The Audit has a growing library of posts addressing the housing crisis. I’m particularly proud of my Solving Canada’s Housing Crisis because of how it presents a broad range of practical approaches that have been proposed and attempted across many countries and economies. But the truth is that the affordability end of the problem could be easily and quickly solved right here at home without the need for clever and expensive innovation.
As you’ll soon see, local and provincial governments – if they were so inspired – could drop the purchase price on new homes by 20 percent. Before breakfast.
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It’s all about taxes and fees. This post will focus mostly on taxes and fees as they apply to new construction of relatively expensive detached homes. But the basic ideas will apply to all homes – and will also impact rentals.
Here are some estimated numbers to chew on. Scenarios based on varying permutations and combinations will produce different results, but I think this example will be a good illustration.
Let’s say that a developer purchases a single residential plot in Toronto for $1.4 million. In mature midtown neighborhoods, that figure is hardly uncommon. The plan is to build an attractive single family home and then sell it on the retail market.
Here are some estimates of the costs our developer will currently face:
Construction costs on a 2,000 sq. ft. home (@ $350/sq. ft.): $700,000
Land transfer taxes on the initial land purchase: $35,000
Development fees: $100,000
Permits and zoning/site approvals: $40,000
Total direct development costs would therefore come to $875,000. Of course, that’s besides the $1.4 million purchase price for the land which would bring our new running total to $2,275,000.
We’ll also need to account for the costs of regulatory delays. Waiting for permits, approvals, and environmental assessments can easily add a full year to the project. Since nothing can begin until the developer has legal title to the property, he’ll likely be paying interest for a mortgage representing 80 percent of the purchase price (i.e., $1,120,000). Even assuming a reasonable rate, that’ll add another $60,000 in carrying charges. Which will bring us to $2,335,000.
And don’t forget lawyers and consultants. They also have families to feed! Professional guidance for navigating through the permit and assessment system can easily cost a developer another $25,000.
That’s not an exhaustive list, by the way. To keep things simple, I left out Toronto’s Parkland Dedication Fee which, for residential developments, can range from 5 to 20 percent of the land value. And the Education Development Charges imposed by school boards was also ignored.
So assuming everything goes smoothly – something that’s far from given – that’ll give us a total development cost of $2,360,000. To ensure compensation for the time, work, investments, and considerable risks involved, our developer is unlikely to want to sell the home for less than $2,700,000.
But various governments are still holding their hands out. When the buyers sign an agreement of purchase, they’ll be on the hook for land transfer taxes and – since it’s a new house – HST. Ontario and Toronto will want about four percent ($108,000) for the transfer (even though they both just cashed in on the very same transfer tax for the very same land at the start of the process). And, even taking into account both the federal and Ontario rebates, getting the keys to the front door will require handing over another $327,000 for HST.
Here’s how development fee schedules currently look in Toronto:
And here’s a breakdown of the land transfer taxes assessed against anyone buying land:
In our hypothetical case, those fees would give us a total, all-in purchase price of $3,135,000. How much of that is due to government involvement (including associated legal and interest fees)? Around $695,000.
That’s $695,000 our buyers will pay – over and above the actual costs of land and construction. Or, in other words, a 22 percent markup.
Let’s put this a different way. If the cost of the median home in Canada dropped by 22 percent, then around 1.5 million extra Canadian households could enter the market. Congratulations, you’ve solved the housing affordability crisis. (Although supply problems will still need some serious work.)
Now it’s probably not realistic to expect politicians in places like the Ontario Legislature and Toronto City Council to give up that kind of income. But just lowering their intake by 50 or even 25 percent – and reducing the costs and pain points of acquiring permits – could make a serious difference. Not only would it lower home sale prices, but it would lower the barriers to entry for new home construction.
Just what were all those taxes worth to governments? Let’s begin with the City of Toronto. Their 2023 Financial Report tells us that land transfer taxes generated $944 million, permits and zoning applications delivered $137 million, and development fees accounted for $1.45 billion. Total city revenues in 2023 were $16.325 billion.
We’re told that all that money was spent on:
Roads and transit systems
Water and wastewater systems
Fire and emergency services
Parks and recreation facilities
Libraries
Well, we do need those things right? We can’t expect the city to just eliminate fire and emergency services.
Wait. Hang on. I seem to recall being told that revenue from my property tax bill covered those services. Yes! My property tax did fund those things. Not 100 percent of those things, but a lot.
Specifically, Toronto property tax revenues cover 65 percent of the municipal costs for roads and transit systems, 85 percent of fire and emergency services, 75 percent of parks and recreation facilities, and 95 percent of library costs (even though very few people use public libraries any more).
Granted, property tax revenue covered only five percent of water and wastewater systems, but that’s because another 40 percent came from user fees (i.e., utility bills).
