The Canada Mortgage and Housing Corporation (CMHC) is giving $250,000 to Generation Squeeze, an advocacy organization for young Canadians, to research ways to improve housing affordability. The group stated it will focus on “wealth generated by rising home values,” which incited fears the government is considering a home equity tax on the capital gains generated when Canadians sell their homes.
But more taxes won’t increase affordability. If the government really wants to know why housing is unaffordable, it could have saved the $250,000 and looked in the mirror. Governments at all levels drive up the cost of housing in two ways: by restricting the housing supply and by increasing housing costs through taxes and fees.
The CMHC defines housing as affordable when “it costs less than 30 per cent of a household’s before-tax income,” which includes rent or mortgage (principal and interest) payments, property taxes and other home bills.