Municipal Revenue and the MLTT

In the 2014 Ontario budget, which will be introduced in mid-July, the government reaffirmed their commitment to upload the cost of social assistance benefit programs and court security and prisoner transportation costs off the property tax base. The 2008 Joint Provincial Municipal Fiscal and Social Service Delivery Review (PMFSDR) estimated that municipalities would see a net benefit of $1.5 billion per year by 2018. According to May 1st’s budget, “As a result of the uploads, municipalities are seeing over $1.5 billion in savings in 2014 alone, which is equivalent of nearly 10 per cent of property tax revenue in the province. These savings will continue to grow until full implementation of the provincial uploads by 2018”.

The budget also reiterated the government’s 2013 budget announcement to review options, “to ensure Ontario’s property tax system is fair, accurate and predictable”.

Most recently, in an interview with CTV Toronto, Premier Wynne indicated that the new Minister of Municipal Affairs and Housing would have to tackle the issue of allowing municipalities to raise taxes. With the exception of Toronto, municipalities in Ontario are limited to raising revenue through property taxes and user fees. The City of Toronto is unique, in that they were given expanded taxation powers under the City of Toronto Act, 2006. While the Act did not prescribe what tax the city could or should implement, the Act gave the city the authority to impose the Toronto land transfer tax.

Ontario REALTORS® understand that taxes are crucial to delivering social services all residents depend and count on. However, from provincial land transfer taxes to property taxes, Ontario home owners and home buyers already pay their fair share.

As a result of the MLTT in Toronto, the average home buyer in the city pays an average of $15,000 in municipal and provincial LTTs, upfront, every time they move. This may force many home owners to tolerate living in ill-suited homes for longer than they would have otherwise. For many other Torontonians, this increased cost creates a barrier to home ownership.

In addition, the MLTT has hurt the housing market and cost Toronto jobs. According to a study by the C.D. Howe Institute, the Toronto LTT resulted in a 16 percent drop in residential home sales. A study by Altus Group Economics Consulting found that since there were fewer real estate transactions the city lost $2.3 billion in economic activity as well as 15,000 jobs.

OREA’s GR team will continue monitoring any discussion on expanding municipal taxation powers and will continue to proactively work to prevent the spread of the MLTT to other Ontario municipalities.

For more information, please visit donttaxmydream.ca.

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Municipal Revenue and the MLTT