The implementation of a GST holiday on new apartment construction is aimed at providing benefits to the middle class, as Housing Minister Sean Fraser stated on Monday..According to Blacklock’s Reporter, MPs began the Second Reading debate on the tax proposal contained in Bill C-56 An Act to Amend the Excise Tax Act..“It is important that we advance measures that are going to increase the supply for middle-class households in this country,” said Fraser. .“When we add more supply to the market, we can actually bring down the cost of homes across the country that people can afford.”.“There is no silver bullet to the housing crisis,” said Fraser. .“We will pull every lever at our disposal to make things right.”.Bill C-56 temporarily eliminates the GST on new "purpose-built rental housing," with retroactive effect from September 13 and continuing until 2036. This bill does not restrict the types of eligible rental properties..New Democrat MP Daniel Blaikie (Elmwood-Transcona, MB) said the bill “does not make affordability a requirement of the program.”.In a 2015 Ministerial Mandate letter, the cabinet first proposed a tax holiday to “encourage the construction of new affordable rental housing.”.Finance Minister Chrystia Freeland on Monday did not explain why the “affordable” criterion was deleted from the bill..“For a two-bedroom rental unit valued at $500,000, our plan would deliver $25,000 in tax relief,” Freeland told the Commons. .“This is about encouraging developers to build homes that otherwise would not get built. It is a game changer for housing in our country.”.“It is so important that we work together to pass this bill,” said Freeland. .“This bill provides urgent measures to make life more affordable for Canadians, including removing the GST on the construction of new apartment buildings, which would allow more rental housing to be built faster.”.According to the Budget Office's assessment, the estimated value of the tax holiday is $383 million each year. .However, the cabinet has not specified the number of new housing units it anticipates as a result of this bill..Prime Minister Justin Trudeau told reporters on September 14 the tax holiday would see “millions of people, thousands of people, getting into new apartments.” .Fraser said the cabinet “can’t put an exact number on exactly how many homes will be constructed.”.“My expectation is we are going to see many thousands of homes,” said Fraser. .“There are estimates just in the Greater Toronto Area this one measure could potentially lead to 120,000 new units over ten years in one part of the country.”
