EXCLUSIVE: City may add $75 fee to process tax payment

Toronto City Hall
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Last updated Jan 25,
EXCLUSIVE – The City of Toronto may begin charging some taxpayers a $75 “processing fee” to process their tax payments. The recommendation came in the form of a motion from Toronto’s Budget Chief Councillor Gary Crawford on January 18 at a meeting discussing how to balance the city’s 2016 operating budget.  The matter was put over, along with a number of other motions, for consideration by the Budget Committee on January 26.

The motion, which has gone largely unnoticed by City Hall watchers, reads as follows:

Motion 6 by Councillor Gary Crawford:

“That:

1. City Council authorize that, effective April 1, 2016, an administration fee be charged for processing each Municipal Land Transfer Tax transaction, to fully recover the City’s costs to process a transaction, with the fee to be set at $75.00 per transaction, excluding HST (HST is payable on the transaction fee).

2. City Council amend City of Toronto Municipal Code Chapter 441, Fees and Charges to add the new Municipal Land Transfer Tax transaction administration fee, and grant for the introduction of the necessary bill.”

This means homebuyers, who already face a $15,000 Municipal Land Transfer Tax bill for buying an average-priced detached home inside the City of Toronto, will have to pay a $75 fee so the City can process their payment!  Paying a fee to pay a tax.  It’s ludicrous.

Insult to Injury

Although he wasn’t available to appear on my Newstalk1010 program Sunday, I spoke with Toronto’s Budget Chief Gary Crawford to understand the rationale behind this motion. Here’s the business case, as he explained it:

The Municipal Land Transfer Tax is collected and administered by an arms-length provincial agency called Teranet which has always charged $75 for each MLTT payment. Up to this point, the City of Toronto has always paid the fees, recovering them from the taxes paid – at a cost of about $5 million per year. The Budget Chief’s motion would change this policy and, instead, recover the cost directly from the taxpayer.  Under this scenario, the Budget Chief can argue the $75 is essentially akin to a user fee.

I understand the argument.  I also understand that $5 million is nothing to sneeze at and homebuyers who are willing to pay $1 million for the average single family detached home, plus $15,000 for the MLTT, are unlikely to balk at the $75 fee.

However, I’m not buying it. What’s next?  There are costs associated with processing annual property tax payments as well – will we soon have to pay an administrative fee on those as well?  What about our water, sewer and garbage fees?  Will there be HST on the MLTT service charge?  Where does the tax on a fee for a tax payment end?

There are better ways to fix the city’s budget woes.  A fee by any other name is still a tax.