July 6, 2021
Toronto Should Cut, Not Hike, Land Transfer Tax
- Toronto City Council should reduce rather than increase the land transfer tax (LTT) on high-end homes.
- Authors Benjamin Dachis, Bev Dahlby and Jack Mintz find any move to increase the tax would have a high economic cost because the LTT discourages people from moving to more favourable locations or housing when they can do so.
- When combined with the provincial LTT, the authors find that the current combined rate of 5 percent on homes in excess of $2 million is highly distortionary and is close to the rate that maximizes total LTT revenues for the city and province combined. Any further increase in the top LTT rate by Toronto, while increasing its own revenues, would reduce the government of Ontario’s LTT revenues by more than Toronto’s.