TREB Says Land Transfer Tax Should Be Scrapped, Not Capped

TORONTO — In light of a proposal to cap the Toronto Land Transfer Tax, being considered by the City of Toronto’s Executive Committee, the Toronto Real Estate Board (TREB) is restating its strong belief that this tax should be phased-out.
“The Toronto Land Transfer Tax should be scrapped, not capped,” said Ann Hannah, President of TREB. “We are encouraged that the Executive Committee is considering action on the Land Transfer Tax, but, not only is capping not enough to correct the problems that this tax is creating for our City, it could make this bad tax even worse.”
In a letter to the Executive Committee, TREB has pointed out that, based on reported details, the proposed capping scheme could create considerable uncertainty for home buyers, if, as proposed, surpluses in Land Transfer Tax revenue are dedicated for reducing the tax in the subsequent year. Under this scenario, home buyers could be artificially encouraged to delay home purchases, thus interfering with the natural operation of the real estate market.
Research has proven that municipal land transfer taxes have a negative impact on home sales. The C.D. Howe Institute recently released an analysis of the Toronto Land Transfer Tax, which shows that this tax has hurt Toronto’s economy by dampening home sales by 16 per cent. This is supported by a recent poll conducted by Ipsos Reid, which found that 77 per cent of GTA residents planning to purchase a home in the next two years are more likely to purchase outside Toronto specifically to avoid paying the Toronto Land Transfer Tax. This poll also found that nearly seven in ten Torontonians, 68 per cent, support plans to eliminate the Toronto Land Transfer Tax.