Denzil Minnan-Wong floats alternative to Rob Ford’s land transfer tax cut
In the latest indication of the difficulty Mayor Rob Ford faces in trying to cut the land transfer tax, one of council’s most ardent conservatives is now pushing an alternative proposal.
Councillor Denzil Minnan-Wong, a prominent member of Ford’s executive committee, has submitted a motion asking council to let city officials study options for imposing a cap on revenues from the tax — rather than reducing the tax rate by 10 per cent, as Ford says he will “soon” try to do.
Under Minnan-Wong’s proposal, council would set an upper limit on how much the tax could generate in a year. If the revenue collected in a given year were higher than the limit, council would reduce the tax rate for the next year.
“While some might not be satisfied that that is enough relief, I think it is a first, responsible step in telling taxpayers that we’re not taking any more from you,” Minnan-Wong said Wednesday. He said a cap could represent “middle ground” between leaving the tax untouched and cutting it immediately.
The proposal was questioned by Enid Slack, director of the University of Toronto’s Institute on Municipal Finance and Governance.
“If you want to reduce the land transfer tax, why would you not just reduce the tax rate, and say the tax rates are going down, so there is some certainty for taxpayers going forward?” Slack said. “With this method, they’re not going to know what the tax rate is next year.”
Revenue caps on property taxes have been used in about one-third of U.S. states. But a cap on revenues from the land transfer tax, which fluctuates with the unpredictable real estate market, would be significantly harder to manage successfully.
And Minnan-Wong’s proposed system, which could trigger an ongoing series of cuts to the land transfer tax rate, may well be no more palatable to council than Ford’s proposed direct rate cut, which is unlikely to pass.
The land transfer tax brought in $340 million last year. Though Ford ran on a pledge to scrap the tax entirely, even conservatives are reluctant to do away with a hefty chunk of the revenue the city needs to balance its budget.
Minnan-Wong said he prefers reductions in the property tax rate “for everyone” to reductions in the land transfer tax, which would benefit only people who are buying homes. He said he will support a land transfer tax reduction only if Ford identifies “responsible” ways to find the money without affecting important services.
“In the absence of an offset, you might find a strong level of resistance,” he said.
Councillor Gord Perks said he does not believe Ford can get even 10 votes to cut the tax, far shy of the 23-vote majority he needs.
“Both the mayor and Councillor Minnan-Wong like to talk about cutting the land transfer tax, and different ways of doing it, so they can appear to be fiscally conservative,” Perks said. “But both of them have run up against the very hard fact that Torontonians want the services that make the city work, and that those services cost money.”
