Justin Trudeau’s government will announce this afternoon that it will eliminate GST on all construction of new buildings intended for rental use, according to a senior government source. Therefore, developers do not have to pay federal taxes on materials and labor to build this type of housing.
The government hopes that this measure will help reduce rental prices.
We understand that further action will be announced during a press conference by Mr. Trudeau following his caucus meeting at 4 p.m. The Prime Minister will also be accompanied by Federal Finance Minister Chrystia Freeland.
The NDP, which has called for the GST to be abolished on new rental housing, welcomed the decision. A party spokesperson told CBC that the Liberal government should have announced this initiative several months ago.
Eliminating GST on new investment in affordable rental housing was one of the Liberal Party’s promises in the 2015 election campaign. The Liberals abandoned this promise in 2017, arguing that studies show there are more effective ways to encourage the construction of affordable rental housing than through sales tax rebates .
On Wednesday, Mr. Trudeau said he wanted to work with cities to advance existing social housing projects whose completion is being delayed by overly complex or restrictive regulatory issues.
“We’ve made it clear that local regulations need to change and that local governments need to be more ambitious,” he said at a construction site where he announced an initial investment of $74 million from the fund to boost housing construction in London, Ont. to accelerate.
Remember, the country is currently suffering from a severe shortage of affordable housing, made worse by increases in inflation and mortgage rates, leaving large numbers of Canadians deprived of healthy, affordable housing. Many simply have no place to stay and are forced into homelessness.
The Canada Mortgage and Housing Corporation (CMHC), which released its 2023 housing shortage report today, estimated today that at least 3.5 million more housing units will need to be built by 2030 to restore affordability in the country.
More details to follow