Ontario Premier Doug Ford has proposed eliminating the sales tax on all new home purchases, not just for first-time buyers. He made this statement during a press conference on Monday, emphasizing the potential economic benefits of such a move. "If we allow everyone to buy a new home, look at the economy — new fridges, new stoves, new microwaves, new televisions, new carpets, new couches, new beds, new everything," Ford said. He believes that removing the sales tax could stimulate the economy and help address the housing shortage in Ontario.

Currently, the provincial government offers a sales tax rebate only for first-time homebuyers, which critics argue is insufficient. Scott Andison, CEO of the Ontario Home Builders’ Association, stated, "The first-time homebuyer exemption in Ontario will have very little effect, less than five per cent. We need a very specific Ontario-led approach and that is to remove the provincial sales tax off the price of all new home purchases."

Ford's proposal aligns with the need for a more comprehensive solution to Ontario's housing crisis. The province has lagged in addressing the sales tax issue compared to the federal government, which announced its plan to assist first-time buyers earlier this year. The provincial government only followed suit in late October with a similar plan.

Despite Ford's earlier enthusiasm for a broader sales tax elimination, he has faced pushback from within his government. He acknowledged this when he said, "I got my knuckles rapped a little bit from the (provincial) finance minister, doing his job. That’s a lot of money." The financial implications of a full sales tax rebate are significant, as it would cost the province more than the current limited rebate program.

The recent fall economic statement estimates that the first-time buyer program will cost Ontario $35 million in 2025-26, increasing to $245 million by 2027-28. In contrast, the federal first-time buyer tax break is projected to cost $1.9 billion over six years, although the government claims it could save Canadians $3.9 billion over five years.

Critics argue that the current policies are merely performative, providing a semblance of action without addressing the core issues. Ford's government has been criticized for its limited approach, especially as housing starts in Ontario have reached their lowest levels in 15 years. The province is projected to fall short of its goal of 1.5 million new homes over the next decade.

The high costs associated with building new homes, including land, materials, and development charges, contribute to the housing supply deficit. Eliminating the sales tax could be a practical solution to lower prices and stimulate new home construction.

As the housing market continues to struggle, Ford's government has the opportunity to take decisive action. By removing the eight percent sales tax on all new homes, Ontario could potentially improve access to housing for a broader range of buyers. However, the question remains whether the government will act on this proposal or continue with its current limited approach.