Real Estate News

Municipal Land Transfer Tax costs Toronto billions

 

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Today OREA released research that shows a massive loss of economic activity in the City of Toronto and a corresponding loss of thousands of jobs due to the Municipal Land Transfer Tax (MLTT), imposed in Toronto in 2008.

The report, Economic Implications of the Municipal Land Transfer Tax in Toronto, conducted by Altus Group Economic Consulting, outlined the economic losses incurred by the City of Toronto between 2008 and 2013 including:

  • A loss of 38,278 resale home transactions
  • A loss of $2.3 billion in economic activity
  • A reduction of $1.2 billion in GDP
  • A loss of 14,934 full-time jobs
  • A loss of $772 million in wages and salaries

The study shows the MLTT has cost Toronto billions over the past five years – significantly more than the annual average of $270.2 million in revenue the city collected since 2008. The MLTT is applied to purchases on all properties in the City of Toronto over and above the existing provincial Land Transfer Tax (LTT). By increasing the total expense associated with housing transactions in Toronto, the tax makes buying a home in Toronto more costly. As a result, a significant number of housing transactions within the City of Toronto did not take place, which has, in turn, affected several aspects of Toronto’s economy.

Resale housing transactions across Ontario generate significant economic activity. The purchase and sale of homes generates fees to professionals such as lawyers, appraisers, Realtors and surveyors, as well as taxes and fees to government. In addition, homebuyers often purchase new appliances or furnishings and typically undertake renovations that tailor the new home to specific household requirements.

By repealing the MLTT, the City of Toronto could effectively increase the number of housing sales and purchases by an estimated 32,216 units over the next five years, resulting in the following economic benefits for Toronto:

  • An additional $1.9 billion in economic activity
  • An increase of $990 million in GDP
  • The creation of 12,570 new full time jobs
  • The addition of $650 million in wages and salaries

The economic study by Altus is being released in conjunction with new research from Ipsos Reid that revealed home ownership is a dream many Torontonians have but find difficult to fulfil due in part to the MLTT. Some of the study highlights include:

  • 85% of Toronto residents agree that the MLTT makes home ownership more difficult to achieve
  • 70% of 416-ers say that the MLTT would make them incur more debt in order to pay the tax
  • 72% say that the MLTT would make them spend less on renovations, furniture or appliances for the home they would purchase

The full Altus report and Ipsos Reid factum are available at www.donttaxmydream.ca


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