It’s been no secret that Mayor Rob Ford has been trying to eliminate Toronto’s land transfer tax since he took office. It was one of the promises he got voted in on, and a battle that he faces almost weekly at City Hall. But getting rid of the tax that Ford says puts a strain on home buyers and owners will end up placing that strain on other parts of the city. And those strains were the focus of one of Toronto’s top bureaucrats, Joe Pennachetti, when he addressed his concerns in a report to the Executive Committee of the July 3 meeting.

“Staff are hesitant to amend the MLTT tax rates before any consideration of the potential expenditure and program aspects,” Pennachetti started in his report.

He continued on to say that while eliminating or even reducing the tax would be good for homeowners and buyers, the repercussions need to be greatly considered. The first he said, would be the potential revenue impacts. If the 10 per cent cuts that Ford wants were put into place, that would be $34.5 million in lost revenue for the city. And that would weigh greatly on not just owners and buyers in the city, but to every single resident within it.

And he says, the tax hasn’t been a total burden to home buyers.

“The growth in MLTT revenue has helped allow property tax increases to stay low, and has supported key fiscal strategies such as mitigating debt issuance through contributions to budget surpluses dedicated to capital,” he stated.

He also states that the tax has not had the cooling effect critics predicted when it was first introduced in 2008. And, anyone who was watching the market during the years right after the recession can certainly attest to that.

But, he says, start plans to eliminate or reduce the tax now and we actually may see a significant drop. As people hear about the tax elimination, they will put off buying that new home until a time when they know they can get it with significantly fewer taxes attached to it.

“Announcement of a pending tax decrease could delay purchase decisions and transaction closings until after the implementation date, resulting in delays of hundreds of millions of transactions and related tax revenues, to the detriment of market participants and City revenues,” he writes. “Therefore, any future decisions in a significant policy change should be made effective promptly…to avoid potential market distortion and revenue impacts.”