RESCON: Government fiddles while new home tax break legislation stalls

The residential construction industry is on its knees, yet senators are heading home without taking care of business

Martial artist Bruce Lee once quipped that if you spend too much time thinking about something, you’ll never get it done. He was right. Overthinking can lead to paralysis by analysis.

In some respects, that seems to be what’s happening with Bill C-4, federal legislation that will give first-time new-home buyers a break on sales taxes they pay when purchasing a new unit.

Let me explain.

The House of Commons passed the bill with a few amendments and sent it to the Senate for approval. However, in their infinite wisdom, senators chose to delay passage of the legislation.

Representatives who occupy seats in the upper chamber unanimously voted to adjourn until Feb. 3, rather than move the bill to royal assent. This means final approval can’t take place until then.

Senators had plenty of time to gather their thoughts on the legislation and contemplate what to do. They received the legislation on Friday, Dec. 12 and had four more sitting days scheduled in their calendar for precisely this type of thing happening. However, unfortunately and unexpectedly, senators voted to adjourn before the matter went to second reading.

RESCON had hoped that the Senate would undertake its review and complete it the following week. The residential construction industry is on its knees. Yet senators are heading home without taking care of business.

The purpose of the Senate’s parliamentary calendar being four days longer than the House of Commons is to allow senators enough time to deal with final votes coming from the lower chamber.

The situation reminds me of two things you never want to see made – sausages and government policies.

Kidding aside, I understand that the Senate is designed to be the sober second thought on legislation and policies. But this circumstance is the exception. The residential construction industry is in crisis mode.

Housing starts and sales are down significantly. We need quick action. The legislation – officially dubbed An Act respecting certain affordability measures for Canadians and another measure – has been in the works since June 5 when it was introduced in the House.

Opposition parties in the House stalled passage of the bill, and it didn’t look like it would advance to the Senate for final review and royal assent, the process by which it becomes law.

The House of Commons was scheduled to adjourn for the Christmas break on Dec. 11 and return Jan. 26. This was a concern because if third and final reading of Bill C-4 was not allowed to proceed, the bill would not make it to the Senate and therefore be stamped into law.

However, a deal was reached and the legislation was allowed to proceed in the House of Commons. The vote in the House was unanimous and the bill moved to the Senate.

The legislation waives the five-per-cent federal GST on new homes under $1 million for first-time buyers and provides partial rebates for those between $1 and $1.5 million.

The province has committed to aligning with the federal debate, which means an additional eight-per-cent would come off new homes for first-time buyers. Implementation is subject to the passing of federal legislation.

The federal bill had originally proposed that eligibility be retroactive to May 27, but it was amended to March 20 – two months earlier. Hopefully, there will be no unwanted amendments, and the legislation will get quick approval when the Senate returns in early February.

Once approved by the Senate, the public service can proceed to release all documentation and applications associated with the sales tax rebate.

Until the legislation passes, the Canada Revenue Agency cannot provide the rules for claiming the rebate even though the funds were passed in the recent federal budget. Hopefully this gets resolved as soon as the Senate returns.

Canada is knee-deep in a housing crisis. Sales and starts have fallen off a cliff, projects are being delayed or cancelled and job losses in the residential construction industry are mounting.

All this, of course, will have a dramatic effect on our economy.

Canada’s construction industry accounts for about 7.5 per cent of the national GDP and generates around $162 billion annually. The residential building share of construction generally accounts for a third of total industry GDP, or $54 billion.

We need to lower the costs of building so builders can get shovels in the ground. Presently, taxes account for roughly 36 per cent of the cost of a new home. Taxes, fees and levies must be reduced.

There is no time for dilly-dallying. We need action over hesitation.

Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.