In response to the pressing issue of housing affordability, the Canadian federal government has taken a significant step by announcing the immediate elimination of the Goods and Services Tax (GST) on the construction of new rental apartments. This strategic move is part of a broader initiative to make housing more accessible and reduce the cost of living for Canadians.
Reporters attending the Liberal caucus retreat in London, Ontario, received this news, with the assurance that it’s one of several measures aimed at addressing the affordability challenge. The official announcement was made by Prime Minister Justin Trudeau and Deputy Prime Minister and Finance Minister Chrystia Freeland.
This development represents a substantial change in policy, as the removal of the GST on new rental housing has been a long-standing demand, particularly from the New Democratic Party (NDP). While the NDP welcomed this decision, they expressed frustration that it had not been implemented sooner.
NDP Leader Jagmeet Singh emphasized the need for quicker action, stating, “These are actions that should have been taken months ago. If they had removed the GST from new affordable rental buildings when we first called for it six months ago, we could have had an entire construction season to get more homes built.”
The pressure on Trudeau’s government to respond to the housing shortage has been mounting over recent months. The urgency escalated following the Liberal cabinet retreat in Prince Edward Island, which concluded without the announcement of new measures to address the housing crisis.
To address the housing shortage and make housing more affordable, Trudeau unveiled a separate initiative during his visit to London, Ontario. The city became the first in Canada to enter into an agreement with the federal government under the Housing Accelerator Fund, which was first introduced during the 2021 election campaign and further detailed in the 2022 federal budget.
This fund allocates $4 billion until 2026-27 to stimulate increased homebuilding in urban centers. Under the terms of the agreement with London, the city will receive $74 million in exchange for implementing a series of measures, including changes to local zoning regulations that facilitate the construction of additional rental units.
Federal and municipal officials anticipate that this agreement will lead to the construction of 2,000 housing units within the next three years and will enable the development of “thousands” more units in the subsequent years.
In summary, the elimination of the GST on new rental apartments represents a significant step toward enhancing housing affordability in Canada. This decision, along with other initiatives, aims to provide relief to Canadians grappling with the rising cost of living and housing shortages.