A proposed land transfer tax would be “really unfair” to home buyers in Yellowknife, says the president of the Yellowknife Real Estate Board.
“Yellowknife has half of the population base in the territory, and the highest real estate costs, so we would be bearing the brunt of that,” Rod Stirling said Thursday.
“Really, it would be a Yellowknife land tax.”
In his Feb. 8 budget address, Finance Minister Robert C. McLeod said in 2018-19, the government “will be developing detailed proposals” for a land transfer tax as one measure to offset some of the territory’s falling revenues.
To reduce the impact on lower-income home owners, said McLeod, the tax rate would be lower on homes of lesser value.
The finance department estimates a land transfer tax would bring in about $3.1 million a year, but the minister could explain in an interview Thursday how officials came to that figure.
A land transfer tax does not appear in the main estimates of the proposed 2018-19 budget.
On Tuesday, Kam Lake MLA Kieron Testart, pressed McLeod to answer whether certain parts of the territory would be taxed differently from others.
“I’ll put it plainly and not hypothetically,” said Testart. “Is this new tax going to disproportionately affect residents of the City of Yellowknife?”
To this, McLeod responded, “I’ll answer plainly: the tax may affect those communities that have higher real estate costs than other communities across the Northwest Territories.”
McLeod was not able to provide a time-line for the roll-out of a land transfer tax.
Talks still need to happen with other MLAs and members of the public, he said Thursday, and the tax may require new legislation.
“It probably won’t make it into this year’s budget,” he said.
Ideally, said McLeod, a land transfer tax would be implemented “toward the end of this assembly.”
McLeod said the new tax “may play a factor” in people’s decision to move to Yellowknife, but that it would not seem so burdensome if amortized over a 20-year mortgage.
Testart said Thursday that he is against a land transfer tax that would “affect Yellowknife primarily, and the other tax base centres generally, and the middle class entirely.”
However, the Standing Committee on Priorities and Planning, of which Testart is deputy chair, was supportive of the tax back in January.
In a Jan. 18 letter to McLeod obtained by Yellowknifer, committee chair Tom Beaulieu, the MLA for Tu Nedhe-Wiilideh, wrote that the committee was “surprised” not to see revenue from a land transfer tax reflected in the 2018-19 budget.
“Members support the implementation of this modest revenue measure,” Beaulieu wrote in the letter to which the other committee members are copied.
Testart said he was under the impression in January that the land transfer tax would represent a harmonization of existing fees, and that it would simplify the home-buying process.
He did not understand it to be a “revenue grab for government” that would “squeeze the middle class and those attempting to enter the middle class.”
“We aren’t political parties here,” said Testart. “We review things as standing committees and we’re all independent at the end of the day.
“Sometimes the correspondence committees send can be different from what individual members say.”
Testart said the picture he has of the land transfer tax is “quite murky,” but so far it seems contrary to the government’s commitment to reduce the cost of living in the Northwest Territories.
In 2017 there were 773 land title transfers in Yellowknife, said Stirling, but a number of those were re-registrations for reasons such as divorce, death and marriage.
The Coldwell-Banker broker estimates that about 600 of those title transfers represent actual sales.
Stirling said a land transfer tax could discourage people from buying homes in Yellowknife, which he called “Toronto of the North.”
Stirling wondered why the government would add to the cost of buying a home, rather than look for ways to make housing more affordable.
“We’re one of the most expensive cities in Canada, let’s not make it more expensive,” he said.
“Let’s make it attractive, not detract from moving here.”