Today, Toronto City Council will vote on whether or not to increase the Municipal Land Transfer Tax (MLTT). If approved, the money from the latest hike will be put towards funding housing allowances.
However, the Toronto Real Estate Board is urging council to err on the side of caution when it comes to making this decision.
“TREB strongly believes that current housing challenges are largely a result of inadequate housing supply and we encourage City Council to focus its efforts on this aspect of the issue,” said TREB President Garry Bhaura in a news release. “We urge City Council to be cautious with the proposal to increase the Municipal Land Transfer Tax on higher-priced properties to fund the City’s Housing Allowance Program.”
TREB specifically applauded the implementation of the Housing Now initiative, which focuses on the development of more affordable housing. But that’s not the only development the city has in the works. The federal government announced earlier this month that they will invest $89 million into a 16-storey building with 259 affordable units in Etobicoke.
While the dwindling supply of affordable housing is at TREB’s top of mind, the board is also concerned that MLTT revenue is an unreliable source of funding. The reason? MLTT revenue is “subject to market fluctuations,” according to TREB CEO John DiMichele.
“City Hall is still dealing with the 2018 MLTT shortfall, which is expected to have finished 2018 with a deficit of almost $100 million,” DiMichele said in a statement. “For years, City staff have been advising City Council to rely less on the MLTT instead of more.”
Last year was the first time MLTT revenue fell short since the tax was imposed on real estate a decade ago, proving how economic changes can impact sales, and thus city funding.
Increasing the MLTT is a motion put forward by city housing chair Ana Bailao and councillors Joe Cressy and Brad Bradford. They hope to increase the tax cap from $2 million to $3 million to take advantage of the increasing number of high-priced properties.
“By creating a new tier of the MLTT, we could create hundreds of new housing allowances and take critical steps to addressing homelessness in our city,” councillor Cressy, who represents Spadina-Fort York, said.