Tax cut to get new homes built? It would cost $175M: Higgs gov't

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The Higgs government is still considering a tax cut that would match a move made by the federal government in attempts to get new rental housing built, says Finance Minister Ernie Steeves.

But the move would cost the province $175 million in revenue annually, money that would need to be found elsewhere, Steeves contends.

“We have run the numbers on it and it would be a kick of about $175 million – what we would lose in tax revenue by doing that,” Steeves told reporters. “It’s hard to balance that with everything else that’s going on, and it’s hard to take that hit and still want to give more to people in dire need.

“We’re trying to protect the people who are having trouble with inflation and housing challenges and all the rest of it, but $175 million has got to be found somewhere.

“If we take it away from there, then we’ve got to find it somewhere else. The two big areas are always health and education, and so where are we going to take it from? I don’t know.”

Prime Minister Justin Trudeau announced in September that his government would eliminate the federal portion of the HST on new rental apartment builds in attempts to see more built.

The rebate on the federal tax is available to all new construction that begins before the end of 2030 and is completed before the end of 2035.

Trudeau challenged the provinces to cut their portion of the tax on newly built rental housing.

Several provinces have followed, including the Higgs government’s conservative colleagues.

Nova Scotia Premier Tim Houston announced over a month ago that his province would drop the provincial portion of the HST on new builds for two years.

At the time, he forecasted that the move would reduce revenue to the province by an estimated $80 million to $100 million a year, much lower than the Higgs government’s projection.

“I hope that number goes up because that would mean we are actually seeing more housing get built,” Houston told reporters.

Meanwhile, Ontario has promised the same move with legislation expected this fall.

“By taking steps like this to address the housing crisis, we’re ensuring Ontario is the best place to live, work and raise a family,” Ontario Finance Minister Peter Bethlenfalvy said at a press conference earlier this month.

The federal government estimates that the program will cost its treasury $4.6 billion over the six years it’s pledged to keep the tax cut in place.

It’s a tough balancing act, and so we are looking at it. But there’s no commitment just yet.

Ernie Steeves

Meanwhile, rent in New Brunswick is climbing.

The Canada Mortgage and Housing Corporation recorded the average cost of rent in the province jumped to $1,016 a month last year.

That’s up from $928 in 2021 and $855 in 2020.

The provincial government also reported earlier this year that the number of people seeking public housing in New Brunswick reached a new high, as rents go up and it becomes harder to find an affordable place to live.

Over the last fiscal year, 8,875 people called the provincial government seeking subsidized rents for them or their families. At the end of fiscal year 2019-20, as the pandemic hit, the requests had been far fewer, just 5,533.

Liberal Leader Susan Holt said last month that removing the tax on the construction of new rental apartment buildings was something her party “has been looking at.”

A housing document published by the party does call to “empower municipalities and incentivize development,” although not directly calling for a tax cut.

“The lack of housing options and the ability for people to find an affordable home is one of the top issues that New Brunswickers expressed to us,” Holt said. “So we have been trying to cost out how we can get more homes built.”

Steeves said the Higgs government cabinet is still considering its options.

“It’s a tough balancing act, and so we are looking at it,” he said.

“But there’s no commitment just yet.”