Board mounts powerful lobby against new fee, but critics say commissions are the real issue

October 19, 2007

Donovan Vincent
Tony Wong
Staff reporters

When he picked a land transfer tax as his main weapon of choice against a looming city budget crisis, Mayor David Miller landed a formidable opponent.

Just how the Toronto Real Estate Board became akin to the official opposition at city hall, powerfully influencing councillors to vote against the Miller plan, is a tale that goes as far back as last year, when the province was drafting the City of Toronto Act – the legislation that gave Toronto power to implement its own new taxes.

Unlike community groups that have only recently coalesced to defend the need for the land transfer tax, the real estate board has been in battle mode for a long time, screaming against it.

The real estate organization, along with partners such as the Ontario Real Estate Association, the Ontario Home Builders' Association and the Building Industry and Land Development Association, has conducted a massive campaign, including full-page advertising in the major newspapers, a website, and commissioning a poll asking voters what they think. (Perhaps predictably, it found 62 per cent opposed.)

As the clock ticks closer to next week's vote at city hall, the board is feverishly calling and meeting with councillors in a bid to block passage of the tax. They're especially targeting the undecided councillors. And many appear to be listening.

"They've been very active and effective,'' Councillor Denzil Minnan-Wong, a vocal opponent of the new tax, says of Von Palmer and Mauro Ritacca, the two real estate board spokespeople who have led the charge.

The real estate board, with 26,000 members and $23 million in annual revenues, is the largest organization of its kind in North America and a powerful lobby for the industry. It's widely agreed that the board's presence, along with other anti-tax groups, had a significant impact on council's 23-22 vote in July that deferred a decision on the land transfer tax until now.

Palmer says the board's message is simple: The land transfer tax, which parallels the existing provincial tax and is aimed at raising $300 million a year for the city, is unfair because it asks 5 per cent of taxpayers – those buying homes in a given year – to cover 70 per cent of the city's budget shortfall.

"If you're talking taxes, you need to spread it across the board,'' Palmer told reporters after the group's annual general meeting yesterday, attended by about 300 board members.

The organization has painted a doomsday scenario where the tax seriously hurts the Toronto real estate market – with buyers looking elsewhere, younger buyers blocked from buying a new home, and even environmental effects as buyers flock to the non-taxed 905 areas, encouraging urban sprawl.

"Well, they're obviously worried about it because it (the tax) creates a wedge between the buyer and seller, and if that happens, sales volumes will drop and it will impact commissions. That's what they're ultimately worried about," says Lawrence Smith, University of Toronto professor emeritus, who specializes in real estate economics and also manages a real estate portfolio with Toronto assets.

Board president Maureen O'Neill called the home buying tax "short-term thinking at its worst.''

She said the board has spent more than $300,000 on advertising and polling, $150,000 of that received from other organizations. "We have been throwing money at this – people are really upset."

Deputy mayor Joe Pantalone said the board played "dirty" in its campaign and has "zero credibility."

"Why haven't they adjusted those commissions? ... Prices are skyrocketing and they're making windfall profits.''

With files by Jim Byers