TORONTO – As Toronto City Council prepares to examine a range of revenue tools that could generate much-needed municipal cash, Mayor John Tory insisted on Tuesday that now was not the time to increase land transfer taxes on high value homes.
“We have to be very careful in this regard,” Tory said. “Right now, we are coming out of a pandemic situation, which has been very difficult for a lot of people. “
The mayor’s executive committee was to examine the possibility of increasing the municipal portion of land transfer taxes on properties valued at $ 2 million or more.
City staff had updated their projections of potential tax returns in response to a request from council, examining how much city coffers stood to earn if the tax was raised to 3% or more on luxury properties.
In a scenario where a gradual increase was implemented on home values above $ 2 million, staff predicted that the levy could generate up to $ 30 million in additional revenue per year.
But a study released Tuesday by the CD Howe Institute suggested the move could have negative consequences for the economy at large.
“These types of taxes put sand in the wheels of the economy,” said Benjamin Dachis, director of public affairs at the institute. “They change the behavior of people.”
“These kinds of expenses lead a lot of people to decide not to buy a home. And when you decide not to buy a home, it comes at a larger economic cost. “
This cost could include a detrimental effect on provincial property transfer tax revenues, Dachis noted.
Real estate broker Andre Kutyan has argued the proposed $ 2 million threshold is arbitrary in Toronto’s booming real estate market.
“Most of the people who own a home or buy a home over $ 2 million are just average buyers and sellers who move into a market that they have been able to do so over the past few years,” said Kutyan at CTV News. Toronto.
“When an average single-family home in the 416 is $ 1.7 million, $ 2 million is only 17-18% more than that. So really you are targeting a segment of the market that is not really real luxury.
Municipal Land Transfer Tax has raised more than $ 6.4 billion since it was first implemented in Toronto in 2008.
City council will consider the full report at its July 14-15 meeting.