Pierre Poilievre’s Bold Proposal: Scrapping GST on New Build Housing
In a significant move aimed at addressing Canada’s ongoing housing crisis, Conservative Leader Pierre Poilievre has unveiled a proposal to eliminate the federal Goods and Services Tax (GST) on new build homes priced under $1 million. This initiative, he argues, will not only lower mortgage costs for Canadians but also expedite the homebuilding process across the country.
The Proposal Details
Speaking at a news conference in Ottawa, Poilievre outlined his plan, emphasizing that removing the GST on new housing could save the average Canadian homeowner an estimated $40,000 over the lifespan of their mortgage. For prospective buyers eyeing properties valued around $800,000, this translates to approximately $2,200 in annual savings on mortgage payments. Furthermore, Poilievre projects that this tax cut could facilitate the construction of an additional 30,000 new homes each year, significantly bolstering Canada’s housing supply.
“Our approach will also tackle bureaucratic inefficiencies. We intend to eliminate programs that the Liberals themselves acknowledge have failed to produce results in housing development,” Poilievre stated. To finance the sales tax cut, he plans to dismantle the Liberal government’s Housing Accelerator Fund and the Canada Housing Infrastructure Fund, potentially saving the government $8 billion over time.
Understanding the Current Tax Structure
In Canada, homebuyers are obligated to pay GST/HST when they purchase new homes directly from developers. Notably, the sale of used owner-occupied homes remains exempt from these taxes, establishing a distinction in the taxable status of new constructions versus existing properties. The Canada Revenue Agency clearly delineates this scenario, stating that only homes sold by builders are subject to GST/HST.
Industry Response
The Greater Ottawa Home Builders’ Association has welcomed Poilievre’s initiative, asserting that the removal of this tax would make new townhomes eligible for a full GST rebate. According to the association, government-imposed taxes and fees, including the HST, constitute roughly 20% of the average new home cost in the capital. Jason Burggraaf, the executive director of the GOHBA, remarked, “Increasing the GST rebate threshold will support affordability, increase housing supply, and restore fairness for current and future generations of homebuyers.”
Expert Insights
Mike Moffatt, a senior director at the Smart Prosperity Institute, described the decision to abolish the GST as an "incredibly bold measure" designed to restore housing affordability and stimulate construction. He noted that should this plan come to fruition, homebuyers could recoup up to $50,000 in GST paid on newly constructed homes, making them more financially viable options.
Moffatt confidently stated that the expectation of producing an additional 30,000 homes annually under this initiative is “a reasonable estimate.” By making new builds more attractive to consumers, the proposal could potentially unleash a wave of new construction activities.
Broader Context: Housing Initiatives and Market Challenges
As the housing crisis continues to dominate Canadian headlines, various stakeholders are emphasizing the urgency of finding practical solutions. The Liberal government has set ambitious targets, planning to construct nearly 3.9 million homes by 2031 to address the growing demand for housing, a plan that follows a broader strategy unveiled earlier this year.
However, complications arise from the recent decisions made by the Liberal government to reduce immigration targets over the next three years. Experts warn that this could inadvertently affect housing affordability by reducing the urgent need for housing — a concern voiced by Immigration Minister Marc Miller, who estimates that lower immigration targets might lead to a decrease in housing demand by as much as 670,000 units by 2027.
Conclusion: A Path Forward
Pierre Poilievre’s proposal to scrap the GST on new build homes represents a significant shift towards addressing Canada’s housing challenges. As the nation grapples with unprecedented demand and affordability issues, his plan is poised to spark discussions across political lines and among industry leaders. Whether this bold measure will lead to tangible improvements in housing supply and affordability remains to be seen, but it undoubtedly sheds light on the pressing need for solutions in a rapidly evolving market.
As the possibility of change looms, Canadians are left to ponder how these proposed reforms could reshape the landscape of homeownership in the years to come.
