The current state of the economy requires every level of government, including the City, to take action,” said Maureen O’Neill, President of the Toronto Real Estate Board (TREB). “Not only does the City need to consider what it can do to help, but also what it is already doing that is hurting the economy. Clearly, the Toronto Land Transfer Tax is hurting the economy.”

 TREB is telling the City that the re-sale housing market is critical to Toronto’s economy and that the best action the City can take for this sector is to roll back the Toronto Land Transfer Tax. A recent study conducted by the C.D. Howe Institute and Economics Professors from the University of Toronto determined that the Toronto Land Transfer Tax is having a significant impact on Toronto’s real estate market, reducing housing sales by 16 per cent and values by 1.5 per cent in 2008 alone.

 A separate recent study, conducted for the Canadian Real Estate Association, determined that every re-sale housing transaction in Ontario generates over $33,000 in economic spin-off activity on things like renovations, furniture, and appliances. Based on these studies, TREB estimates that the Toronto Land Transfer Tax has already cost the City’s economy about $200 million in consumer spending. The Tax has also reduced Toronto home owners’ net worth by $3.5 billion in lost equity when selling their homes, with less credit available to them from equity lines of credit, thereby reducing spending and economic activity.

“Buying and selling homes is crucial to our economy; thousands of jobs depend on it,” said O’Neill. “It was encouraging to see the City recognize this for new housing with its recent action on development charges, and we hope it will do the same for re-sale housing by reversing destructive tax policies, like the Toronto Land Transfer Tax.”

According to the study conducted for the Canadian Real Estate Association, one out of every 100 jobs depends on spending associated with re-sale housing transactions. This means that approximately 14,000 jobs in Toronto and 30,000 jobs in the GTA depend on re-sale housing transactions. TREB believes that, by impacting the real estate market, the Toronto Land Transfer Tax is risking these jobs.

 TREB is calling on the City to focus its efforts on options recommended by the Mayor’s Fiscal Review Panel last year.

“The Mayor’s Fiscal Review Panel made it clear that the City has choices other than taxes. According to the Panel, there are, literally, hundreds of millions of dollars in savings and innovative options available to the City,” said O’Neill. “Toronto taxpayers deserve to know what actions have been taken to implement the recommendations of the Mayor’s Fiscal Review Panel.”

Source: TREB (Toronto Real Estate Board)

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“The housing sector is one of the most significant parts of Toronto’s economy,” said Maureen O’Neill, President of the Toronto Real Estate Board (TREB). “Unfortunately, the study prepared jointly by the C.D. Howe Institute and Economics Professors from the University of Toronto shows that the Toronto Land Transfer Tax has had a negative economic impact, which TREB estimates to be $170 million in 2008.”

The study found that the Toronto Land Transfer Tax, which costs average Toronto homebuyers approximately $4,000 in addition to a similar amount for the provincial Land Transfer Tax, has reduced
sales of re-sale single-family homes (condominiums not included in study) by 16 per cent, which means approximately 3,500 lost re-sale transactions in the first year of the tax. If condominiums are included, REALTORS® estimate that the impact could be in excess of 5,000 lost re-sale transactions in the first year of the tax.

A separate recent study, conducted by Altus Clayton for the Canadian Real Estate Association, determined that every re-sale housing transaction in Ontario generates approximately $33,425 in economic spin-off activity on things like renovations, furniture, and appliances. This means that losing 5,000 re-sale housing transactions because of the Toronto Land Transfer Tax costs the City’s economy approximately $170 million in consumer spending.

“When people buy a home, they usually spend thousands of dollars on related things like renovations, furniture, and appliances. Thousands of Toronto jobs depend on this spending,” said O’Neill. “Any City policy that impacts housing sales has a direct impact on the City’s economy and jobs.”

With the City currently preparing a recommended operating budget for 2009, TREB is calling on City Council to roll back the Toronto Land Transfer Tax.

“REALTORS® have been clear that we believe that the Toronto Land Transfer Tax is unfair and now a study by respected economists is validating that view. Not only is this tax unfair to home buyers and sellers, but also to the thousands of people whose jobs depend on the housing sector,” said O’Neill. “City Council can, and should, show leadership by rolling back the Toronto Land Transfer Tax.”

REALTORS® are looking forward to opportunities to provide input to the City’s 2009 Operating Budget.

Source: TREB (Toronto Real Estate Board)

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If the City moves forward with the proposal, the average Toronto home buyer will pay another $4,200 in land transfer tax. That is a 100 per cent increase, and would give Toronto the highest land transfer taxes in Canada and the second highest in North America.

“A second land transfer tax discriminates against home buyers. The City doesn’t provide any land transfer related services, so this tax is just a way of forcing home buyers to pay for services for everyone. That, simply, is unfair,” said Dorothy Mason, President of the Toronto Real Estate Board.

TREB also pointed out that the proposed second land transfer tax is most unfair to those who can least afford it – people who have small down payments and, therefore, can only qualify for a mortgage by also paying for mortgage insurance.

“Many home buyers will have no choice but to take money from their down payment to pay this tax, which would mean extra mortgage interest and higher mortgage insurance premiums. For the most vulnerable, this means that the second land transfer tax will actually cost over $15,000. The City will literally be forcing people to take out a mortgage to pay a tax. That is unfair,” Mason said.

TREB also noted that Toronto residents and businesses can’t even expect that the new money the City collects from this tax will result in any improved services.

“The Mayor and City staff have admitted that the money the City takes from home buyers will be used to fill the holes in the City’s current budget, not to expand or improve services. It’s not fair that home buyers will be paying more for the same service”, Mason said.

TREB plans to continue opposing the implementation of a second land transfer tax in Toronto.

“A second land transfer tax will make the dream of home ownership more difficult to achieve. Toronto’s REALTORS® are protecting the interests of home buyers by strongly opposing the City’s proposal. Just in the last week, hundreds of REALTORS® and the public have sent emails to the Mayor and all City Councillors telling them that his tax is a bad idea. We plan to keep up the fight,” said Mason.

Source: Toronto Real Estate Board

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