Olivia Chow vows to increase land transfer tax on luxury homes

Toronto mayoral candidate Olivia Chow is vowing to boost the land transfer tax on multimillion dollar homes as a way to pay for public transit and school nutrition programs.

Chow's proposed tax hike would mean that homes that cost more than $2 million will be subject to a 3 per cent land transfer tax, instead of the current two. The former NDP MP for the Trinity-Spadina riding said that the "fair" and "progressive" proposed tax increase would help generate upwards of $20 million a year.

"We need to invest in people now," Chow told reporters Tuesday morning at her campaign headquarters. "I would like to think that all progressive people, and there are many of them in this city, would rather see kids succeed in school."

In Toronto, homebuyers pay two taxes: a provincial one and a municipal one. The municipal tax is applied to purchases on all properties in the City of Toronto, and amounts to approximately $4,000 for the average home.

How the municipal land transfer tax works:

According to Chow, her proposed tax increase would affect approximately 500 home buyers each year. She said it will give an additional 36,000 students access to breakfasts and lunches, and help pay for public transit improvements.

"I don't believe that we can go into a campaign and say that somehow public transit will improve 10 years from now but you don't have to pay for that," she said. "We have seen that under Mr. Ford for four years and it is just not an honest way to go."

Ford has previously said that he intends to eliminate the land transfer tax if he is re-elected this fall.

"This is not the way to run the city. So why should we put the burden or a double tax on the homeowners for buying homes in the city," Ford said in July.

He also promised to scrap it in 2010 when he was running for mayor, but ultimately failed to fulfill his election promise. He blamed the lack of support from his fellow colleagues at City Hall for being unable to put a dent in the tax.