If you are one of a number of Manitobans upset or wondering out loud why our land transfer tax is so high and have requested that Manitoba Finance Minister Stan Struthers respond to your concern, you may have already received a letter from him that speaks about education property tax credit relief and dealing with the requirement for more money to address the increased frequency of major flooding. Without getting into the contents of the entire letter, a few points have to be contested.
On the whole matter of education property tax credits, you do not have to buy a house to reap the benefit of the current $700 education property tax credit. Instead of getting a reduction on your education property tax, as homeowners do every year, if you’re a renter, you get it back through your income tax return.
If that is the case, why is there not a provincial renters’ tax. What justification is there for levying such a high land transfer tax when buying a property, if you get an education property tax credit back when you own a home? There is no difference other than how you receive the $700 credit.
Of course, the proponents behind seeking meaningful land transfer tax relief for home buyers would never want to see renters be unfairly targeted. Proponents of land transfer tax reform simply want fairness to be applied to home buyers.
As has been clearly pointed out by the Education Finance Coalition, the group seeking reform of the land transfer tax, education is a core government service, as is health care, and should similarly be funded entirely through general revenues.
In another two years, seniors who own a home will not have to pay education taxes, but what about the rest of us? Claiming that an education property tax credit somehow benefits someone who has already shelled out for the $3,000 land transfer tax is difficult to swallow.
Another point is that many people will pay the land transfer tax at least once or twice over their lifetime.
But it could even be more than twice when you consider how many reasons there are to sell and buy another home. Search the Web for reasons why people sell their home and you may come across an article by Elizabeth Weintraub from the About.com Guide. It starts off by saying, “American home owners sell and move, on average, every five to seven years.” At first glance, this may seem too frequent a time period, but when she provides 15 main reasons people move, it is not all that farfetched.
Would it be much different in Canada?
For example, the need to purchase another home may occur due to a squabble with a next door neighbour, a job change, a personal relationship change (e.g., spousal break-up), the need to buy a bigger or smaller home, retirement, health problems, a lifestyle choice, etc. There really can be a myriad of reasons to sell or buy another home.
For the government to imply that you are fixed in place for many years once you buy your first home — and paid the land transfer tax — is just not true. Mobility is a fact of life.
Levying a high land transfer tax is ill-advised as it hinders an individual’s right to move in order to obtain a better life.
The reality is that many, not just a few homeowners, may have to pay Manitoba’s land transfer tax several times in their lifetime. Each time, it will cost them thousands of dollars that they could otherwise have put back into the economy by purchasing goods and services needed for their new home.
Let’s be honest and call the land transfer tax what it is — a cash grab!
The tax also inhibits one’s ability to purchase a home. By hitting you in your pocketbook, it makes your dream home seem to be a distant and less affordable reality.
To express any concerns you may have with the land transfer tax, go to 2muchltt.com and send a letter to Finance Minister Stan Struthers. If you receive a similar letter to the one referred to in this column, you may want to write the minister back and ask what his government is doing to make housing more accessible and affordable for Manitobans?