So revenues from land transfer taxes, developer fees, and permitting aren’t an insignificant portion of City income, but they’re hardly the linchpin propping the whole thing up either. City Council could respond to losing that income by increasing property taxes. Or – and I’m just throwing around random ideas here – they could reduce their spending.
Now what about the province? I couldn’t get a good sense of how much of their HST revenue comes specifically from new home sales, but Ontario’s 2023–24 consolidated financial statements tell us that provincial land transfer taxes brought in $3.538 billion. That would be around 1.7% of total government revenues. Again, a bit more than a rounding error.
Politics is about finding balances through trade offs. Sure, maintaining program spending while minimizing deficits is an ongoing and real challenge for governments. On the other hand, they all say they’re concerned about the housing crisis. Foregoing just one to five percent of revenues should, given the political payoffs and bragging rights that could follow, probably be an easy pill to swallow.
A few weeks ago I reached out to the City of Toronto Housing Secretariat and the Province of Ontario’s Municipal Affairs and Housing for their thoughts. I received no response.
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“So we’re going to have an order on that pretty soon – we can’t do that to our farmers and leisure too, hotels, we’re going to have to use a lot of common sense on that.”
President Donald Trump said Thursday that changes are coming to his aggressive immigration policies after complaints from farmers and business owners.
“Our great Farmers and people in the Hotel and Leisure business have been stating that our very aggressive policy on immigration is taking very good, long time workers away from them, with those jobs being almost impossible to replace,” Trump wrote in a social media post Thursday morning. “In many cases the Criminals allowed into our Country by the VERY Stupid Biden Open Borders Policy are applying for those jobs. This is not good. We must protect our Farmers, but get the CRIMINALS OUT OF THE USA. Changes are coming!”
Later Thursday, Trump made it clear that businesses need workers.
“Our farmers are being hurt badly. They have very good workers – they’re not citizens, but they’ve turned out to be great. And we’re going to have to do something about that,” the president said.
He added: “We can’t take farmers and take all their people and send them back because they don’t have, maybe, what they’re supposed to have.”
Just how Trump may change his approach to immigration enforcement remains unclear, but he said he wants to help farmers and business owners.
“You go into a farm and you look and people, they’ve been there for 20 or 25 years and they work great and the owner of the farm loves them and you’re supposed to throw them out. You know what happens? They end up hiring the criminals that have come in, the murderers from prisons and everything else,” Trump said.
Trump said changes would be coming soon, but gave little detail on how policies could change.
“So we’re going to have an order on that pretty soon – we can’t do that to our farmers and leisure too, hotels, we’re going to have to use a lot of common sense on that.”
In a later post on Truth Social, Trump said illegal immigration had destroyed American institutions.
“Biden let 21 Million Unvetted, Illegal Aliens flood into the Country from some of the most dangerous and dysfunctional Nations on Earth — Many of them Rapists, Murderers, and Terrorists. This tsunami of Illegals has destroyed Americans’ Public Schools, Hospitals, Parks, Community Resources, and Living Conditions,” the president wrote. “They have stolen American Jobs, consumed BILLIONS OF DOLLARS in Free Welfare, and turned once idyllic Communities, like Springfield, Ohio, into Third World Nightmares.”
He added that deportations would continue: “I campaigned on, and received a Historic Mandate for, the largest Mass Deportation Program in American History. Polling shows overwhelming Public Support for getting the Illegals out, and that is exactly what we will do. As Commander-in-Chief, I will always protect and defend the Heroes of ICE and Border Patrol, whose work has already resulted in the Most Secure Border in American History. Anyone who assaults or attacks an ICE or Border Agent will do hard time in jail. Those who are here illegally should either self deport using the CBP Home App or, ICE will find you and remove you. Saving America is not negotiable!”
For years, Canada’s political class sold us on the idea that carbon taxes were clever policy. Not just a tool to cut emissions, but a fair one – tax the polluters, then cycle the money back to regular folks, especially those with thinner wallets.
It wasn’t a perfect system. The focus-group-tested line embraced for years by the Trudeau Liberals made no sense at all: we’re taxing you so we can put more money back in your pocketbooks. What the hell? If you care so much about my taxes being low, just cut them already. Somehow, it took years and years of this line being repeated for its internal contradiction to become evident to all.
Yet, even many strategic conservative minds could see the thinking had internal logic. You could sell it at a town hall. As an editorial team member at an influential news organization when B.C. got its carbon tax in 2008, I bought into the concept too.
And now? That whole model has been thrown overboard, by the very parties had long defended it with a straight face and an arch tone. In both Ottawa and Victoria in 2025, progressive governments facing political survival abandoned the idea of climate policy as a matter of fairness, opting instead for tactical concessions meant to blunt the momentum of their foes.
The result: lower-income Canadians who had grown accustomed to carbon tax rebates as a dependable backstop are waking up to find the support gone. And higher earners? They just got a tidy little gift from the state.
