RESCON asks feds to reinvest taxes in housing, infrastructure

The residential construction group believes Ottawa is failing to use revenue effectively.

Toronto housing

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The Residential Construction Council of Ontario (RESCON) is calling on the federal government to invest more tax revenue it collects from new home construction into housing supply and public infrastructure.

“The federal government is benefitting massively from the growth of the Ontario economy but not reinvesting enough of the tax revenues it receives from new housing development into public infrastructure,” said RESCON president Richard Lyall. “Both now and over the past decades, this has created unprecedented funding challenges for provincial and municipal governments. We are in the midst of a generational housing crisis and it is critical that the federal government finally establish stable, predictable and substantial infrastructure funding for Ontario and its municipalities.”

A report authored by the Canadian Centre for Economic Analysis and commissioned by the Residential and Civil Construction Alliance of Ontario (RCCAO) shows that taxes on the purchase of a new home in Ontario accounts for 31 per cent of the price, up from about 24 per cent in 2012. 

RESCON noted that the federal government’s share of those taxes is 39 per cent, yet it only invests 7.1 per cent in public infrastructure. The report also indicates that the tax burden on new home construction is two times higher compared to other sectors of the economy. RESCON stated that Infrastructure-dependent products and sectors such as cars, electronics and manufacturing are not taxed nearly as much.

While the federal government reaps most of the benefits of growth through the taxation of new homes, the report notes it has not been a significant participant in funding public infrastructure investment. RESCON argued that this puts a strain on local governments and impedes construction at a time when the feds are increasing immigration targets without regard to housing supply. It highlighted that Ontario’s population has grown by 68 per cent since the 1970s, but the number of annual new housing completions has dropped by 23 per cent.

“The present level of federal investment in public infrastructure falls far short of what is needed to sustain our communities and contribute to economic growth,” said Lyall. “Residential construction of new homes and investments in public infrastructure are critical to the economic growth of Ontario and all of Canada. The federal government is contributing too little compared to the amount of revenue it generates.”

The report suggests that public infrastructure investment funding in Ontario required to support growth trends is 30 per cent below what is required. According to RESCON, this only exacerbates the critical need for increased federal public infrastructure investment to help ease housing unaffordability in Ontario.

“This ongoing lack of support is one of the reasons we have the worst housing affordability crisis in Ontario’s history,” said Lyall. “It is very difficult for developers and builders to build more homes – and for the public to afford them – when taxes account for such a large chunk of the cost and the funds are not being properly reinvested into public infrastructure for the future. It’s a travesty.”


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