According to the C.D. Howe Institute, the answer is a resounding YES. A December 2008 C.D. Howe report compared sales in the 416 with surrounding 905 municipalities and found that the Toronto Land Transfer Tax (LTT) has seriously impacted Toronto’s housing market by reducing sales and lowering the prices of homes. In fact the LTT caused a 16% decline in the number of single-family homes sold after January 2008 while lowering house values by 1.5% or approximately $6,400 per house. The report also shows that because of the Land Transfer Tax people who would have moved are opting to stay instead, causing a significant slowdown in the market.

The report clearly states that the LTT has no advantage over an ordinary property tax. However it does create distinct economic disadvantages. Ordinary property taxes do not discourage mobility therefore it would have made more sense to raise property taxes to 10% in order to achieve the same additional revenue and not hurt the housing industry. Condos were not included in the study but it is has been approximated that if they were, 5,000 or more condo and home owners would opt not to move because of the LTT, and Toronto’s economy is suffering as a result. It’s not just the loss of the sale of the house that affects the economy. It creates a giant ripple effect. Every time someone moves house or condo it is estimated that they spend $33,000 on new purchases, renovations, and fees associated with the move.

Now that the C.D. Howe report is public knowledge, do you think that Mayor Miller is going to get rid of this tax or justify it?