Prime Minister Justin Trudeau’s government is set to remove the goods and services tax on the construction of new purpose-built rental projects, a senior government official said.
(Bloomberg) — Prime Minister Justin Trudeau’s government is set to remove the goods and services tax on the construction of new purpose-built rental projects, a senior government official said.
Trudeau is set to announce the measure Thursday afternoon at a retreat with his Liberal Party caucus, the official said, speaking on condition they not be named.
Ontario’s provincial government quickly welcomed the move and announced it would also remove its share of the sales tax on rental projects.
The federal government’s move “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 said in a joint statement.
The measure was recommended earlier this summer in a report that called for tax changes and cheap financing to spur builders to create about two million new rental units in seven years.
The report’s authors, including Mike Moffatt of the Smart Prosperity Institute, said removing the GST would incentivize new rental developments. They noted the 2015 mandate letter to then-Finance Minister Bill Morneau also called for a removal of the tax on new capital investments in rental housing as a top priority.
Trudeau has been under pressure to act on soaring rental costs and housing prices as the rising cost of living has caused his government to sink in opinion polls.
(Updates with Ontario reaction.)
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