Housing Affordability Crisis: Ontario Developers Offer Tax Cut Solution
A group of Ontario developers has proposed significant tax reductions on new homes, in a bold move to address the housing affordability taxes. The Coalition Against New-Home Taxes (CANT), comprising 18 developers with plans to build 100,000 new housing units over the next decade, has reached out to federal, provincial, and municipal governments with a unique proposition.
The coalition is calling for the removal of the harmonized sales tax on all new housing, mirroring the exemption already in place for rental housing construction. Additionally, they’re seeking the elimination of land-transfer taxes on newly constructed homes in Ontario and Toronto, as well as a reduction in municipal development charges to 2009 levels, adjusted for inflation.
Matt Young, president of Republic Developments and a key figure in the coalition, emphasized the group’s commitment to passing on these tax savings directly to homebuyers. The developers have pledged to reduce their prices by one dollar for every dollar cut in taxes, aiming to make homeownership more accessible.
The coalition points to a stark increase in the tax burden on new homes over the past 15 years. In 2009, taxes accounted for roughly 12% of the cost of an average Toronto condominium. Today, that figure has jumped to 29%, with development charges alone rising by 1,200% during this period.
Young highlighted the current challenges in the housing market, noting that rising interest rates have made it difficult to sell homes at prices that are both affordable to buyers and profitable for developers. This situation has led to a significant slowdown in sales and the stalling of many construction projects.
“To solve the affordability crisis today, your governments must take bold action to make homes cheaper to build and cheaper to buy,” the coalition wrote in a letter sent to the federal government, the province, and the City of Toronto on Wednesday.
Recent data from the Canada Mortgage and Housing Corporation underscores the severity of the issue, showing a 44% decrease in housing starts across Ontario in June compared to the previous year. The coalition warns that without decisive action, the industry could face job losses and broader economic repercussions.
Related: Canada’s Housing Starts Decline 9% In June
However, the proposal has met with some resistance, particularly from municipalities. The Association of Municipalities of Ontario has expressed concerns about the potential loss of revenue from reduced development charges, which fund essential infrastructure like roads and sewers. Lindsay Jones, the association’s director of policy, emphasized the need for alternative funding sources if development charges are cut.
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