Municipal Land Transfer Tax (MLLT)
Council candidates across Toronto are stating support in the elimination of the Municipal Land Transfer Tax (MLLT). It is a great campaign promise that was one of the policy platforms in the mayoral race in 2010, it has since not been reduced or eliminated. Why has it not been reduced, it is a necessary revenue tool Toronto needs to balance the operating budget.
The MLLT was not a "back-of-the-napkin" implementation. It was implemented in 2008 and stemmed from the City of Toronto 2005 Long-Term Fiscal Plan. On page 106, the report realized it lacked adequate revenue sources to fund it's municipal responsibilities. When we reflect back to previous budget years, Toronto needed a "one-time" infusion of cash from the Provincial Government. Long-term fiscal planning cannot be sustained by waiting cap-in-hand for help.
Since it as been implemented, Toronto has been able to better balance its operating budget, which is must do by law. The scare of having a crashing real estate market in Toronto has been a fear-mongering statement that has not been accurate. Toronto has one of the hottest real estate markets in Canada. If anything, the MLLT has allowed a bit of housing market stability by not having extreme sky-rocketing prices as seen in other parts of Canada. Housing prices are not affordable to many young families, the sad truth is that it could be worse.
One aspect that many residents may not realize is that if you aren't buying a home, you are not affected by this tax. This is good for the residents who have lived for decades in their homes who continually see their property tax increased by those who buy, fix and sell homes. The increasing property values of the neighbourhood has more monetary consequence to the stable home owner.
A great article by Matt Elliot from February 2013 titled "No good arguments for eliminating Toronto land transfer tax" is both insightful but also gives key facts and figures (including great graphs and charts) about the effect of the MLLT.
On September 25th, seven Ward 3 candidates had the opportunity to debate on Rogers Cable TV (airing September 27th at 4PM). The MLLT was a topic of discussion where I had to defend my reasoning for not eliminating the tax. One point I brought up was the math, the MLLT brought in $356M into the Toronto Operating Budget. That represents 3.7% (as shown on the left side diagram). I stated that if we were to eliminate this tax and to make it "fair" by spreading it to all home owners, we'd have to almost increase property taxes by 10%.
Property Tax: $3.762 Billion MLLT: $356 Million account for 42% of the 2014 Operating Budget.
The average resident is not going to worry about the exact details of where their taxes are going or how it is collected, they are going to worry about the total they have to pay. As unfair as the tax is, many residents of Ward 3 would feel a greater impact if the MLLT was eliminated and brought in equally to all residents.
During the debate, I also mentioned how an increase in the property tax will likely force senior residents to sell their home. They are already on a tight fixed-income budget that is struggling. There needs to be a real conversation about find ways to lessen the burden on our seniors who can least afford clawing of their income. As stated above, home owners who aren't buying and selling in Toronto are not paying this tax.
I fully support the MLLT as a revenue tool for Toronto, albeit there needs to be further study on altering the funding formula to take into consideration inflation. It is not perfect and does put an undue expense on home buyers.
Many have said that they would find savings in the budget, that is another hard notion to believe. A report by Institute on Municipal Finance and Governance found:
Toronto has a REVENUE problem, not a SPENDING problem.
My opponents continued to direct the need to create revenue from the developers of new developments in Toronto. I agree that many developers are not contributing enough to the city in regards to increased spending on infrastructure upgrades and community building. A better system for building a "community" was previously discussed in the OPEN HOUSE I attended in March on the Development Permit System. Even with a more functional permit system, creating the right communities, the MLLT is still necessary.
One last point that I did make during the debate is the need for addition ways to find revenue. The report listed above about revenue vs spending did have an interesting chart about possible revenue streams. Would any of these taxes work in Toronto, would it replace the burden from home buyers to other specific demographic?
I support the MLLT in its current state and will not vote to eliminate. Provide a realistic plan to supplement the revenue that is sustainable, I am willing to change my view.
Election promises are filled with good intentions, they also need to be founded on solid factual data. Don't be fooled by a promise that many listened to in 2010, stay informed and vote accordingly.