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Conservative Leader Pierre Poilievre is pledging to eliminate the GST on new homes sold for under $1 million if his party wins the next federal election.
Poilievre made the announcement early Monday morning in a campaign-style video released online and held a media conference in Ottawa to provide more detail.
“The GST was not meant to apply to the basic necessities of food and housing,” Poilievre said Monday.
The Conservatives say the move would save Canadians $40,000 on a $800,000 house and would spur the construction of an additional 30,000 homes in Canada every year.
This announcement builds on a previous pledge by Poilievre to remove the GST on construction of any new homes with rental prices below market value.
Poilievre said that he is not concerned housing developers will refuse to pass on the savings.
“Businesses will pass on those savings because if they don’t, then buyers will buy from someone else. That’s what competition means,” he said.
Conservative Party Leader Pierre Poilievre announced a plan to remove the GST from new-construction homes under $1 million, if his party forms government.
Kevin Lee, CEO of the Canadian Home Builders’ Association, said he is also confident home builders will pass on the savings because they need housing to be affordable.
“If people can’t afford to buy, then builders can’t build houses and that’s why we don’t have as many housing starts as we need right now,” Lee told CBC News.
“Anything that’s going to lower the actual selling price of the house, which this would empirically, is going to help create more housing supply.”
Lee said the GST on new housing is eroding affordability and removing the tax is long overdue. “We’re definitely supportive of this kind of move,” he said.
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Poilievre said he would pay for the plan by cutting two government programs — the Housing Accelerator Fund and the Housing Infrastructure Fund — programs the Conservative leader described as costly bureaucracies.
The Housing Accelerator Fund, first announced during the 2021 election campaign and introduced in the 2022 federal budget, allocates $4 billion until 2026-27 to encourage home building in cities. In April, the Liberal government topped up the fund with an additional $400 million.
The fund’s objective is to build 100,000 more units across the country by providing municipalities with populations over 10,000 with money in exchange for streamlined land-use planning and development approvals.
“While Trudeau and the NDP Liberals build bureaucracy, I want to build homes. Common sense Conservatives will stop giving the money to bureaucrats and instead leave it in the pocket of home builders and home buyers,” Poilievre said.
NDP Leader Jagmeet Singh said the Housing Accelerator Fund is helping to get houses built — a number of agreements have been struck between the federal government and cities such as Ottawa, Toronto, Charlottetown, London and Vaughan, Ont.
“What about investors who want to buy multiple properties?” Singh asked in Toronto Monday. “That’s not actually a plan that is going to help a first time home buyer.”
Federal Housing Minister Sean Fraser said Poilievre’s announcement contains “some elements that make sense, but there are other elements that could be deeply troubling.”
“We want to be careful … that we don’t necessarily create a program that enriches someone that may be buying their sixth or seventh home through a corporate vehicle … and asking low income and middle income families to pay for that kind of a tax cut,” Fraser said.
NDP Leader Jagmeet Singh says a Conservative plan to cut the GST on new home purchases under $1 million could result in savings for developers, but says more needs to be done to ensure a housing market that works for people across income levels.
The $6 billion Housing Infrastructure Fund, announced in the last budget, will be rolled out over 10 years, starting in 2024-25. Its purpose is to accelerate construction by funding water, wastewater, stormwater and solid waste infrastructure to reduce the costs of building new housing, it does this through a number of measures.
Poilievre said he will cut the fund because it “hasn’t built any infrastructure or any housing.”
Lee said that if those two funds are cut, a future Conservative government would need to find a way to ensure that they are replaced with something that would also streamline land-use planning and development approvals in municipalities.
He also said the Housing Infrastructure Fund is important and he wants to hear how the Conservatives would support that infrastructure need if they eliminate the fund.
“We still need a means to provide infrastructure funding and so that will be an important part of every party’s platform, I expect,” Lee said.
The Canadian Real Estate Association (CREA) told CBC News that it “welcomes the Conservatives’ announcement,” which it says will make “home ownership more attainable for Canadians.”
“There’s more to be done to bring forward effective and solution-oriented policy that will build more housing supply and make it affordable and accessible for all Canadians,” CREA CEO Janice Myers said in an email.
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People buying new homes currently can get a rebate on the GST they pay of up to 36 per cent, to a maximum of $6,300, for homes valued at $350,000 or less.
For homes valued at more than $350,000 and up to $449,999, the rebate is gradually reduced until it reaches zero for homes that are $450,000 or more.
Depending on the province a house is purchased in, buyers may also be eligible for a rebate of the provincial sales tax.
In September of last year, the Liberal government announced it was removing the GST on new rental housing projects.
It said that decision means someone buying a two-bedroom rental unit valued at $500,000 would get a tax break of about $25,000.
Source: cbc
