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JAY GOLDBERG: Carney’s new housing policies must not remain Ontario-specific

Much of the country is in a housing crisis and sales tax relief could make a major difference from St. John’s to Victoria.

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Canada is in a housing crisis. With housing starts slumping nationwide, and the federal government’s housing goals looking increasingly out of reach, bold policy action is needed to correct course and get Canada’s housing market under control.

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In recent weeks, the Carney government has partnered with the government of Ontario on two important initiatives that could make a meaningful difference in getting things heading in the right direction. The first major announcement came in the form of sales tax relief. Currently, governments charge sales taxes on newly built homes, a major disincentive for potential homebuyers to buy new builds.

JAY GOLDBERG: Carney’s new housing policies must not remain Ontario-specific Back to video

Last fall, the federal government announced plans to rebate the federal sales tax on newly built homes for first-time homebuyers. While this was an important first step, most buyers aren’t buying their first home, and they were excluded from the government’s rebate.

Recognizing this policy did not go far enough, the federal government, along with the Ford government in Ontario, recently announced plans to rebate both federal and provincial sales taxes on newly built homes for all homebuyers for a period of one year, beginning this month.

However, the plan to extend the break to all homebuyers is currently restricted to the province of Ontario.

Yet much of the country is in a housing crisis and sales tax relief could make a major difference from St. John’s to Victoria. Thankfully, the federal government seems to recognize sales tax relief ought to be expanded.

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“We are in discussions with all of the provinces and territories about taking down the GST for one year on new home purchases,” housing minister Gregor Robertson told Global News.

Robertson hinted that he expects provincial government to match the federal government’s move, which would mean every province, save Alberta, which doesn’t have a provincial sales tax, would have to give homebuyers a corresponding break.

That’s the right approach from the federal government, as removing all sales taxes from new homes should be the end goal. The federal government should also look at extending this policy beyond its current timeframe of just one year.

The second major announcement, again in partnership with the Ford government, came on development charges. The Carney and Ford governments plan to give Ontario municipalities $8.8 billion over the course of 10 years to cut their development charges by up to 50%.

This is yet another important policy move. In Toronto, for example, development charges, which are charges municipalities tack on to the cost of building a home to supposedly cover new infrastructure, average $180,000 per new home. Cutting that cost in half will make a meaningful difference in housing affordability.

Municipalities need nudge

But development charges don’t just exist in Ontario. They exist in every province and are driving up the cost of housing everywhere. If the federal government really wants to tackle the housing issue nationwide, it ought to work with other provinces to cut development charges across the country.

Municipalities have proven they won’t just do this on their own. They rely on development charges to fund municipal spending. And raising development charges is often much more palatable for municipal politicians than hiking property taxes or looking for other revenue sources.

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If the Carney government is serious about tackling the issue of development charges, it needs to work with governments across the country to slash them, not just the Ford government in Ontario.

The Carney government finally appears to be getting on the right track when it comes to housing policy that can truly start to tackle the housing crisis. Getting rid of sales taxes on new builds, if only temporarily, and tackling development charges are two important steps toward housing affordability. But, right now, both policies are restricted to the province of Ontario. To truly tackle the national housing crisis, the Carney government ought to expand both policies to apply nationwide.

Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center

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