Published September 14, 2023

Ottawa to remove GST on new rental housing, ask grocers to stabilize prices: PM

By Dylan Robertson in London

The federal government will remove GST on construction of new rental apartment buildings, Prime Minister Justin Trudeau announced Thursday — a move he first promised in the election that brought the Liberals to power.

The measure, which would lower the cost of labour and materials for homebuilders, was one of several affordability measures Trudeau announced at the end of the Liberal caucus retreat in London, Ont.

That includes trying to lower the rising costs of food in Canada. Trudeau said Industry Minister François-Philippe Champagne will ask grocery companies to come up with a plan by Thanksgiving to stabilize prices and that he is not ruling out forcing them to do so through tax measures.

The federal government is also telling municipalities they must end exclusionary zoning and encourage building apartments near public transit in order to get federal funding through the housing accelerator fund.

Housing Minister Sean Fraser sent a letter to Calgary's mayor Thursday urging city council to do just that. 

"We will never solve the housing crisis in Calgary if it is not legal to build the homes required to meet the moment," Fraser wrote in a letter to Jyoti Gondek that she released on X, formerly known as Twitter.

On Wednesday, the City of London became the first to get its funding approved. While the $4-billion fund was announced in the 2022 budget, applications opened in July.

"This is something that all Canadians are worried about," Trudeau said during a news conference Thursday. 

"We know that housing is a problem that takes decades to address."

The Liberals have seen slumping poll numbers that suggest Canadians believe the Conservatives would do a better job dealing with affordability and housing concerns.

News of the plan to remove the GST came out hours before Trudeau made his announcement and just before Conservative Leader Pierre Poilievre was scheduled to share his own housing plan in Vancouver.

The Conservative plan would remove the GST on the construction of rental housing charging below-market prices to tenants.

Poilievre argued his proposal holds more water than Trudeau revisiting a 2015 promise. 

"He's flip-flopped again and he expects you to believe it," he told reporters in Vancouver, pledging to introduce a bill when Parliament resumes on Monday that would also include five other measures.

The NDP noted that they called for the GST to be dropped on new, affordable rental buildings six months ago, and said an entire construction season has passed since then. They also questioned whether the measures will be targeted at affordable homes or include "luxury condos."

Trudeau said he will be encouraging provinces to remove sales taxes on the cost of building new rental homes too.

Earlier Thursday, Ontario's Progressive Conservative cabinet released a statement in support of the proposal. It said the province plans to remove its share of the HST on "purpose-built rental housing" as soon as possible.

"Minister Fraser's quick action on this file will make it cheaper and easier to build more of the rental housing we desperately need," Ontario's Finance Minister Peter Bethlenfalvy and Housing Minister Paul Calandra wrote in a news release.

In a press release the federal government also said it will take steps to "enhance competition across the Canadian economy," giving the Competition Bureau the power to take action on corporations that work together to stifle consumer choice — specifically citing large grocery stores that have prevented competitors from setting up shop nearby.

Banner image: THE CANADIAN PRESS/Nicole Osborne

This report by The Canadian Press was first published Sept. 14, 2023.

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