VAUGHAN, ONT. – A new report commissioned by the (RESCON) reveals the average tax burden on a newly constructed home in Ontario has jumped to almost 36 per cent.
A new home in Ontario has an average price of $1,070,000, the council states, so that means consumers are now paying nearly $381,000 in income taxes, corporate, sales and transfer taxes, and development charges and fees. The new number is a 16-per-cent increase over 2021.
“These taxes are out of control and pushing the cost of new housing beyond the reach of most working families,” says RESCON president Richard Lyall in a statement. “The tax burden is significantly raising the price tag of a new home and directly contributing to the housing crisis we are facing by affecting the ability of developers to invest in new housing projects. This escalation presents substantial challenges to housing affordability and economic stability.”
The report, called Increasing Tax Burden on New Ontario Homes: 2024, was done by the Canadian Centre for Economic Analysis and states the tax and fee burden on new homes continues to be more than twice that of the rest of the economy.
Governments now derive nearly four times more revenue from the sale of a new home than builders, it continues.
According to the research, the tax and fee burden is significantly higher because of recent surges in development charges.
“Of the total tax and fee burden on new housing, 70 per cent consists of direct fees on the home, such as development charges and other fees, while the remaining 30 per cent arises from indirect taxes paid during the development process, including income and corporate taxes paid during the ordinary course of a residential construction business,” a release highlights.
Rates in some jurisdictions are higher than the provincial average. In the GTA, excluding Toronto, the average tax and fees on a new home is 35.9 per cent, a large apartment is 37 per cent, and a small apartment is 36.9 per cent. In Toronto, the average tax on a new home is 35.1 per cent, a large apartment is 34.2 per cent, and a small apartment is 35.3 per cent.
The system disproportionately affects first-time buyers and lower-income households, the report reads. For homes priced at $450,000, the average tax burden rises to 45.2 per cent.
“The situation simply can not be allowed to continue,” Lyall states. “The huge increases have occurred over the last decade in large part because municipalities have hiked their development charges to pay for municipal infrastructure. The findings of this research indicate a critical need for the federal and provincial governments to get more involved in funding public infrastructure at local levels to support growth and ease the tax burden on housing in Ontario.
“Much of our economic success depends on a robust housing supply so it is critical that we address the tax burden,” Lyall continues. “Municipalities lack the revenue streams to fund the infrastructure necessary for new housing and end up loading the cost onto new homeowners via development charges. This must change if we are to incentivize more homebuilding.”
for a copy of the report.
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