Liberal candidate plans to cut middle-class taxes and eliminate GST on new homes for first-time buyers
Liberal leadership candidate Chrystia Freeland is making housing affordability a key focus of her campaign, pledging income tax cuts for the middle class and a GST exemption on new homes for first-time buyers.
Her proposals, unveiled this week, aim to relieve financial pressure on Canadians struggling with high housing costs, rising interest rates, and inflation.
Freeland, who previously served as federal finance minister, has promised to cut the tax rate for Canadians earning between $57,375 and $114,750 by reducing the second income tax bracket from 20.5% to 19%. The move would save qualifying taxpayers up to $550 annually.
Her housing plan includes eliminating the Goods and Services Tax (GST) on new homes for first-time buyers, which could provide savings of up to $75,000 on properties worth $1.5 million or less. The measure is meant to lower upfront costs for young Canadians looking to buy their first home.
Freeland’s plan comes at a time when housing affordability remains one of the most pressing issues for Canadians. According to a November report from Statistics Canada, 45% of Canadians said they were "very concerned about housing affordability" due to rising home prices and rental costs.
The issue has also been a major focus of other leadership candidates. Fellow Liberal contender Karina Gould recently introduced a three-part housing plan designed to combat homelessness, increase housing supply, and support first-time buyers.
Gould’s proposals include revamping the First-Time Home Buyer Incentive (FTHB), which was discontinued in March 2024, by boosting the government’s contribution toward down payments from 10% to 50%. She has also pledged a $2,000 tax credit to offset provincial land transfer taxes for first-time buyers and is advocating for the construction of climate-resilient modular homes to expand affordable housing options.
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Meanwhile, Conservative Leader Pierre Poilievre has also made housing a key priority. Last October, he promised to eliminate the federal sales tax on new homes priced up to $1 million, calling on provincial governments to remove their own sales taxes as well. The Conservatives estimate their plan would save homebuyers $50,000 on a home priced at the maximum threshold.
Freeland’s platform extends beyond housing. She has also proposed capping credit card interest rates at 15%, with the goal of eventually lowering the cap to 10%. Additionally, she wants to limit profit margins on essential grocery items (including milk, eggs, fresh produce, canned goods, and baby formula) arguing that food costs have become unaffordable for many Canadians.
Her grocery price plan is similar to one proposed last July by NDP leader Jagmeet Singh, who called on the federal government to intervene in pricing on essential goods to protect consumers.
Freeland’s leadership bid follows her departure from cabinet on December 16, where she openly clashed with Prime Minister Justin Trudeau over affordability measures. She strongly opposed Trudeau’s proposed GST holiday and the $250 rebate checks for working Canadians, calling them “costly political gimmicks” that would do little to help long-term affordability.
Read more: Freeland resignation plunges Trudeau government into crisis
Her resignation, along with growing dissatisfaction within the Liberal Party, ultimately pushed Trudeau to announce he was stepping down as leader. The Liberal leadership race concludes on March 9, with Freeland and Gould currently trailing frontrunner Mark Carney in the odds to replace Trudeau.
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