Toronto's slumping real estate market has had little effect on revenue from the city's new land transfer tax, according to city manager Joe Pennachetti.

In fact, Pennachetti said in a news release issued late Tuesday, the city is doing so well that even if the real estate slump worsens in the last few months of the year, Toronto will hit its $155-million revenue target easily.

"Current figures are actually slightly ahead of expectations," said Pennachetti, "which should permit the city to stay on budget in the event of less sales activity in the real estate market for the remainder of the year."

So far, the city has raised $130 million from the land transfer tax, and is on target to raise the $20 million in vehicle registration taxes by the end of the year.

The city released the figures Tuesday in the wake of worries raised by Ward 37 (Scarborough Centre) Councillor Michael Thompson that the shifts in the economy might cut in to land transfer tax revenues.

"I'm trying to understand what our fallback plan will be if we're not able to realize the $155 million on the land transfer tax," said Thompson. "What are we going to do? Are we going to cut back services or lay off workers?"

Thompson has written to Mayor David Miller asking for a briefing on the city's plans, should the revenue be inadequate.

Numbers from the Toronto Real Estate Board (TREB), a long opponent of the land transfer tax, indicate that housing sales are continuing a long slump in Toronto.

"Sales are down 21 per cent, prices are down 15 per cent, and that's consistent with the month before and the month before that," said Von Palmer, TREB spokesperson. "There seems to be a trend and as much as we still think housing is a very good investment - the market is still somewhat healthy - but there's a lot of red flags. There's a consumer confidence factor, and you've got an industry where there's a punishing new tax."

He said that the board had always questioned the city's revenue projections for the new tax.

"During the debate, we knew the folks at city hall were using projections at the peak of the market," he said. "Well, last year was a record year for housing. So at the height of the debate they were using projections at the height of the market, which makes no sense."

Palmer said the board continues to urge the city to repeal the land transfer tax altogether, citing it as a possible cooling factor for Toronto home sales.

SV Development