Reforming the tax system to affect positive change for buyers
- As housing is a basic need, much like food, GST/HST should not be applied to new housing. If it is not completely eliminated, the GST/HST Rebate thresholds should at least be increased to better reflect today’s market prices. Housing affordability at one time benefited from the reduction in the general rate of the Goods and Services Tax (GST) from 7% to 5%. As a result of this reduction, plus the continuation of the GST New Housing Rebate, the actual rate of GST on new homes eligible for the full rebate dropped from 4.48% to 3.2%. However, rising house prices, especially in urban centres, mean many dwellings no longer qualify for the rebate because the rebate threshold has not moved up with house prices.
Increasing housing supply – additional recommendations
- Improve competitiveness of Canada’s communities by guiding with authoritative data and analysis integrated multi-governmental efforts to remove barriers to housing supply. Improved demographic data, more accurate housing stock data and a deeper understanding of the impact of regulation on housing supply is needed to support better decision-making by all orders of government.
- Show federal leadership, through the National Housing Strategy or other avenues, to help counter “Not-in-My-Backyard” opposition through public education by promoting “Yes-in-My-Backyard” for development geared to first-time homebuyers, purpose-built rental developments, and social housing.
- Ensure infrastructure investment is tied to plans that have proper density around transit nodes to promote affordability and maximum ridership.
- Develop metrics, then track and measure success (CHBA has developed such a system) for transit-oriented development.
- Ensure that non-transit investments are focused on core infrastructure.
- Ensure that federal land write-downs for family-oriented housing support mixed-income, mixed-use, complete communities.
- Construction costs of new rental housing and costs of renovating rental housing should be GST-exempt, since ongoing rental revenues will not benefit from Input Tax Credits nor entail GST collection.
- Allow deferral of capital gains and recaptured depreciation deductions upon disposition of existing rental properties if the entire proceeds of sales are demonstrably invested in equal or greater new purpose-built rental properties.
- Amend the federal tax regime and appraisal rules for accessory suites such as granny flats and laneway housing to avoid discriminating against new purpose-built forms of infill rental developments.
Canada Housing Benefit (Portable Housing Benefit)
- Ensure the timely implementation of the Canada Housing Benefit, which commences in 2020 and ends in 2028.
- Continue to expand activities that promote skilled trades for young people in the residential construction industry.
- Invest in employer-directed training and partnerships with employers and post-secondary educational institutions, especially colleges, to align with the needs of Canadian companies in the residential construction industry.
- Make changes to the immigration system to respond better and more quickly to labour shortages in residential construction through permanent immigration solutions.
International Trade Disputes
- Make improvements to current trade dispute mechanisms (dumping and countervailing duties) to limit the disruption that these processes cause on markets, and in particular the residential construction industry. They cause uncertainty in both the price and availability of materials used for Canada’s residential construction industry, which ultimately lead to higher costs for Canadians in purchasing or renovating their homes.
- Engage end users such as home builders and contractors in trade tribunal processes that affect residential construction. As learned through the trade tribunal process on U.S. drywall, involving end users was critical to the Canadian International Trade Tribunal’s ultimate recommendations and the federal government’s decision on final levies and reimbursement program, which all helped support better housing affordability.