I’m not especially interested in carrying the beer (or wine) for a bunch of people who can buy super expensive homes. But Mayor Olivia Chow’s proposal to hike the municipal land transfer tax, which lands at her executive committee next week, is forcing a certain type of ugly politics onto the city, with little to show financially, thus begging the question: why bother?
Chow yesterday released a motion proposing to hike MLTT rates on homes with a sale price of over $3 million, adding about a point of taxation on the sale price of all such dwellings. Chow made a similar move after she was elected. “In 2024,” her motion states, “[the new rates] impacted only 2% of home-buyers and brought in $138 million in revenue, taking pressure off working and middle class families. That’s revenue that keeps our city running.”
According to the Toronto Star, this incremental tax will raise an exceedingly modest $13.8 million in new revenue next year, which is a rounding error on a rounding error on the City’s $17 billion budget. To ground that figure further, there were just 182 homes in the City of Toronto that sold for over $2 million in 2024, according to the Toronto Region Real Estate Board (TRREB). Not a lot, and less this year, if re-sale figures continue to go south.
As I’ve argued in this space previously, the City has over the past decade-and-a-half become dangerously dependent on the easy and cyclical financial dividends of a frothy real estate market. David Miller, in his time as mayor, initially established the MLTT in 2008 as a means of diversifying Toronto’s base of revenues. It soon became a useful cash cow for a municipal council that refused to tax homeowners properly and fairly.
The more appealing game politically was to identify a victimless/constituency-free crime. Only people in the market for a new home were hit by the MLTT, so real estate prices in the city adjusted accordingly. Once the individual deals closed, the people stuck with the bill dissolved into their neighbourhoods, and never again had to advocate for a lower MLTT.
For years, City finance officials have warned members of council that such a tax holds out the risk of triggering the law of diminishing returns, especially if the property bubble bursts, as it now has. They projected future revenues cautiously — generating $751 million for 2023 and $880 million for 2024, respectively. The 2025 budget anticipated $986.1 million — up 12% from 2024 — and who knows what’s anticipated for next year (the budget process has only just started).
Now consider: average re-sale prices as of October, 2025, had dropped 7.2% compared to the year previous, according to TRREB, with the typical Toronto home still selling for a bit over $1 million. My prediction is that the City’s MLTT take won’t reach $880 million for next year, and definitely not on the strength of this new luxury tax. Whether those dollars will provide the social benefits Chow has promised to deliver with this hike (food programs for children) is completely imponderable. A heavy winter, a damagingly wet spring or even fuel inflation could easily wipe out those windfalls.
So if the case for this luxury MLTT isn’t persuasively about good policy or fiscal stability, then whatever could we be talking about?
The answer, of course, is election-year politics, and I’m not feeling all that much love for a tactic that pits Torontonians against each other in this way, at this weird economic moment. Over the next week, however, we’ll hear plenty of us/them, plus some political flatulence from a premier who lives in just such a dwelling (Ford will wade into this somehow). Whenever a leader opts for the politics of resentment, it’s definitely worth asking whether the cost is worth the benefit.
Everyone understands that Chow has vulnerabilities. She will be forced to tell Torontonians what they got when she ordered an 8.9% tax increase in year one. She has to explain why she has largely failed to stand up for Ontario Place, the Science Centre, and bike lanes — all of them under siege or already demolished courtesy of Doug Ford. She pissed off Team Carney early on over multiplexes. Yes, there was a big financial windfall with the Gardiner/DVP upload, and there’s evidence that the City has begun accelerating painfully slow construction and infrastructure projects.
What’s less clear is whether Chow has galvanized her supporters and the sloppy centre around a defining moment or policy, and someone’s going to fill that vacuum soon enough. There are plenty of political rumblings in the ether now — not just Brad Bradford, but the perennial rumours about John Tory and the appearance of some notably pointed social media campaigns. I’m guessing the re-election advisors around Chow are now casting around for the sort of clarifying ballot-question issues that help focus everyone’s attention.
The proposed luxury tax will provide some candy-floss-grade distraction. I suppose it gives Chow a cudgel with which she can demonstrate the social consciousness of her mayoralty (although honestly, there are plenty of far better examples, in my view, among them affordable housing). Yet the notion that we’ll get a fairer, more inflation-proof society by mopping up a mere $14 million — maybe — from a bunch of high-flyers simply beggars belief.
There are lots of external threats to the city’s quality of life. Perhaps the mayor should choose to foreground one of them as a symbolic opponent instead.
