For the past few years, Toronto has experienced an overheated housing market where $400,000 buys you a pile of bricks in a dilapidated neighbourhood, where gardening involves picking out used condoms and needles from the wispy shrubs on your front lawn.
Home buyers were stretching themselves thin, leaving themselves house rich but cash poor. A groovy abode with no furnishings and Kraft Dinner for lunch. It’s like being in university without the five other dudes but still with the cockroach infestation.
In 2006, Mayor David Miller proposed two new taxes in lieu of jacking up property taxes. One of the taxes charges $60 per year for those who have a personal vehicle. Seems reasonable enough and if you can afford to own and operate a vehicle, you can pay $5 a month (cheaper than renting a movie at Blockbuster).
But it’s the new Municipal Land Transfer Tax that had some (read right-wing councilors and the Toronto Real Estate Board) howling. Granted, the MLTT ain’t cheap. According to the City of Toronto’s calculations, a home priced at $500,000 means the buyer pays $5,725.
But if you are shelling out half-a-million dollars, should you be put off by another $6,000? And how many times in the next few years are you going to be buying and selling a $500,000 home? It should be one time (or at least infrequent) pain and first time buyers can get a hefty rebate. The MLTT is much like user fees – something those on the right like to herald when it comes to vital services like health care (by the way, user fees for health care is an asinine idea and doesn’t work. You don’t encourage healthy populations by discouraging people from seeking care.)
In a stunning display of ignorance, the Toronto Real Estate Board (TREB) is prancing around with a study by the CD Howe Institute claiming that the MLTT is to blame for a cooling housing market. TREB goes on to say that the MLTT “hurt the economy”. Good. Screw the auto bailouts. Let’s get rid of the MLTT and all will be well.
The CD Howe says that the MLTT crippled household mobility. That is, fewer people moving from one house to another within Toronto. They go on to say that “the reduction in household mobility means that families will be more likely to remain in houses that are too big or too small, or are too far from their workplace or school.”
Really? Did CD Howe ask Torontonians why they may choose to stay in the same house? No, I didn’t think so.
Correlation does not equal causation. There are a pile of variables to consider. Even if this study was conducted before the full brunt of a worsening economy was felt, maybe Torontonians were getting tired of unaffordable housing and decided to stop house-hunting. This could indeed affect mobility. Multiple bids and blind bids and other techniques that smell slightly unethical, could have started to sour house hunters and caused them to wait for things to cool. Or they decided to stop listening to TREB urging consumers to get into the market now because there’s no investment like a house. Maybe they got sick of being told by banks they could afford more than they actually could, leaving many stretching their paycheques.
Predictably, the MLTT foes have cranked up the hyperbole. Councilor Denzil Minnan-Wong said the study is evidence of “how taxes are leading to the decline in the quality of life in the city.” For whom? For those who can afford a half-million-dollar spread? What about using those MLTT tax dollars for services that improve the quality of life for Toronto’s impoverished? Or maybe since many of Toronto’s poor don’t pay taxes, in the eyes of people like Minnan-Wong, they are barely citizens.