Ottawa, ON-NDP Leader Pierre Poilievre is floating a new housing policy, pledging to axe the federal sales tax on new homes under $1 million in price if he is elected Prime Minister. This is against a backdrop of lofty robust prices across the country, as average-earning Canadians struggle to get into the real estate market.
Unlocking Home Ownership
Speaking at a press conference in Toronto, Poilievre blamed the current housing policies for standing in the way of first-homebuyers: the tax imposed by the government. “Canadians are working hard, but they still cannot afford to buy a home. It’s time to bring the dream of homeownership back within reach,” said Poilievre.
The GST, currently set at 5%, was the tax that the Conservative leader identified as costing a homebuyer thousands more in addition to the price of a new home. For example, on an $800,000 property, one pays $40,000 in GST alone. Take that away, Poilievre said, and this would amount to serious and much-needed relief for prospective buyers looking to buy into the market. Furthermore, it would spur the building of housing supply through providing developers with much-needed incentives to construct units which people can actually afford.
Who Will Benefit?
This would mean that only newly constructed homes, condos, and townhouses under the $1 million threshold would be exempt from tax. The policy is targeted at helping first-time buyers and middle-income families trying to get into homes in urban centers which have seen prices skyrocket.
This is about making homes affordable again. “We need to get the government out of the way and let Canadians build and buy homes without these burdensome taxes,” Poilievre said.
House Prices: A Growing Political Battleground
Housing affordability is emerging as one of the key issues in the lead-up to the next federal election. With skyrocketing interest rates, inflated prices for real estate, and home ownership out of reach for many, Poilievre’s promise taps into growing frustration among young Canadians-mostly in cities like Vancouver, Toronto, and Montreal.
But his plan will doubtless be attacked by critics who will say it will create a hole in federal revenues that governments have been relying on. The GST is a lucrative cash cow, and critics could say removing it from the sale of new homes would starve a budget that funds many other public services.
The Poilievre camp had dismissed these, however, arguing that the revenue lost would be replaced by an economic boost thanks to increased construction and home purchases. “This is not a cost – it’s an investment in Canadians’ futures,” he said.
Industry Reactions
Developers and real estate pros alike greeted the proposal with cautious optimism. “If it becomes reality, this policy could make a meaningful difference,” said a spokesperson for the Canadian Home Builders’ Association. “It would help to make projects more viable by lowering the overall costs for buyers and hastening new developments.
Still, some economists have noted that axing the GST would do little to fix problems at the root of the crisis, including strict zoning rules and a dearth of available land. They say that in the absence of fundamental reforms to boost supply, any tax savings could be sopped up by increased valuations in an ever-hotter property market.
A High-Stakes Promise
The promise by Poilievre to remove the federal sales tax from new homes under $1 million adds another layer of depth to the Conservatives’ developing campaign platform rooted in bringing down Canadians’ costs. It isn’t yet clear how the promise will be received by voters, but that it has been made at all shows the deep political resonance the housing crisis has today in Canada.
With the prices of housing continuing to outpace incomes, many Canadians will be watching closely as this policy develops in the hopes it may be just what makes homeownership more obtainable.
