As Justin Trudeau's Popularity Sinks, Rival Promises To End Sales Tax On New Homes

Conservative Leader Pierre Poilievre said he would remove Canada's 5% national sales tax on new homes sold for under C$1 million ($719,700) if he's elected prime minister. Poilievre, whose party leads by about 20 points in recent polls, said the cut would save around C$2,200 a year in mortgage payments on a C$800,000 house. 

If the Conservatives win an election that's currently scheduled for October 2025, he would also push the provinces to remove their sales taxes from new homes, Poilievre said in a news release.

The high cost of housing in Canada has helped sink Prime Minister Justin Trudeau's popularity, especially among younger voters. The benchmark home price has jumped 61% since he entered office in 2015, and interest rate increases have pushed housing affordability to near the worst level since the early 1990s.

Trudeau's government has spent billions and promised much more to boost home construction. Through its C$4 billion housing accelerator fund, it has transferred about C$1 billion so far to municipalities that cut red tape and allow dense zoning for housing, including C$471 million to Toronto. It has also created a housing infrastructure fund that is set to be handed over to the provinces on Jan. 1 - if those governments agree to allow increased housing supply. 

Poilievre said he would cancel the remaining C$3 billion in the housing accelerator fund and axe the C$5 billion housing infrastructure fund entirely to help pay for the tax cut. 

He also said the tax cut would spur enough new homebuilding to generate an additional C$2.1 billion annually for the government. Therefore, his plan would produce enough in savings and new revenue over four years to offset the estimated C$4 billion annual cost of the tax cut, Poilievre said.

"This is a fiscally responsible plan to cut taxes, build homes and bring back the promise of Canada, of hard work enabling people to buy a home in safe neighborhoods," Poilievre said at a news conference.

The government already offers a partial sales tax rebate, worth about 36% of the tax paid on new or substantially renovated homes worth up to C$450,000.

Trudeau's housing minister, Sean Fraser, said there's a fundamental problem with Poilievre's proposal - he plans to fund it by cutting the government programs that are "actually going to deliver housing for middle-class and low-income families."

The housing accelerator fund has pushed nearly every big city in the country to adopt more permissive zoning and move to digital permitting to make it easier and faster to build homes, he said. 

"These funds are making a difference. They're going to have a bigger difference in the future and to cut them now would be nonsensical," he told reporters in Ottawa.

Fraser also raised concerns that Poilievre's plan would support real estate investors buying multiple homes through a corporate vehicle at the expense of low and middle-income taxpayers. 

Mike Moffatt, a policy director at the Smart Prosperity Institute and a former Trudeau economic adviser, estimated Poilievre's tax cut would cost about C$4.5 billion annually. Though he voiced concern about the Conservatives' plan to cancel the housing accelerator fund, Moffatt agreed the tax cut would spur more building.

"This could really help affordability for young, middle-class Canadians," he said on X.