Decision Letter |
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Executive Committee |
Meeting No. | 33 | Contact | Kelly McCarthy, Committee Administrator | |
Meeting Date |
Wednesday, July 3, 2013 |
Phone | 416-392-4666 | |
Start Time |
9:30 AM |
exc@toronto.ca | ||
Location |
Committee Room 1, City Hall
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Chair | Mayor Rob Ford |
EX33.28 | ACTION |
Adopted |
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Ward:All |
Municipal Land Transfer Tax Reduction Options |
Committee Decision | |
The Executive Committee:
1. Referred the report (June 18, 2013) from the City Manager and the Deputy City Manager and the Chief Financial Officer to the Budget Committee to be dealt with as part of the 2014 budget process. |
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Origin |
(June 18, 2013) Report from City Manager and the Deputy City Manager and Chief Financial Officer |
Summary |
This report responds to a request from Executive Committee to report to the July 3, 2013 Executive Committee on potential options for capping, reducing (by 10%) or eliminating the City's Municipal Land Transfer Tax (MLTT) over four years, through reductions to applicable tax rates and increases to the first-time home buyer rebate.
Potential revenue impacts would depend on how much the rates in each tier of the MLTT tax structure are reduced, and whether the first time home purchasers rebate is amended. Based on the 2012 net MLTT revenue of $344.5 million, a 10% reduction of the MLTT is equal to $34.5 million (or 1.5% of residential property tax impact). A 25% reduction is equal to $86.1 million (or 3.6% residential property tax impact).
The MLTT has become a key sustainable own-source City revenue since its 2008 inception, generating almost 10% of the net tax-supported operating budget. Although the City is approaching fiscal sustainability, the current 2014 operating budget outlook requires an efficiency savings target of $197 million to $203 million, after an assumed 1.75% to 2% property tax increase and other user fee increases. Any reductions in the MLTT revenue would increase operating budget funding pressures and resulting expenditure program impacts for 2014 and beyond.
Staff are hesitant to amend MLTT tax rates before any consideration of the potential expenditure and program impacts. As a result, it is recommended that this report be forwarded to Budget Committee for consideration of the 2014 budget. |
Financial Impact |
There is no financial impact resulting from this report. However, if Council elects to amend the MLTT by-law, or even signal its intent to make specific by-law changes in the future, in-year real estate market reaction (i.e real estate sales) and MLTT revenue changes could result. Changes to the MLTT rates and or rebate structure could be considered as part of the City's annual budget process. |
Background Information |
(June 18, 2013) Report from the City Manager and the Deputy City Manager and Chief Financial Officer on Municipal Land Transfer Tax Reduction Options (http://www.toronto.ca/legdocs/mmis/2013/ex/bgrd/backgroundfile-59869.pdf) |
Declared Interests |
The following member(s) declared an interest:
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