Raise the Hammer
Well they've done it! For those of you following the Toronto municipal cash 'crisis', Toronto City Council has finally approved a new one percent property purchase tax levy.
The tax will work in the same way the existing provincial based property purchase tax formula works, with different tax bands levied depending on the value of the home. The idea, if you can really call it that, is that folks who can afford a more expensive house will pay proportionately more tax.
What a crock.
Proponents of the tax are citing the need to "invest" in Toronto's infrastructure and are blaming the usual suspects, i.e. the province, for downloading social service costs.
A Toronto Star web forum included comments from tax supporters who had the audacity to suggest that home buyers can easily afford this tax:
"I completely agree with the land transfer tax," writes Todd McCleave from Toronto. "If you can afford a $400,000-plus home in Toronto, then what's another few thousand dollars in taxes?"
What Council has failed to consider is that this tax, like the much-maligned property tax it seeks to offset, is regressive. Worse than that - it's just downright wrong.
Here are three problems to consider:
1. There's no accountability. Our property taxes, although woefully misaligned to our income and ability to pay, do at least provide us with an annual income statement outlining where our money has gone.
This new home purchase tax, however, just 'disappears'. Where will that money go? What are home buyers going to get for their investment? They will never know.
2. The payment is removed from the source. Why do our municipalities shy away from the idea of fee-based services? Although there are obviously a large proportion of municipal services which make sense to fund in a lump sum - social services, road/sewer renewal, street lights, street cleaning, and so on - there are a whole whack of services which we can, and should, pay for closer to the source.
Pay-by-the-bag garbage collection? Bring it on! Road tolls to fun transit improvements and road repairs? Makes sense! What other service sector industry would ask its consumers to fund a wad of services in such a murky, unaccountable fashion? None.
This property tax levy is a classic tax grab. Grab the money where folks can, theoretically, afford to pay for it, and don't bother giving them a meaningful receipt. You pay, and the money is spent somewhere. This is not a model we can work with.
3. It discourages residential growth. We are supposed to be encouraging dense, downtown living. Toronto, like all municipalities, needs to encourage growth and that growth includes new residents. Despite Mr. McLeave's contention (above), I can assure him and anyone else who is wondering, that this tax levy is a lot of money for prospective Toronto home buyers, and it will discourage a significant number of purchasers.
Toronto, more than many other municipalities, needs to do everything it can to attract homebuyers because a) the housing is already prohibitively expensive and b) downtown living is more cost effective (more municipal services closer to the point of consumption) and environmentally friendly than the surrounding GTA municipalities (i.e. the sprawling suburbs).
If we discourage Toronto housing growth - and this tax will - we are, in effect reducing our property tax base and encouraging growth in other regions (that's right - more sprawl).
Today's announcement makes some mention of toll roads and "other municipal income measures" to be introduced somewhere down the line. My big disappointment is that we are not there already.
By g. (anonymous) | Posted October 24, 2007 at 06:15:44
the other interesting thing with this tax is that its ability to generate revenue is directly tied to the health of the housing market. sounds good now with a booming market but what happens when things fall apart. where will toronto be then? and this tax grab doesn't even solve the budget problem they already have. these are good economic times, toronto should be rolling in money like... hmmm... the federal government. what's their secret?
By TM (anonymous) | Posted June 10, 2008 at 09:29:40
Wow, I made it onto a blog...
By toronto corporate housing (anonymous) | Posted February 20, 2009 at 03:00:34
the concept of collecting housing tax in
toronto corporate housingis very beneficial for the favour of growth of city and somewhere its feel lossy for the peoples which are going to buy or construct a new house.
By Madalyn Y (registered) | Posted March 16, 2009 at 02:22:16
This may seem good news to homebuyers. But of course, there are consequences on this matter. With tax season upon us, a lot of people are looking into what they can get tax credits for. To those first-time homebuyers out there, you should begin planning on now to take advantage of a new tax credit. Tax credits are some people’s ticket to a refund. Thankfully there are some new deductions you can take this year. You can deduct investment losses (up to a certain point), any funds spent on a job search, and some new credits if you (and your spouse, if that applies) make under $150,000. Paying the IRS more money than you already have to pay, especially when it seems the government doesn’t know what to do with the money they've given them, is frustrating. If you do the appropriate research, you’d be surprised what you can get tax credits for.s
By Gage_X (registered) | Posted September 04, 2009 at 02:42:13
I think this article makes sense. It would seem like when I buy one lollipop, I would pay 3 or 4 dollars for that. It would mean that whatever property we are enjoying, it is equivalent to payment. Where does our property taxes go by the way? There are far fewer insults that people are saddled with than property taxes. Property taxes in essence say that the government owns the land that you bought, and therefore, you have to pay them to allow you to buy what you want. They are bogus - but there's no getting rid of them, but discounts are possible. CNN Money recently highlighted the community of Alpine, NJ, the most expensive place to buy a house, and how to reduce the property tax bill. Here's how - dispute it. After an assessor does his job, 30 to 90 days after the assessment, dispute it if you can. It might save you more than an online cash advance or two on your property taxes.
By (anonymous) | Posted September 04, 2009 at 02:43:08
spam comment deleted by editor
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