The desire of most Canadians to reap profits from their homes is preventing us from building more housing. Is tax reform the solution?
Canada has the tools to address its housing crisis. The problem is assembling the political will to use those tools.
David Rosenberg of market analyst Rosenberg Research agrees. He estimates home prices would have to fall nearly 30 per cent from today’s “crazy-stupid” levels to restore housing affordability to historically normal levels. Whichever is the case, the political reality suggests that those who want to fix the housing problem may want to focus their attention on the other obvious remedy – vastly increasing the supply of new homes.
Many municipalities deter building by imposing zoning restrictions that discourage higher population densities. They also charge developers hefty upfront fees to construct new water and sewer connections. Yet they often fail to deliver that infrastructure as quickly as they could. The trickiest but perhaps most necessary change would be finding a way around the not-in-my-backyard contingent. To circumvent the forces of homeowner obstinacy, Mr. Dachis suggests that provinces should set minimum targets for municipal housing construction. They should then hand enforcement of those targets over to a non-political regulatory body “with the power to enforce fines on laggard cities.
Perhaps what is needed is a mechanism that would persuade homeowners to embrace more development. The simplest, most obvious way to do that would be through the tax system.
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