Increases to Toronto Land Transfer Tax

The Toronto City Council has approved several revenue-generating measures to address the city's significant financial challenges, including a projected $1.5 billion budget deficit. Here are the key points from the decision:

1. Increase in Land Transfer Tax: The council approved an increase in the municipal land transfer tax rates for luxury homes valued at $3 million or higher. This tax increase is set to take effect on January 1, 2024. The tax rates will be graduated, with higher-value homes facing higher tax rates.

2. Removal of Cap on Street Parking Rates: The council voted to remove the cap on street parking rates, allowing rates to increase beyond the previous limit of $5 per hour.

3. Exploration of Additional Measures: City staff have been directed to explore several other revenue-generating measures, including implementing a foreign buyer land transfer tax, introducing a commercial parking levy, and increasing the vacant home tax from one to three percent.

4. Request for Provincial Approval: The council is seeking approval from the Ontario government to implement a municipal sales tax and/or receive a portion of the existing harmonized sales tax (HST) revenue. Such a tax could generate up to $1 billion annually for the city. However, implementing such a tax would require provincial approval and an amendment to the City of Toronto Act.

5. Differing Opinions: While these measures received approval, there were differing opinions among councillors. Some opposed the idea of a municipal sales tax, expressing concerns that it could drive shoppers to neighboring areas. Others argued that upper levels of government should provide more support to the city and suggested sharing a portion of the existing HST revenue.

6. Long-Term Financial Challenges: The city is facing long-term budget pressures projected to reach $46.5 billion in operating and capital shortfalls over the next decade. Mayor Olivia Chow emphasized the need for cooperation with other levels of government while also taking action to address the financial crisis locally.

7. Concerns About Impact on Residents: Some councillors expressed concerns that these tax measures, particularly the increase in the land transfer tax for luxury homes, may not significantly impact residents who are struggling with the increasing cost of living.