Fleming
at 3:57 pm
Thank you for the feedback!
I can’t disagree with your argument.
The city simply needs more money, and they have to get it somewhere.
I wrote today’s post while wearing my real estate agent hat, so its no surprise which side of this debate I took.
But even if my business weren’t being threatened, and even if I weren’t contemplating another residential property purchase that would be more heavily taxed, I would still argue against this new tax bill. Reason being, that the Toronto real estate industry is thriving keeps pumping more and more money into the economy. Think of all the people that benefit, directly or indirectly from a booming housing market: mortgage brokers, contractors and their tradesmen, landscapers, moving companies, private garbage collection, and the list goes on and on.
I said it before, I’ll say it again: “Why kill your cash cow?”
Slowing down the real estate industry with this new tax just doesn’t make sense.
Bikermom
at 10:15 am
Taxes, taxes… the way to get more money into city coffers is very old-fashioned: cancel the grants & funding given to non-essential special interest groups, especially Miller’s pets: multi-culturalism; fringe entertainment; tourist attractions etc…. ; as well as cutting frills at city hall — basically anything that has been funded in the past 5 years should be cut! Cut the duplication — areas that have other funding should not get it from City Hall too!! Put a Senior in charge, and you’d have a balanced budget, no debt, in a week!!