Canada’s Finance Minister, Chrystia Freeland, has asserted that the government will be proposing new affordability measures. Further, she said that she has tabled a new bill with the House of Commons to improve affordability in the nation.
Bill C-56, the Affordable Housing & Groceries Act, has two main components. The first is to change the Excise Tax Act to enhance the GST New Residential Rental Property Rebate.
Moreover, the second is to create a framework for Canada’s Minister of Industry to question the Commission of Competition to inquire into state competition in the industry/ market & offer the Competition Tribunal permission to make specific orders, even if none of the parties are competitors. In addition, it also plans to repeal an exception to the present act, which includes efficiency gains via mergers.
Tax Rebate For New Rental Builds
In addition to new affordability measures, the tax rebate means that builders who invest in building rental properties might be eligible for a tax rebate. This is intended to act as an incentive to increase the number of rental properties in Canada & help drive down the prices.
As per the government’s new release regarding the act, the enhancement increases the GST rental rebate from 36% to 100%, thus removing the existing GST rental rebate phase-out thresholds for rental housing projects.
For instance, for a two-bedroom rental unit valued at $500,000, the enhanced GSTb rental rebate would be $25,000 in tax relief.
Moreover, Rentals.ca asserts that the average cost to rent a one-bedroom apartment in Canada is $2,117. Well, this is often much higher in Canada’s large cities, like Toronto, Vancouver, etc. As a result, this can create significant challenges for immigrants who have to rent their first home in Canada as they settle.
Buying a home in Canada is often out of reach for both Canadians & newcomers due to the lack of supply to meet the demand for affordable housing. The average cost of a home exceeds $600,000, as per the Canadian Real Estate Association.
On the contrary, Statistics Canada released a report in 2021 which revealed that newcomers who arrived in Canada in 2018 had a median wage of $31,900 in 2019. Another popular job search engine, i.e., Talent.com, also reported that the median entry-level wage for an immigrant this year is $41,858.
Competition Act
The updates to the Competition Act under new affordability measures are expected to benefit Canada by giving more power to the Competition Bureau in order to investigate when companies/ industries are behaving in an unfair manner. The Canadian government states that this will have an impact, wherein price fixing is taking place, thus leading the government to take enforcement action.
In addition, by removing efficiencies defense, it might end anti-competitive mergers, which raise prices & limit choices for consumers in Canada. Moreover, the bureau will be granted the power to block collaborations which discourage consumer choice & competition.
Finally, blocking mergers & collaborations will increase competition, resulting in lower prices, thus attracting & retaining consumers.