Lower taxes can initially boost construction, but recent tax cuts in Canada aimed at increasing rental housing development had limited and temporary effects. In the Greater Toronto and Hamilton Area, rental unit construction surged after the GST and PST cuts, but by the end of 2024, starts returned to pre-tax levels. Additionally, fewer rental units were proposed post-tax changes, indicating that these measures alone are insufficient for lasting impacts on housing development. Broader policy changes are needed to address ongoing challenges in the construction market.
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