Ontario Premier Doug Ford has proposed eliminating the sales tax on all new homes, not just for first-time buyers. He made this statement on Monday, arguing that such a move would stimulate the economy. "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 told reporters. He believes that removing the sales tax would help boost housing development and address Ontario's housing shortage.

Currently, the provincial government offers a sales tax rebate only for first-time homebuyers, a limited segment of the market. Scott Andison, CEO of the Ontario Home Builders’ Association, criticized this approach, stating, "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 suggestion is not new; he previously mentioned it during the summer but later backed off after discussions with the provincial finance minister. He acknowledged the financial implications, saying, "I got my knuckles rapped a little bit from the (provincial) finance minister, doing his job. That’s a lot of money."

The current first-time buyer program is projected to cost Ontario $35 million in 2025-26, increasing to $190 million the following year and $245 million in 2027-28. In contrast, the federal government’s first-time buyer tax break is estimated to cost $1.9 billion over six years, although it claims potential savings of $3.9 billion for Canadians over five years.

Critics argue that the limited rebate for first-time buyers is more of a political gesture than a substantial solution. While the combined sales tax rebate could reduce home costs by 13 percent, it does not significantly impact enough buyers to address the housing crisis.

Ford's recent comments put him in a challenging position, as he has previously praised the limited sales tax rebate his government has implemented. However, he still has the option to push for a broader sales tax elimination for all new homes, independent of federal actions.

The housing market in Ontario is facing significant challenges. Recent data shows that housing starts in the first quarter of this year were the lowest in 15 years. Projections indicate that home starts over the next few years will be about half of the government's target of 1.5 million new homes over the next decade.

The primary issue remains the high cost of building new homes, which exceeds what buyers can afford. Factors such as land prices, construction materials, labor costs, and development charges contribute to this problem, making it difficult to increase housing supply effectively.