By Jack Mintz, February 18, 2021
Toronto City Council today considers a budget proposal to hike its land transfer tax (LTT) from 2.5 to 3.5 per cent on house transaction values in excess of $2 million. The proposal is projected to raise $18.7 to $26.7 million in 2021, a minuscule amount compared with Toronto’s $14-billion municipal budget. It would affect almost 40 per cent of Toronto sales this year (based on Feb. 12 listings).
Not surprisingly, the Toronto Regional Real Estate Board is on a rampage to defeat the proposal. A similar proposal died last year; nor is this one expected to pass. Whatever happens, however, a basic question needs to be asked: why would Toronto levy an LTT in the first place when Torontonians are fleeing to neighbouring municipalities that offer them more space?
Toronto’s municipal government is the only “winner,” extracting close to $800 million in LTT revenues in 2019, sharply up from $525 million in 2015 — although it fell back to about $700 million in last year’s pandemic recession. But the tax has drawbacks even for it.