2 weeks Ago By [email protected] (Alex Ballingall)
OTTAWA—A future Conservative government would scrap two multi-billion federal housing programs the party argues have failed, to help pay for a new tax cut that could cost $4 billion per year and is designed to boost home construction. Staging a campaign-style announcement in the suburbs of Ottawa on Monday, Conservative Leader Pierre Poilievre said he would cut the five-per-cent federal sales tax on newly-built homes that sell for less than $1 million, and that this would “spark” construction of an additional 30,000 homes per year. “Common-sense Conservatives will stop giving the money to bureaucrats (and) instead leave it in the pockets of homebuilders and home buyers,” Poilievre said.
Several housing experts welcomed the promised tax cut, and the Ford government at Queen’s Park signalled a desire to match it. Meanwhile, the federal Liberal housing minister accused the Conservatives of wanting to slash programs that are “making it easier to build homes,” and suggested it would be better to cater new policies to lower-income Canadians instead of delivering a broad-based tax cut that he suggested could benefit wealthy property owners. “He’s talking about cutting the programs that are actually going to deliver housing for middle class and low-income families,” Housing Minister Sean Fraser said.
Poilievre predicted his promised tax cut would cost about $16 billion in lost federal revenue over the next four years, but claimed slashing government “bureaucracy” and increased economic activity from new home construction would make up the shortfall. “This includes about ..
. $16 billion in additional revenue and lower costs to the taxpayer, which is about the cost of axing the sales tax on homebuilding over the next four years,” Poilievre said. Poilievre said the Conservatives could find $3 billion in unspent money by cancelling the existing $4.
4-billion Housing Accelerator Fund, which the Tory leader argued has failed to build homes despite the Liberals’ claims that the program will help construct 750,000 units through deals with municipalities across the country. Another $5 billion would come from scrapping the government’s Housing Infrastructure Fund, Poilievre said. That program, this spring and slated for launch next year, is meant to finance construction and upgrades to the infrastructure, like sewer and water systems, required for new home construction.
On top of that, Poilievre claimed the tax cut would generate government revenues through increased economic activity around homebuilding worth about $2 billion per year. Asked about Poilievre’s claim the two Liberal housing programs are failures, Fraser shot back that the accelerator fund — through more than 170 deals with the federal government — has helped prompt municipalities to rezone areas for greater housing density and cut red tape by adopting digital permits. “If you want to go back to municipalities and pull that money out, that would make no sense,” Fraser said.
At Queen’s Park, sources close to Premier Doug Ford said the Progressive Conservative government would “love” to match Poilievre’s tax cut and remove the eight per cent provincial portion of the harmonized sales tax from new homes under $1 million. Insiders, speaking confidentially in order to discuss deliberations with the federal Liberal government, said the provincial Tories have broached that change with Ottawa in the past without success. That’s because the Trudeau government prefers to earmark money toward programs like the housing accelerator fund that result in building affordable rental units as opposed to homes for purchase, sources said.
Fraser said Monday that the Conservatives were perhaps inspired by the federal government’s decision last year to slash the federal sales tax on new rental apartment construction, but said Poilievre’s new tax cut could give benefits to the “investor class” of property owners. While several housing industry players on Monday said they were awaiting more details of the Conservatives’ proposal, such as projected uptake, the vow was broadly welcomed. But Richard Lyall, president of the Residential Construction Council of Ontario, said the rebate has lost its effect over the years, in part because it was “never adjusted for inflation, as was supposed to have been the case.
” Housing policy expert Steve Pomeroy, a senior research fellow at Carleton University’s Centre for Urban Research and Education, said “adjusting the index is good tax policy,” noting how housing costs have grown over the decades since the rebate was introduced. In a city like Toronto, or even in the surrounding 905 region, buyers looking for detached houses are still “realistically never going to qualify,” said Building Industry and Land Development Association (BILD) executive Justin Sherwood. But he sees Poilievre’s tax cut as offering some relief to buyers of new condos in Toronto, as well as some stacked townhomes and other mid-sized offerings within the broader 905.
BILD has been among development groups calling for such a change in recent years, added association president David Wilkes. “Our position has been that it needed to be increased to a million dollars,” he said. “In the GTA, nothing is being sold that’s $350,000 or lower.
Right now, no one qualifies for the current rebate.” David Amborski, director of Toronto Metropolitan University’s Centre for Urban Research and Land Development and a member of the Ontario government’s recent housing affordability task force, was pleased to see the federal Conservatives turning an eye to the taxes and fees applied to new housing, which he sees as important to tackle unaffordability. He, too, sees the policy’s reach as somewhat limited, but welcomed the promise.
“I’m not sure it’s going to make a monumental difference — but I’d expect it to have some impact for people on the margins,” he said..
