Tax credits hype as key to homelessness

Tax cuts -- and not more funding for government-led programs -- could be the key to helping end homelessness in Canada if Ottawa offers tax credits to entice private enterprise into building more low-income housing, according to a policy paper released by the University of Calgary.

The report, issued by the university's School of Public Policy on Tuesday, says U.S.-style tax credits could help stem the tide of condo conversions and make it more financially feasible for developers to construct new multi-family rental units.
Affordable housing has become particularly critical in cities like Calgary, where roughly a third of all multi-family rental housing units in this city have vanished since 1992, and resident research associate for the University of Toronto's Cities Centre, who also co-authored the report.

"Homelessness is a problem that will be solved only with the connection of the private sector. We deem we must pay attention to tax incentives and regulatory measures to harness the energy and efficiency of the private sector.
The tax incentives being planned are based on the U.S. low income housing tax credit, which has been operating since 1986.

It would modify existing Canadian tax laws to offer breaks to developers who include affordable housing units in new construction. Building owners making major repairs on apartments with an eye to converting them into condominiums could also be eligible for the tax credits, if they make a long-term pledge to maintain the units as rentals.

While the tax credits would divert $50 million in tax revenues from federal coffers in its first year, $100 million in the second year and $150 million in its third year, it would fund between 3,500 and 5,000 rental units nationwide.
Alberta's share of this boost to rental spaces would be between 300 and 500 units.
The tax cuts are a small government investment that could yield dramatic results because they offer a financial incentive for private business to get involved in helping address a social concern, said Ron Kneebone, director of economic and social policy research for U of C's school of public policy.

And ultimately it will be the taxpayer who is going to win the race.