Thank you for having me here today.
I will speak to the first-time homebuyers' GST rebate in Bill C-4. While it is a step forward, it should be expanded to match the existing GST rebate and apply to all buyers of primary residences.
Taxes on new homes have priced the middle class out of the market.
In 2004, I bought a new home in London, Ontario, for $168,000. Back then, development charges, PST and GST totalled under $16,000 after rebates. Today, those same charges exceed $110,000 on a similar home—a 600% increase in 20 years. If we add in other fees, land transfer taxes and interest on development charges, the tax bill on a home today approaches the entire cost of the home I bought in 2004. In the GTA, that alphabet soup of taxes can top $300,000 on a new home.
The golden rule is that a middle-class family shouldn't buy a home that's worth more than three times their income. For a $100,000 household, that's $300,000. When the taxes alone on the new home are that high, we've priced the middle class out of home ownership. Sales prove it. In the GTA and greater Golden Horseshoe areas, preconstruction condo sales are down 89% and ground-oriented home sales are down 70%. If buyers can't afford homes, they won't be built.
Governments must cut input costs. Ottawa has already acknowledged the harm of high housing taxes by rebating 100% of the GST on purpose-built rental construction. It has also recognized that through a commitment to lowering development charges. However, when the GST was introduced in 1991, a commitment was made to adjust the GST new housing rebate for inflation on a regular basis. Over 30 years later, that promise has never been kept.
Yes, tax cuts have fiscal costs, but inaction has bigger ones. A 2023 CANCEA report found that a $940,000 new Ontario home generates $110,000 in federal tax revenue. Based on CMHC housing start forecasts, a decline in owner-occupied starts in the GTA alone is projected to cost the federal government $2.4 billion annually. If we add Vancouver to that cost, the losses are well in excess of $3 billion annually. That's more than the annual cost of Build Canada Homes in lost tax revenue.
It's not just tax revenue. Jobs are at stake. If this slowdown persists, as many as 100,000 housing jobs could be lost nationwide. When 15,000 automotive jobs were at risk during the financial crisis, governments acted. We need the same resolve now.
There are three points I would like to leave the committee with. First, Canada cannot double housing starts if they're falling. The CMHC projects that housing starts will fall through 2027. We can't go up and go down at the same time. Second, that inaction drains the revenue needed for housing programs. The very money you need to fund Build Canada Homes is not going to be there if housing starts fall. Third, if housing is a human right, we can't keep taxing it like alcohol and tobacco. We can't keep taxing the middle class out of this market.
I look forward to your questions.