Housing Can’t Be a Right If We Tax It Like a Luxury
My remarks to the Standing Committee on Finance
On Wednesday, October 1st, I will appear before the House of Commons’ Standing Committee on Finance (FINA) to provide testimony as a witness for its study of Bill C-4, An Act respecting certain affordability measures for Canadians and another measure. Here are my opening remarks to the Committee:
Thank you for having me today.
The First-Time Home Buyer GST rebate in Bill C-4 is a step forward, but it should be expanded to match the existing GST rebate and apply to all buyers of primary residences.
Taxes on new homes have priced the middle class out of the market. In 2004, I bought a new home in London, Ontario, for $168,000. Development charges, PST, and GST totalled under $16,000 after rebates. Today, those same charges exceed $110,000, a 600% increase. Add other fees, land transfer taxes, and interest on development charges, and the tax bill approaches the cost of my entire house at the time. In the GTA, it can top $300,000.
The golden rule is that a middle-class family shouldn’t buy a home worth more than three times their income. For a $100,000 household, that’s $300,000. When the taxes alone are this high, middle-class homeownership is out of reach. Sales prove it: GTA and Greater Golden Horseshoe pre-construction condo sales are down 89%, ground-oriented homes down 70%. If buyers can’t afford homes, they won’t be built.
Governments must cut input costs. Ottawa already acknowledged the harm of high housing taxes by rebating 100% of GST on purpose-built rental construction. It has also recognized it through a commitment to lowering development charges. However, when GST was introduced in 1991, a commitment was made to adjust the GST new housing rebate for inflation on a regular basis. That promise has never been kept.
Yes, tax cuts have fiscal costs. But inaction has bigger ones. A 2023 CANCEA report found that a $940,000 Ontario home generates $110,000 in federal tax revenue. Based on CMHC housing start forecasts, a decline in owner-occupied starts in the GTA is projected to cost the federal government $2.4 billion annually. Add Vancouver, and losses exceed $3B, more than the annual cost of Build Canada Homes.
And jobs are at stake. If this slowdown persists, as many as 100,000 housing jobs could be lost nationwide. When 15,000 auto jobs were at risk in the financial crisis, governments acted. We need that same resolve now.
Three points to leave you with:
Canada cannot double housing starts if they’re falling, as CMHC projects through 2027.
Inaction drains the revenue needed for housing programs.
If housing is a human right, we can’t keep taxing it like alcohol and tobacco.
I look forward to your questions.