In an effort to address the housing affordability crisis, Finance Minister Chrystia Freeland is set to announce a significant building expansion in Budget 2024 Tuesday.A billion-a-year GST holiday initially designated for new rental construction will now extend to include student housing, marking a pivotal step in what Freeland describes as "unlocking the door to the middle class for millions."“Our renewed focus is unlocking the door to the middle class for millions of younger Canadians,” Freeland articulated to reporters. “In everything we do we dedicate ourselves to making sure a better life is within reach for our younger generation because that is what you deserve. That is what you have earned.”Last December 14, Parliament passed Bill C-56, enacting a GST holiday on new "purpose-built rental housing" constructed by 2036. The Department of Finance projected the tax holiday to cost “about $4.5 billion over the next five years.”In Tuesday's federal budget announcement, cabinet will unveil plans to expand the GST holiday to encompass purpose-built student residences constructed by colleges and universities. Additionally, the budget will raise the capital cost allowance on new rental property construction from four to 10%.“We need to make the dream of home ownership a reality for younger Canadians,” said Freeland. “In the budget I will be tabling Tuesday we will reveal more of our plan.”“Faced with a shortage of housing options and rent which is just too high and home prices which feel out of reach, too many younger Canadians feel that dream of getting your first set of keys, of owning your own house, is just that — a dream,” added Freeland. “Our government is changing that.”“Too many young Canadians feel as if the deck is stacked against them. They can get a good job, they can work hard, but far too often the reward of a secure, prosperous, comfortable middle class life is out of reach. That is not okay.”Though cabinet did not provide specific details regarding the cost of the expanded tax holiday, the proposal was outlined in a Department of Infrastructure report titled Solving The Housing Crisis: Canada’s Housing Plan. This release followed criticism from the Canada Mortgage and Housing Corporation (CMHC) regarding the absence of a concrete plan.“There is not a plan,” testified CEO Romy Bowers last December 5 at the Senate national finance committee. CMHC has calculated that Canadian builders would need to triple the number of housing starts to restore housing affordability by 2030.
