Toronto City Council has released a report suggesting that the controversial Municipal Land Transfer Tax is acctually a very promissing revenue generator, projecting that they will actually collect more revenues than they had originally expected for this year.

TREB was quick to respond though, saying that the tax collection was neither reliable, nor fairly levied- and urges City Hall to take another look at their books to find a more reliable revenue stream-for example property taxes or user fees.

This isn’t just a taxation issue either, as Toronto Realtor Michael McCann. In his experience, it is weighing heavily in the purchasing decision process, and is potentially impacting financially- and geographically: “I work in Toronto's east end which includes east Scarborough and west Pickering.  If I show clients a $400,000 home in west Pickering, then we cross the Rouge River Bridge and show them the identical home in east Scarborough, the latter will cost them an additional $3,700 in taxes”

“To buyers, the Toronto Land Transfer Tax just becomes an additional factor in their overall decision making process on where to buy a home. Location is critical; however that short crossing of bridge can be either an additional expense or savings.  This tax can be a considerable weight on where to buy, depending on how tight a client's budget is.”

"What goes up, also comes down. For years, REALTORS® have been warning the City that the Land Transfer Tax is an unpredictable revenue stream because it is based on the number, and value, of real estate transactions, which are very difficult to predict in any given year," said Richard Silver, President of the Toronto Real Estate Board. "City staff's recent budget variance report proves how difficult it is to budget based on unpredictable revenue like the Land Transfer Tax. The unpredictability of the Land Transfer Tax might not be a problem when times are good, but what will the City do if real estate markets cool in the middle of its budget cycle and the tax brings in less than expected?"

Silver suggests that the tax itself is unfair, and actually creates more problems than solutions for the City’s bottom line.

"The first requirement for any tax should be that it is fair. The Land Transfer Tax is far from fair. It forces someone buying a home or business property to pay thousands of dollars more to receive the same services that others receive without paying this tax. That is simply unfair," said Silver. "On the other hand, property taxes and user fees are much fairer because they are paid by everyone who benefits from, or uses, City services. Property tax and user fee revenue is also predictable and reliable, unlike Land Transfer Tax revenue. Toronto residents also enjoy a very low property tax rate."

"One of the best ways for City Council to address its budget challenges is to grow the City's property tax base. Toronto is the only GTA municipality with a second land transfer tax, which puts the City at a competitive disadvantage. Furthermore, the City's business tax rates, which are much higher than the City's residential tax rates, are uncompetitive compared to other GTA municipalities. The Toronto Land Transfer Tax and high business property taxes create a double whammy that discourages growth in the City's property assessment base. Eliminating the Land Transfer Tax and making business property taxes competitive will help to attract new development and keep businesses in the City. Maintaining and growing the City's property tax assessment base provides long-term, sustainable and reliable tax revenue."