Housing industry executives have petitioned the Liberal government to expand its GST rebate program for new homebuyers on news from the Parliament Budget Office (PBO) the current eligibility status of the program might result in 13,000 home sales per year. Currently, only first-time homebuyers are eligible for a full GST rebate on sales of new homes priced below $1 million, with the rebate phased out on new homes priced between $1 million and $1.5 million. The government predicts the rebate will increase sales of new homes and support home construction. On a national level, sales of new homes are down, impeding construction. The PBO report says if the rebate was expanded to include all new homebuyers, between 60,000 and 65,000 home sales would be under the GST rebate umbrella. Late last month, a number of companies in the building and development industry, including the Canadian Home Builders’ Association (CHBA) and the Building Industry and Land Development association (BILD) signed a letter to Prime Minister Carney calling for an expansion of the program to include all new home sales. Estimates are the current rebate program will cost $1.9 billion spread over six years, while an expanded program would cost $2 billion per year over six years, a significant difference of $10.1 billion. .The difference is defended by Mike Moffat, founding director of the Missing Middle Initiative, which did the calculations. Moffat said the government decided to cover only first-time buyers due to costs, which he said would have been a more defensible decision if new home starts weren’t so low, particularly in Canada's two largest markets. "New housing construction in both Toronto and Vancouver is pretty much stalled,” he told STOREYS. “So, we do think that governments, both federally and provincially, should be looking for policies that can have an immediate impact and that aren't just, 'hey, we'll design this thing, and three or four years from now we'll start to get some shovels in the ground.'" “I have a little bit of trouble when we've got the federal government saying they want to build 100,000 (more) homes a year, and all the estimates we're seeing say not only that we are nowhere close to that, but housing starts are actually falling and the CMHC projects them to fall in further years. So, I do think there is room to be more bold." In agreement is David Wilkes, president and CEO of BILD. ."This would be a very effective and immediate tool that would reduce the cost of new homes," Wilkes told STOREYS. "So, I would say to those that are adjusting to the expenditure, this is a way to make sure that we provide housing at a level that's affordable, and it's a way to ensure our economy doesn't go into a recession because of residential construction decreasing." "The reduction in GST, and hopefully PST, would go straight to the consumer," he added. "It would really address some of the affordability challenges that we're facing in the country and help achieve the federal government's goal of 500,000 new homes." There would be trickle down effects on the general economy, said Moffat "People have to build those homes, right? So you've got all the electricians, drywallers, and plumbers who now have jobs that wouldn't have had jobs before, and they're paying income taxes, they're paying EI and CBP premiums," he said. "Governments will also generate additional sales tax revenue when those people go out and buy hockey skates, or whatever, with their money."
