Canada's housing sector is facing a severe downturn, with plunging sales, cancelled projects, and significant job losses. In the midst of this crisis, a critical piece of federal legislation designed to provide financial relief to first-time homebuyers has been unexpectedly stalled by the Senate.
Legislative Paralysis Amid Industry Crisis
Bill C-4, which would waive the federal GST on new homes under $1 million for first-time buyers, was passed unanimously by the House of Commons. The bill, officially titled An Act respecting certain affordability measures for Canadians and another measure, was sent to the Senate for final review and royal assent on Friday, December 12.
Instead of moving the bill forward, senators voted to adjourn until February 3, delaying its final approval. This decision came despite the Senate having four additional scheduled sitting days specifically to handle legislation from the lower chamber. The residential construction industry, which accounts for roughly $54 billion annually, had hoped for swift action.
The Stakes of the Delayed Tax Break
The proposed legislation is a key affordability measure. It eliminates the 5% federal GST on new homes priced below $1 million for first-time purchasers. For homes costing between $1 million and $1.5 million, a partial rebate would apply. The province has committed to aligning with this measure, which would mean an additional 8% rebate for eligible buyers.
An important amendment moved the eligibility date retroactively to March 20, two months earlier than initially proposed. However, until the bill becomes law, the Canada Revenue Agency cannot release the rules or application forms for the rebate, even though the funding was approved in the federal budget.
Mounting Pressure on a Struggling Industry
Richard Lyall, president of the Residential Construction Council of Ontario (RESCON), argues the delay is ill-timed. "The residential construction industry is on its knees," Lyall stated. He points out that housing starts and sales have fallen dramatically, projects are being delayed or cancelled, and job losses are mounting across the sector.
Taxes, fees, and levies currently make up an estimated 36% of the cost of a new home in Canada. Industry advocates insist that reducing this burden is essential to making housing more affordable and getting shovels back in the ground. The construction industry represents about 7.5% of Canada's GDP, generating approximately $162 billion each year, with residential building comprising a third of that total.
While the Senate is designed for sober second thought, critics contend the current housing emergency requires urgency over deliberation. All eyes will be on the upper chamber when it returns in early February to see if it moves quickly to pass Bill C-4 or proposes further amendments that could prolong the process. For an industry in crisis mode, the wait is costly.
