Home is where the tax is
March 29th, 2007If the greedy mayor has his way Torontonians will be dinged with a second land-transfer tax
By Linda Leatherdale, Toronto Sun
David Miller, give your head a shake.
Adding a new tax on Toronto’s overtaxed homes is a bonehead move that could kill off our real estate - a key economic engine which already is showing signs of slowing.
The idiotic plan to tax homes twice with a land transfer tax is part of a greedy tax grab by Mayor Miller, who wants to tax everything from roads, parking and billboards to cars, booze, cigarettes and entertainment - to lift another $675 million from taxpayers’ pockets.
“Make no mistake, a second land transfer tax is nothing short of a home buying tax. Put another way, this would be like telling a consumer that they have to pay the GST twice every time they go to the cash register,” Dorothy Mason, the Toronto Real Estate Board president, wrote in a letter to Miller urging him to reconsider.
Bottom line is Toronto is already the most expensive city to buy a home, next to Vancouver. And affordability is already getting out of reach, with an average two-storey home eating up 49% of pre-tax income. You’ll fork out $2,776 a month to pay the mortgage, utilities and property taxes for a home valued at $446,917.
Adding another tax on homes will push more buyers right out of the market.
Mason points out Miller’s proposed 0.5% land transfer tax on an average Toronto resale home, priced at $378,000, will add $1,900 to the $4,200 cost of Queen’s Park’s land transfer tax - for a total tax grab of $6,100. That’s an additional 45% in land transfer tax.
But land transfer tax is only one of a host of taxes homes get hit with. (By the way, first-time buyers of brand new homes don’t pay the Ontario land transfer tax.)
There are property taxes, lot levies, even a GO Transit levy, and on, and on. Meanwhile, insured, high-ratio mortgages pay the PST, thanks to Bob Rae’s NDP - who once considered slapping a tax on gains made on principal residence, which are now tax free. And closing costs get hit with GST.
“A 0.5% Toronto land transfer tax would represent a 33% increase in closing costs,” Mason said.
In her letter, Mason asked Miller: “What added services from the City can homebuyers expect for paying a second land transfer tax? Taxpayers have the right to know what benefits they receive from taxes.”
Mason also points out that by taxing Toronto real estate twice, more buyers will be forced into surrounding municipalities, meaning more urban sprawl, more commuting, more traffic and more smog.
You can blame Premier Dalton McGuinty for this tax madness. By passing the new City of Toronto Act, he gave Miller sweeping powers to tax, tax, tax - instead of bringing some accountability to City Hall. With this act, Toronto is the only municipality allowed to hit real estate with a land transfer tax.
Lord help us when other municipalities get granted the same powers, instead of the Liberals doing the right thing in their budget today. And that’s start uploading the cost of social services off the backs of municipalities and onto Queen’s Park, where they belong.
What McGuinty and Miller must get through their heads is real estate is a valuable economic engine.
We all know the pain Ontario suffered after affordability was pushed through the roof in 1989 and the bubble burst, with the province slumping into a nasty deflationary spiral in the 1990s.
As the Toronto Real Estate Board’s Mason points out, the city’s resale market adds $2 billion a year to the economy, with every sale generating $27,000 in spinoff spending, like furniture, appliances and renovations.
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