Vaughan, Ont., Oct. 28, 2024 (GLOBE NEWSWIRE) -- The Residential Construction Council of Ontario (RESCON) is pleased that the federal Conservatives have announced plans to axe the federal sales tax on new homes sold for under $1 million if they are elected.
“We commend Opposition Leader Pierre Poilievre and his party for putting forward this plan to remove the GST and encourage the provinces to do the same as it will save buyers tens of thousands of dollars on the purchase of a new home,” says RESCON president Richard Lyall. “Builders have been urging the federal and provincial governments to remove the sales taxes to bring down the cost of new housing and spur construction of residential development.
“Taxes on new housing in the Greater Toronto Area, for example, are the highest in North America and have combined with other factors to push the cost of new homes beyond affordability for many, especially first-time homebuyers. This move is a step in the right direction.”
For houses valued at or below $350,000, the federal government presently provides a 36-per-cent rebate of the total GST paid to a maximum value of $6,300. The rebate is gradually phased out for houses valued between $350,000 and $450,000 and no rebate is available for homes valued at $450,000 or more. Under the Conservatives’ proposed plan, the entire five-per-cent GST would be removed on homes sold for under $1 million, for a maximum tax savings of $50,000.
The tax cut would save $40,000 on an $800,000 home and reduce mortgage payments by $2,200 a year. According to the Conservatives, it would also spark 30,000 extra homes being built each year, which would generate more income for construction workers and businesses, and $2.1 billion of revenue for government.
High taxes are one of the main reasons for the housing supply and affordability crisis. Reducing the sales taxes would significantly lower the cost of new housing and thereby enable builders to build homes that people can afford.
The tax burden on new home construction is far too high. A report done last year by the Canadian Centre for Economic Analysis found that the tax burden on new home construction is two times higher compared to other sectors of the economy. Taxes on the purchase of a new home have climbed massively from about 24 per cent in 2012 to 31 per cent today.
“These taxes are ultimately passed on to new home buyers,” says Lyall. “Buyers must finance these costs and pay significant interest on the taxes included in the total price. This results in thousands of dollars in additional interest costs over the term of a typical mortgage. The tax burden is preventing many people from buying a new home and many are leaving our cities. The plan put forward by the Conservatives is forward-thinking and should help restore balance to the market.”
RESCON is the province’s leading association of residential builders committed to providing leadership and fostering innovation in the industry.
