Ontario Housing Minister Paul Calandra showed support for Conservative Leader Pierre Poilievre’s proposal to eliminate the federal GST on homes priced under $1 million.
“When we saw [a] GST cut on purpose-built rentals, we saw an explosion of purpose-built rental construction in Ontario. It works,” Calandra told QP Briefing.
“And it is something that I’m very excited to talk to federal Conservatives about."
"When I’ve talked to industry leaders, they’ve said that this policy, more than anything else the federal government is doing, will help unleash housing across the province.”
Poilievre recently proposed eliminating the GST on all newly built homes under $1 million. He argues this tax break would help homebuyers, while also pressing provinces to follow suit with cuts to their sales taxes on new homes.
In a recent letter to provincial leaders, Poilievre asked the premiers to match his proposed GST cut with similar measures on the provincial side.
At the federal level, the Goods and Services Tax (GST) is a five per cent tax applied to almost all goods and services, including newly built homes. This tax becomes substantial on houses valued above 450,000.
The federal government offers a partial GST rebate, but only for homes under $450,000, which in housing markets like Ontario’s, where homes often exceed this price, buyers find themselves ineligible for any rebate at all.
Housing expert Mike Moffatt said that this policy results in buyers of new homes in many urban areas facing the full five per cent tax, on top of Ontario’s provincial tax (PST), which is wrapped together with GST in a 13 per cent Harmonized Sales Tax (HST).
A spokesperson for Minister of Finance Peter Bethlenfalvy explained that Ontario’s portion of this tax, the PST, is of eight per cent, and is also eligible for a rebate, but only on the first $400,000 of a home’s value.
This rebate maxes out at $24,000 and doesn’t increase for homes over that threshold, Bethlenfalvy’s office explained.
This means that someone who is buying in the Ontario housing market, which has mostly homes priced above $400,000 will not benefit proportionally from the rebate.
For a new home priced at $800,000, for example, the GST alone would add an extra $40,000 to the buyer’s bill. This would be on top of the PST and the HST - at the end, the buyer would pay $104,000 in taxes, adding significantly to their mortgage payments.
Calandra said the province is willing to collaborate with any government “that wants to reduce taxes to get shovels on the ground faster.”
Calandra’s comments seem to suggest that the Ontario’s provincial government may be open to consider a similar approach. but the minister didn’t elaborate on whether the province’s decision will depend on what the federal government will do.
Housing expert Mike Moffatt said Poilievre's initiative is “bold” and that it would boost housing affordability and stimulate more construction.
Moffatt previously told QP Briefing that the Ford government will need transformative changes to make a real impact on housing, and the province might still introduce a spring budget with some significant housing measures.