Land Transfer T ax has Huge Economic Impact

21 May 2014
Armand Gilks

Land transfer tax causes ‘massive loss’ says OREA

adamr/freedigitalphotos.net

adamr/freedigitalphotos.net

New research released by the Ontario Real Estate Association (OREA) says the city’s Municipal Land Transfer Tax is causing “a massive loss of economic activity in the City of Toronto and a corresponding loss of thousands of jobs.”

The report, conducted by Altus Group Economic Consulting, says the economic losses incurred by the City of Toronto between 2008 and 2013 include 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 and a loss of $772 million in wages and salaries.

“The MLTT is bad for our economy,” says Costa Poulopoulos, OREA president. “For one, it kills jobs. With an unemployment rate worse than the national rate and even that of the province as a whole, the City of Toronto could have used those jobs. It also adds to household debt and pushes the dream of home ownership even further away.”

The MLTT is applied to purchases on all properties in the City of Toronto over and above the existing provincial Land Transfer Tax. 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, says the report.

The report reflects the fact that resale housing transactions generate significant economic activity. “This research proves that the MLTT is doing more harm than good where our economy is concerned,” says Poulopoulos. “It gets in the way of the economic spin-off that occurs when homes are purchased and sold. It should be repealed in Toronto and it should never be endorsed by the provincial government for any other municipality in this province.”

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, says the report. It would result in an additional $1.9 billion in economic activity, an increase of $990 million in GDP, the creation of 12,570 new full-time jobs and the addition of $650 million in wages and salaries, says the report.

The study was released in conjunction with new research from Ipsos Reid that says:

-  85 per cent of Toronto residents agree that the MLTT makes home ownership more     difficult to achieve

- 70 per cent of 416-ers say that the MLTT would make them incur more debt in order to pay the tax

-  72 per cent 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.