Mattamy CEO urges permanent HST rebate update as short-term measure nears end
Brad Carr says the temporary HST rebate helped sales but long-term structural reforms are needed for affordability.
The chief executive of one of Canada's largest home builders is calling for permanent reforms to housing tax policy, including an updated HST rebate and a mortgage interest deduction.
Brad Carr, CEO of Mattamy Homes, said the temporary Enhanced HST rebate for new homes in Ontario has helped sales but that long-term structural changes are needed to sustain affordability and increase supply.
"The HST rebate’s impact was immediately visible in key sectors of the market, buyers returned to low-rise sales centres across the province and second quarter sector-wide sales increased 130 per cent year over year," Carr said.
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He said the rebate, announced earlier this year by Ontario and the federal government, is set to expire at the end of March 2027.
When it ends, the policy will revert to an outdated threshold set in 1991, which Carr said has not been adjusted for inflation.
According to the Bank of Canada's inflation calculator, a home that cost $450,000 in 1991 would cost approximately $972,000 today.
"So, let’s permanently update the policy by increasing the threshold and eliminating the HST on the first $1-million of the cost of a new home, while also establishing a two-year review mechanism that adjusts this threshold as necessary based on inflation and other criteria," Carr said.
He also proposed allowing homeowners to deduct mortgage interest payments from their taxable income.
"This tax change would be linked to the tax-free capital gains exception for the sale of a primary residence," Carr said.
The home building industry has raised the idea with the government, as first reported by The Globe and Mail.
Carr said the change would help young or first-time buyers when they are first entering the market.
He said it would allow homebuyers to enjoy benefits "when they are first getting into the market or just starting their careers instead of 'banking' them in capital gains benefits from the eventual profits from the sale of their family home years or even decades down the line."
Carr also suggested restructuring how housing-enabling infrastructure is funded to reduce hidden fees and taxes for new homeowners.
He said important work between municipal, provincial and federal governments has started to reduce development charges.
Carr said broad economic challenges are being felt in the housing market, with national home sales falling 7 per cent year over year in August.
He said this slip was echoed in a modest slowdown in housing starts.
"To address Canada’s housing crisis, we need to build more housing of all types in all regions," Carr said.
He said a healthy home building sector is critical for the economy.
Home building employs about 880,000 people across Canada each year, and that jumps to 1.2 million when including the repair industry, according to the Canadian Home Builders Association.
That represents $90-billion in wages and $213-billion in economic activity, the association said.
"As a nation, we cannot afford to move on from the housing discussion until long-term permanent solutions have been achieved," Carr said.
"The path to a stronger Canada runs through a stronger housing sector, one that can build more homes faster, and meet the needs of future generations."
With files from The Globe and Mail