Feds removing GST on new rental builds, source says

The change would lower the cost of labour and materials for homebuilders

A development in Burnaby's Brentwood neighbourhood | Lauren Vanderdeen, Burnaby Now

Prime Minister Justin Trudeau will announce Thursday that Ottawa is removing the GST on construction of new rental apartment buildings, according to a senior government source.

The source spoke on the condition of anonymity to discuss matters that were not yet public.

The Liberals originally promised to remove the federal tax on rental construction during the 2015 election campaign. 

It would lower the cost of labour and materials for homebuilders and is one of the components of an affordability announcement Trudeau was set to make Thursday afternoon, the source said.

Finance Minister Chrystia Freeland, Housing Minister Sean Fraser and Industry Minister François-Philippe Champagne are also to be at the announcement in London, Ont.

That is where most of the 158 Liberal MPs have been gathered for a three-day retreat aimed at strategizing their approach for the return of Parliament next week. 

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 housing announcement was met by skepticism from opposition parties but welcomed by Ontario's government, which pledged to also drop provincial sales taxes.

The federal Conservatives put their own housing plan forward Thursday, which included removing the GST on apartments with rent below the market average.

Tory leader Pierre Poilievre argued his proposal hold 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.

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."

Ontario's Progressive Conservative cabinet released a statement in support of the proposal and said that 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 Finance Minister Peter Bethlenfalvy and Housing Minister Paul Calandra wrote in a news release.

Housing advocates and municipalities have been calling for this change for years. 

At the ongoing caucus retreat, Trudeau has said his focus is on hearing what constituents are telling MPs.

Halifax MP Andy Fillmore said the talks have largely focused on affordability concerns and how the Liberals can better communicate what they've done to help with the cost of living.

He said climate change was a frequent topic in Wednesday's meeting of MPs from all regions, with two more meetings of the national caucus planned for Thursday.

Quebec MP Steve MacKinnon said the party is trying to stabilize the housing market after a drastic rise in costs and interest rates, but the provinces also need to help.

"We clearly have to make some adjustments," said the MP for Gatineau.

Meanwhile, Industry Minister François-Philippe Champagne rejected the idea that the Liberals are responding late to concerns about inflation.

"It's always a good time to fight," he said.

Foreign Affairs Minister Mélanie Joly pushed back on reports that MPs have come to London to blast Trudeau over unflattering polls.

"There's no dirty laundry," she said in French, arguing the COVID-19 pandemic was a much bigger challenge for her government than slumping poll numbers.

"We are used to going through crises," she said. "We are in solution mode, and we'll earn the trust of Canadians."

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

Dylan Robertson, The Canadian Press