The 444 municipalities across Ontario will not be given the same power as the city of Toronto to impose a land transfer tax.
Municipal Affairs Minister Ted McMeekin says he consulted a wide range of groups following last year's local elections and found there was no call for a municipal land transfer tax.
He says local governments are looking for new revenue tools, but adds there will be no extension of a land transfer tax to any municipality beyond Toronto.
The Progressive Conservatives celebrated in the legislature after McMeekin's surprise announcement during question period.
Deputy PC leader Steve Clark had campaigned hard against giving cities and towns the ability to create a land transfer tax, which he warned would hit home buyers with a bill averaging an extra $10,000 on closing.
The Ontario Real Estate Association and several mayors also had warned the province that a land transfer tax would hurt home sales and the economy.