Olivia Chow and John Tory challenged how and whether Doug Ford could deliver on a promise to phase out the municipal land transfer tax at a Tuesday morning mayoral candidates debate hosted by the Toronto Real Estate Board (TREB). The unpopular fee is one of a few key issues TREB is tracking in the election race to lead Toronto.
Moderator Gord Martineau, anchor at CityNews Toronto, began the debate by asking the candidates whether they would commit to municipal land transfer tax relief. As context, Martineau noted that Toronto is the only city in Ontario where homebuyers pay a municipal land transfer tax in addition to a provincial land transfer tax. The municipal land transfer tax, he added, costs the purchaser of an average Toronto home $8,000, up front. What’s more, he said, the C.D. Howe Institute found that the tax dampens home sales by 16 per cent every year.
Ford, in his opening remarks, had already repeated his previous vow to cut the tax by 15 per cent upon election, which also included a promise to cut the tax by 15 per cent in each of the following three years. He cited Altus Group Economic Consulting as having found that, between 2008 and 2013, the tax was responsible for a loss of $2.3 billion in economic activity, 14,934 full-time jobs and 38,278 home transactions, among other losses.
“I’m the only candidate that’s going to get rid of 15 per cent of the land transfer tax immediately,” Ford said, to applause and whistles from the crowd.
Indeed, neither Chow nor Tory would commit to eliminating or substantially reducing the tax. Both candidates criticized Ford’s promise to phase out the land transfer tax, questioning its credibility, and in particular, how he would pay for it.
“If we are to reduce the $300 million in revenue [generated annually by the municipal land transfer tax],” said Chow, “the city’s property tax will dramatically increase, and we cannot allow that to happen.”
She said that every $25 million of that $300 million represented a one-per-cent property-tax increase. The total amount would represent a 12- to 14-per-cent property-tax increase, she said.
“Every study has said that we have in this city a revenue problem, not a spending problem,” Chow said, “so if someone comes and tells you that they can find $300 million worth of saving, they are not being straightforward; they are not being honest.”
She said she would press the provincial and federal government to return more funding to the city, which currently only sees eight cents of every tax dollar collected.
Tory made a similar pledge to fight for more money from the higher levels of government. He also held up Mayor Rob Ford’s record as evidence that older brother Doug’s plan was unrealistic, pointing to the younger Ford’s unfulfilled pledge to abolish the tax during the recently ended council term.
“It hasn’t been done away with, not at all, not a penny,” said Tory, “and there’s a reason for that: the land transfer tax, as you’ve heard, brings in $350 million, and I don’t think you can … say you’re going to do away with it without expressly and explicitly spelling out where you’re going to get the money from to replace it.”
Specifically, Tory charged that Ford has only detailed how he would pay for the first 15-per-cent cut, and not for the subsequent 15-per-cent cuts in each of the following three years.
“Mr. Ford tells you where he’s going to get the money for year one, but then he goes on to say there’s more cuts coming after that, and you are not hearing where the money is going to come from,” Tory said.
Ford fired back saying that the reason Tory didn’t know was that Tory didn’t have the experience and hadn’t saved tax dollars. Ford said he would find the money through measures including outsourcing garbage collection east of Yonge Street, which he said would save $97 million.
In an Oct. 10 news release, TREB raised its concerns about the land transfer tax, which it characterized as “unfair and hurtful,” for council and mayoral candidates to consider.
“This is a huge cost that hits people when they can least afford it, like when they need to move because their family is growing or later in life as their lifestyle needs, and income, change,” Paul Etherington, president of TREB, said in the news release. “This is an important issue for many Torontonians, and we expect it will influence their voting decisions.”
In the Oct. 10 news release, TREB endorsed Ford’s commitment to phase out the tax; said it believed Tory understands the problems with the tax and hoped that he would articulate a plan for relief from the tax; and said it did not support Chow’s proposal to increase the tax (by one percentage point on homes sold for more than $2 million).
At the TREB event, the leading mayoral candidates also debated business and property taxes, transit and traffic, and affordable housing.
Election day is less than a week away, on Oct. 27.
Michelle Ervin is the editor of CondoBusiness.