Metro's Matt Elliott, formerly of Ford For Toronto, keeps the light shining on Mayor John Tory's city hall.
Do Toronto city council a favour and buy yourself a house
Almost 15 per cent of Toronto's tax revenue is tied to people buying homes — and that could be risky business, Matt Elliott says.
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If you’re a Toronto resident who wants to maintain or improve the state of city services, Toronto’s 2017 budget has a message for you: buy a house.
“But Matt,” you might be saying, “houses are ludicrously expensive.”
Which, yes, I know. That’s the point. Homes in Toronto cost a ludicrous amount of money, and because the city slaps a municipal land transfer tax on top of every single house purchase, city hall gets a ludicrous amount of money from every real estate transaction.
The city’s preliminary 2017 budget, currently working its way through the approval process before coming before Toronto City Council in February, bets big on this strategy.
Faced with a gaping budget hole and a staff report that contemplates cuts to things like childcare and libraries, the city’s budget committee has approved an increase to land transfer tax rates – the first increase since the tax was introduced in 2008.
It will add about $750 to the average homebuyer’s land transfer tax bill and represents an additional $77 million for the city. Add that to the existing pile of money the tax brings in, and the city is looking to bring in more than $700 million from real estate this year. That’s almost 15 per cent of all municipal tax revenue.
None of this is necessarily a bad thing. More money for the city and its programs is great. And I’ve never opposed the land transfer tax. Former mayor David Miller’s successful push to implement it greatly improved the city’s financial situation.
But every year the city becomes more and more dependent on this real estate tax to fund core services. And that concerns me for a couple of reasons.
First, it’s hard for the city to talk seriously about making Toronto housing more affordable when politicians rely on an ever-increasing housing market to fund basic city services.
Second, what if this massive growth just, uh, stops?
With the city budgeting like this, Toronto will quickly find itself in dire straights if the market takes a turn. Replacing just a quarter of land transfer tax revenue would require a residential property tax increase of about seven per cent.
Think I sound paranoid?
On Jan. 24, city councillors received a briefing note on the land transfer tax for 2017. Toward the end, there’s a graph showing provincial land transfer tax revenue since 1990. The text underneath notes that, historically, those revenues decline by more than 20 per cent every seven to nine years. Toronto’s land transfer tax is set to celebrate its 10th birthday next year.
I’m not saying we’re due, but, please, just to be safe, buy a house this year. Buy two. Buy five.
For the sake of your city, just don’t stop buying.