The betrayal is worse in B.C.
This new chart from economist Ken Peacock tells the story. He shared it last week at the B.C. Chamber of Commerce annual gathering in Nanaimo.
Ken-Peacock- B.C. Chamber of Commerce annual gathering in Nanaimo.
What is shows is that scrapping the carbon tax means the poor are poorer. The treasury is emptier.
What about the rich?
Yup, you guessed it: richer.
Scrubbing the B.C. consumer carbon tax leaves the lowest earning 20 percent of households $830 per year poorer, while the top one-fifth gain $959.
“Climate leader” British Columbia’s approach was supposed to be the gold standard: a revenue-neutral carbon tax, accepted by industry, supported by voters, and engineered to send the right price signal without growing the size of government.
That pact broke somewhere along the way.
Instead of returning the money, the provincial government slowly transformed the tax into a $2 billion annual cash cow. And when Mark Carney won the federal election, B.C. Premier David Eby, boxed in by his own pledge, scrapped the tax like a man dropping ballast from a sinking balloon. Gone. No replacement. No protections for those who need them most.
Filling the gas tank, on the other hand, is noticeably cheaper. Of course, if you can’t afford a car that might not be apparent.
Spare a thought for the climate activists who spent 15 years flogging this policy, only to watch it get tossed aside like a stack of briefing notes on a Friday afternoon.
Who could not conclude that the environmental left has been played. For a political movement that prides itself on idealism, it’s a brutal lesson in realpolitik: when power’s on the line, principles are negotiable.
But here’s the thing: maybe the carbon tax model deserved a rethink. Maybe it’s time for a grown-up look at what actually works
With B.C. now reviewing its CleanBC policies, here’s a basic question: what’s working, and what’s not?
A lot of emission reductions in this province didn’t come from government fiat. They were the result of business-led innovation: more efficient technology, cleaner fuels, and capital discipline.
That, plus a hefty dose of offshoring. We’ve pushed our industrial emissions onto other jurisdictions, then shipped the finished goods back without attaching any climate cost. This contradiction particularly helped to fuel the push to dump carbon pricing as a failed solution.
The progressives’ choice was made once the anti-tax arguments could no longer be refuted: to limit losses it would be necessary to deep six an unpopular strand of the overall carbon strategy. This, to save the rest. That’s why policies like the federal emissions cap haven’t also been abandoned.
To give another example, it’s also why British Columbia’s aviation sector is in a flap over the issue of sustainable aviation fuel. Despite years of aspirational policy, low emissions jet fuel blends remain more scarce than a long-haul cabin upgrade. The policy’s designers correctly anticipated that refiners would never be able to meet the imposed demand, and so as an alternative they provided a complex carbon credit trading scheme that will make the cost of flying more expensive. For those with a choice, nearby airport hubs in the United States where these policies do not apply will become an attractive alternative, while remote communities that have no choice in the matter will simply have to eat the cost. (Needless to say, if emissions reduction is your goal this policy isn’t needed anyways, since the decisions that matter in reducing global aviation emissions aren’t made in B.C. and never will be.)
I’m not showing up to bash those who have been genuinely trying to figure things out, and found themselves in a world of policy that is more complicated and unpredictable than they realized. Simply put, the chapter is closing on an era of energy policy naïveté.
The brutally honest action by Eby and Carney to eject carbon taxes for their own political survival could be read as a signal that it’s now okay to have an honest public conversation. Let’s insist on that. For years now, debate has been constrained in part by a particular form of linguistic tyranny, awash in terminology designed to cow the questioner into silence. “So you have an issue with clean policies, do you? What kind of dirty reprobate are you?” “Only a monster doesn’t want their aviation fuel to be sustainable.” Etc. Now is the moment to move on from that, and widen the field of discourse.
Ditching bad policy is also a signal that just maybe a better approach is to start by embracing a robust sense of the possibilities for energy to improve lives and empower all of the solutions needed for tomorrow’s problems. Because that’s the only way the conversation will ever get real.
Slogans, wildly aspirational goal setting and the habit of refusing to acknowledge how the world really works have been getting us nowhere. Petroleum products will continue to obey Yergin’s Law: oil always gets to market. China and India will grow their economies using reliable energy they can afford, having recently approved the construction of the most new coal power plants in a decade amid energy security concerns. Japan, which has practically worn itself out pleading for natural gas from Canada, isn’t waiting for the help of last-finishing nice guys to guarantee energy security: today, they are buying 8% of their LNG imports from the evil Putin regime.
Meanwhile, we’re in the worst of both worlds: our courageous carbon tax policy that was positioned as trailblazing not just for B.C. residents but for the world as a whole – climate leadership! – is gone, the poorest are puzzling over why things feel even more expensive, and nobody knows what comes next.
Ken-Peacock- B.C. Chamber of Commerce annual gathering in Nanaimo.
