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Conservative Leader Pierre Poilievre speaks at a news conference in Ottawa on Oct. 28.PATRICK DOYLE/The Canadian Press

Federal Conservative Leader Pierre Poilievre said he would eliminate the federal goods and services tax on new homes priced under $1-million and $8-billion from the Liberals’ existing housing programs if his party forms the government after the next election.

Mr. Poilievre said Monday that eliminating the 5-per-cent GST would help spur more home building at a time when developers have been hit by rising construction and labour costs.

The tax break would reduce housing prices because developers would pass on the savings to buyers, the Conservative Leader said during a campaign-style event in an Ottawa suburb.

“Because if they don’t, then buyers will buy from someone else. That’s what competition means,” he told reporters.

Mr. Poilievre made the announcement as the federal political parties inch closer to election footing.

Though the NDP and Bloc Québécois have been supporting the minority government, the NDP has ended its “supply and confidence” agreement with the Liberals. And Bloc support could run out on Tuesday if the government does not back two pieces of legislation – on federal benefits for seniors and on supply management.

Housing policy is expected to be a dominant theme in the next election, and the Liberals and Conservatives have jockeyed for the political upper hand on the file over the last two years.

Toronto condo developer PlazaCorp called the proposed GST rebate on homes meant for ownership a step in the right direction. Its chief operating officer Scott McLellan said it would help reduce costs for buyers.

“If your costs are lower, your end price will be lower,” he said.

Non-profit developers also praised the proposed tax cut.

Habitat for Humanity Canada, which builds new homes and helps families buy them, said the tax break would help it construct more housing units.

“Not having to pay it would free up significant dollars for Habitat for Humanity to build even more badly needed homes,” said its chief executive officer Pedro Barata, adding that for every 100 homes it builds, the charity could add up to 20 affordable homes depending on local markets.

Clark: Conservative housing proposal puts Liberals on the back foot

Options for Homes, a non-profit that helps low-income earners buy homes, said lower home prices would help families make the jump to home ownership and free up rental housing in the process.

“Supporting non-profits that create viable pathways to home ownership has a direct impact on rental supply,” said its chief executive Daniel Ger.

It is unclear how helpful the proposed tax break would be for the most expensive markets of Vancouver and Toronto where the typical home price exceeds $1-million.

Mr. McLellan said the majority of PlazaCorp’s current inventory for sale is between $900,000 and $1.1-million. “There’s not much for under $1-million in Toronto any more,” he said.

The tax rebate would be similar to a Liberal government policy that eliminates the GST and the federal portion of the harmonized sales tax (HST) on newly built rental homes.

Mr. Poilievre had previously promised to remove the GST on new rental construction with prices below market value and would pay for that out of the Housing Accelerator Fund, a $4.4-billion program launched by the Liberals last year. It provides capital to local governments to increase home building. The money runs out in 2027-2028.

Mr. Poilievre said Monday his new proposal would cost $8-billion “over several years” and would be paid for out of the Accelerator Fund, and the Housing Infrastructure Fund – a $6-billion-allotment announced by the Liberals this year. It helps cover the cost of infrastructure needed for new housing, such as sewers. That money is meant to be spent over a 10-year period.

The three development executives declined to comment on the proposed cuts to these programs.

Mr. Poilievre said the two funds aren’t building more homes, but Federal Housing Minister Sean Fraser said cutting the money when municipalities are just getting started on the projects now supported would be “nonsensical.”

“I can’t help but think there’s Conservative members of Parliament who are now campaigning on a commitment to take tens of millions of dollars away from their communities, presumably raising property taxes on their constituents to pay for it when they wouldn’t actually get the benefit from deals that we have already reached,” Mr. Fraser told reporters.

Both funds tie the promised federal money to a series of conditions laid out to spur construction, an approach Mr. Poilievre uses in his own housing policy as well.

He told reporters Monday the proposal to remove the GST would also raise $2-billion for the government based on his party’s prediction that the tax cut would help get 30,000 new homes built each year.

“It’s going to spark more home building, which means more workers and businesses will be making money building homes, and therefore, at the existing rates, they’ll be paying more into the system,” he said.

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