Recently the Ontario Liberal Government has voiced its desire to open up the Municipalities Act allowing all municipalities to levy a Land Transfer Tax on its residents or more accurately “buyers of property”.
Sadly all this tax seems to do is hide from the general public the lack of a proper Taxation audit that would show all levels to be poor guardians of the public purse. The problem with the Land Transfer Tax is that it is a band-aid solution. Rather than everyone bearing the brunt of a shortfall in funds or god forbid the Government exercising restraint, it looks to raise funds by taxing only one sector, Buyers.
The pro-argument says that Governments need money. I do not disagree but what about raising taxes on everyone equally so that the full tax base would pay for what the full tax base will benefit from…novel concept, I know.
I do understand user fees but what is the benefit to a buyer who is paying close to 2% to the Ontario government and then 2% to the municipality? Don’t forget that they will also be paying a newly generated property tax within the year to continue yearly. What does he get that his neighbour does not get?
There is a benefit however to the City of Toronto. It already has a LTT and that has led to some purchasers heading to the suburbs to escape the Land Transfer Tax. With no escape in site, there will be no advantage to moving to the suburbs and this might heat up the already hot Toronto Market. Time will tell...