Please No: Why Oakville Should Not Even be Mulling a Land Transfer Tax

A Candidate's Perspective for Ward 5 Town Council

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Please No: Why Oakville Should Not Even be Mulling a Land Transfer Tax
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About the Author

Linda Nazareth

Linda Nazareth

An economist, author and broadcaster, Linda is also the Senior Fellow for Economics and Population Change at think tank The Macdonald-Laurier Institute. Linda lives in Oakville with her husband and daughter. She campaigned in the 2014 Municipal Election for Ward 5.

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Seriously, a municipal land transfer tax (MLTT) for Oakville? Great idea if you want to make it more expensive for new buyers to get into the market, cut into baby boomers’ nest eggs and generally slow down homebuying. Otherwise – well, bringing in a LTT is not such a brilliant policy move. Given all that, why on earth is Oakville’s current administration open to the idea?

Living as we do on the edge of Toronto (which introduced the MLTT in 2008), most of us know how a Land Transfer Tax works. It is basically a tax grab for governments, who get a cut when a home changes hands. In Toronto’s case, when a home gets sold, the new buyer has to cough up a tax of 0.5 percent on first $55,000, 1 percent on the portion between $55,000 and $400,000, and 2 percent on the value about $400,000. That means on a $600,000 home, a buyer would pay $5,725 in taxes.

You do not need a whole lot of economics training to know that taxes slow down a market. If Oakville were to bring in such a tax, buyers would look at their options carefully, perhaps choosing Milton or Burlington or Mississauga instead. Or maybe they would choose Toronto, since there is no tax advantage to being in Oakville. Whatever they go with, there would be a depressive effect on Oakville home prices.

As much as buyers would be hurt by a MLTT, sellers would be as well. Many Oakville homeowners are baby boomers, and their homes represent a large part of their nest eggs. At some point, they are going to want to cash in on those homes, perhaps moving to smaller spaces in Oakville or elsewhere. I cannot think of anything that would be less helpful to them than a policy move by Town Council that would effectively reduce their potential retirement savings.

Now, we do not know for sure that Oakville’s current Mayor Rob Burton and his (fully-endorsed by him) existing Town Council are going to bring in a Land Transfer Tax. Still, earlier this month at the Mayoral Debate Mr. Burton said that “_“We have to evaluate any new tax tools that the Province may give us, if they give them to us.” That slip of the tongue, however, is not what makes me believe that the incumbent Town Council may well look favourably on a tax grab tax like the MLTT.

What makes me think that the MLTT might be seriously on the table is the current administration’s unquenchable appetite for spending. Thanks to increases in the property tax rate, Oakville taxation revenues grew by over 27 percent between 2009 and 2013. Unfortunately, expenditures rose by nearly 24 percent over the same period. That has left Oakville’s budget in surplus, but not by a particularly comfortable margin. Under the circumstances, a shiny new tax probably looks good to a lot of people.

Here’s an idea: let’s figure out how to cut spending for a start, and maybe go from there to cutting property taxes. Crazy and radical I know, and maybe an impossible dream in Oakville. Introducing a new tax though? Surely we are all smart enough to know that that one has to be a non –starter, whoever gets elected on October 27th.

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Readers Comments (3)

  1. Linda Nazareth has a penchant for identifying the “economics” of overspending by Council(i.e. more taxes and debt) and its effect on the local economy.

     Reply
  2. jim abbot says:

    No land transfer tax!

     Reply



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