Cities outside Toronto cannot charge land-transfer tax, Ted McMeekin says

Ontario backs down on municipal land transfer taxes, as they would add thousands to the cost of homes.

Homebuyers outside Toronto no longer have to worry about paying thousands of dollars in local land transfer taxes.

Municipal Affairs Minister Ted McMeekin shut down speculation Tuesday that cities and towns would be given permission to bring in their own such levy in addition to the provincial land transfer tax.

“There has been no call, at all, for a municipal land transfer tax, nor is there any legislation before the House that would allow this,” McMeekin said in the legislature’s daily question period.

Toronto will remain the only Ontario city allowed to charge a land transfer tax, he added, but offered to look at “what possibilities exist” for other new sources of revenue to help strained municipal budgets.

McMeekin’s surprise announcement followed a push against a local land transfer tax by the Progressive Conservatives and the Ontario Real Estate Association’s “don’t tax my dream” campaign, arguing it could push house prices further out of reach for many families.

“I’m glad the minister made the right decision,” said Conservative MPP Steve Clark (Leeds-Grenville), blaming the government for floating the idea earlier this fall and crediting a “grassroots” efforts with stirring up opposition.

McMeekin had said earlier this fall during consultations with local governments that any new revenue powers for them would be optional and did not rule out a land transfer tax.

The Association of Municipalities of Ontario said it wants local councils to have “discretionary authority” just like what Toronto enjoyed in levying its own land transfer tax to raise revenues for services, transit and other infrastructure.

“Ontario municipalities face significant fiscal challenges, just like Toronto,” AMO president Gary McNamara said in a statement after McMeekin’s announcement.

“In many communities, property taxes are poorly suited to the burdens that communities face. We all need to look at new solutions that will work.”

McMeekin suggested local governments could do more in the way of development charges as “a potential significant source of revenue.”

Clark and the Ontario Real Estate Association had warned home buyers would have to dig much deeper into their pockets if local land transfer taxes were authorized.

“This is a huge win for Ontario’s home owners and those who dream of one day owning a home,” said Patricia Verge, president of the real estate group.

In Toronto, the buyer of a $450,000 home pays a total of $10,200 in land transfer taxes: $5,475 for the provincial levy and $4,725 to the city. The city tax was added in 2006.

The Star

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