Rein in real estate speculators

Toronto Star, Saturday, May 19, 2012

There’s really only one way to make Toronto housing affordable for everyone — including young families. But the City can’t do it alone; the provincial government will need to help out.

Step one: the Ontario government would need to instruct the Municipal Property Assessment Corp.(MPAC) to ignore buildings and assess only the land under buildings.

Step two: Toronto would then apply the municipal tax to the lot values alone, also ignoring buildings.

The tax rate would need to be raised to make up the revenue lost by untaxing buildings — but remember, this is a revenue-neutral tax shift. The only difference would be people with larger houses on small lots would pay a little less, while people with smaller houses on large lots would pay a little more.

This tax system, called “land value taxation,” is used successfully in many jurisdictions around the world. Under LVT, Toronto property owners could improve, renovate, and expand without being hit by tax increases.

Also, holding vacant and under-used land (parking lots) out of its best use would cost more, so speculators would have no choice but to build now or sell to someone who would.

And, since land becomes more expensive to hold, developers would be encouraged to build more and larger units on less land to meet the needs of all at reasonable prices. Infill and building higher would result, providing needed housing without urban sprawl.

Frank de Jong, Earthsharing Canada, Toronto