Canada’s housing crisis has simple solution: cut taxes and regulation

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We keep hearing from governments at all levels of the latest plans, subsidies and other programs on responding to the housing crisis, but they are always targeted at symptoms, not the cause. The reason for the housing problem in Canada is simple: excessive taxation and strict regulation of construction, which limits supply and raises costs.

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We tax and regulate what to lose heart: cigarettes, alcohol, gas and surprising housing. When I added 10 x 10 feet of breakfast to my home in the 1940s, the license cost $25 and took a day. Today, one person will be exposed to public hearings, providing thousands of dollars to architects, attorneys and consultants, and a process of one year or more.

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Housing in Canada is in crisis as demand simply outweighs the supply of new homes. Peak housing began in 1976, when 273,000 new homes were delivered to a population of about 23.5 million. Today, with 41.5 million Canadians, we are still below that peak. That’s why Canada has the least amount of housing per capita in the G7, ranking 25th in the Organization for Economic Cooperation and Development (OECD).

When demand exceeds supply, prices rise. This is the law of economics. This imbalance is a cost burden on excess taxes and regulations for new home construction, which will pass to the buyer or renter.

Today, in Toronto, one-third of the cost of new housing in all forms is taxes, fees, levies, etc. for governments at all three levels, while dedicated apartment buildings are exempt from HST. If all of these costs in construction are abandoned, the rental rate will be reduced by one third, making many stagnant residential projects feasible and adding new supplies at reduced costs. When new supply is added, the price of old rents also falls.

The abandonment of the concept of development costs, taxation and taxation has attracted attention to the pressure on municipal finances, but it is largely a matter of timing. The generated flow of property tax revenue is more valuable to municipalities than one-time development expenses.

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By exempting one-time taxes and fees from new housing, we can accelerate construction and expand our property tax base to generate more tax revenue than underdeveloped land. In many countries, municipalities will provide incremental tax financing to achieve ultimate property tax benefits, which will last forever.

In Toronto, the opposite is true: The high taxes for building stalls are creating new housing for everyone’s damage, focusing on one-time expenses rather than adding multi-generational income sources for enhanced property taxes.

Regulation also leads in reducing supply and increasing costs. A typical project takes three to four years from the start of land assembly to the construction, while the delayed stock cost increases millions. All of this increases the cost of a home or renter.

The federal election contrasts sharply with the approach of conservatives and liberals. The Conservative Party’s focus is on eliminating taxes and resolving regulations to free up the scale, skills and capital of the private sector.

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By allowing permission to build and reduce the burden of construction costs, the private sector will respond with a larger supply of new homes. This will result in accelerated supply and reduced costs for new incremental housing, which will affect everyone as new supply is provided at competitive costs (another economic law).

The Liberals announced that they intend to enter the development business to build housing. Do we really want the federal government and its regulatory oversight to become developers? If people are watching the catastrophic state of their housing plans in our military bases and indigenous reserves, perhaps the federal government should focus on fulfilling that promise first.

So if we want more affordable housing, voters need to send clear messages to our politicians. Let us unleash our world-class development industry, and no government is trying to recreate it. Let’s allow thousands of developers across the country to master it in one simple three-step move:

1. Eliminate all taxes, taxes and fees for new housing in all forms.
2. Overhaul the regulatory process to grant a license within six to nine months.
3. A aimed at building builders who aim to expand the property tax base.

The good news is that our housing crisis is the result of bad public policy. The better news is that it can be addressed by unleashing enlightened policies in Canada’s world-class development industries. Now need to change – now.

Jon Love is the executive director and founder of Kingsett Capital.

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