What is the Toronto Land Transfer Tax?
Simply put, the Toronto Land Transfer Tax is a tax on the dream of home ownership. It’s paid every time people like you purchase a home in Toronto, and it’s not small. The average home buyer in Toronto faces about $15,000 in land transfer taxes, which has to be paid in full before moving into their new home.
Why does it matter?
Because, together, we are building a great City, and it’s important, for all of us, that we get this right. The Toronto Land Transfer Tax is no way to build a great City, and here’s why:
It Makes Toronto Less Fair
In any given year, only about five percent of Torontonians move. These are average people, who move for different reasons: a young family with a baby on the way may need more space; aging seniors may need to change their lifestyle; a family break-up. The list goes on. It is unfair, and wrong, to expect these people to shoulder so much more burden in taxes than the other 95 percent of Torontonians, for no additional services.
It Makes Our City Services Less Reliable
Torontonians value their municipal services. To maintain those services, we need reliable and predictable funding. The Toronto Land Transfer Tax is far from reliable or predictable. The revenue it generates goes up AND down with the state of the real estate market. What will we do if real estate markets suddenly cool and Land Transfer Tax revenue drops sharply and quickly? If we want our City’s services to be truly reliable, we should end our reliance on this unpredictable tax.
It Makes Our City Less Competitive
Over the years, Toronto has succeeded largely because people want to live here. In fact, about half of all immigrants arriving in Canada choose to live in the Toronto region. Once they settle on the Toronto region, however, the choice between municipalities becomes less clear, and the Toronto Land Transfer Tax doesn’t help our City’s chances. That’s because Toronto is the ONLY City in the entire country, let alone the Greater Toronto Area, to have two land transfer taxes: the Toronto Land Transfer Tax, AND the provincial Land Transfer Tax. Choosing to live outside of Toronto means paying only once, instead of twice. Clearly, this puts our City at a competitive disadvantage for its most important resource: people.
It Risks OUR Economic Vibrancy
When people buy and sell homes, they create jobs for people. They hire movers. They have their new home painted. They renovate. They buy new furniture and appliances. The list goes on. In fact, studies have shown that about 40,000 Toronto jobs rely directly on this type of economic activity. By discouraging people from moving, the Toronto Land Transfer Tax threatens these jobs.
It Makes Our City Less Affordable
Toronto should be a City for everyone. Anyone who wants to live here should be able to. The Toronto Land Transfer Tax makes that more difficult. Even average middle-class people struggle with this tax, which adds about $6,000 to the cost of an average home in Toronto, and about $15,000 to the cost of an average detached home in Toronto. That’s money that has to be paid in full, upfront, before moving in. That’s not easy, or realistic, for many average people.
It Makes Our Government Less Accountable
As taxpayers, we all expect our hard-earned tax dollars to be spent wisely by City Hall. The Toronto Land Transfer Tax reduces City Hall’s accountability to taxpayers because it is hidden in housing transaction closing costs. It’s important, for our City’s finances, that City Council carefully considers their tax and spending decisions, and the best way to make that happen is for taxes to be out in the open so that all taxpayers know what City Council is doing.
It Makes Our City Less Green and Less Livable
We are all tired of the traffic congestion that plagues Toronto and the entire region. Not only does it affect our quality of life, but the pollution generated by automobiles is bad for our health and our environment. Reducing the amount and length of commuting between work and home is a key part of solving this problem. That means helping people to live close to their jobs. The Toronto Land Transfer Tax does the opposite by creating an incentive to live outside of the City, farther from Toronto jobs, where home buyers don’t have to pay a municipal land transfer tax.