Renovation Industry Could Take A Punch From HST
By 250 News
Monday, August 17, 2009 03:58 AM
Prince George, B.C. - A report prepared for the Canadian Home Builders Association indicates the harmonizing of the provincial sales tax and GST, will have a serious negative impact on the home renovation industry.
The report prepared by Altus Group Economic Consulting, notes the Harmonized Sales Tax (HST) will increase the effective tax rate on contractor renovations in B.C. by 7%. When the B.C. increase is coupled with the proposed HST in Ontario, the report concludes the tax burden on homeowners and rental housing investors will increase by close to one billion dollars a year.
Although the B.C. Government says the switch to a harmonized tax will save money in the long run, the report suggests the only way to achieve tax neutrality in this province is to reduce the provincial portion of the tax on contractor renovations to 2.3%.
The report also observes that unless this action is taken, there will be a number of negative effects,including:
• Reduction in renovation activity, which will affect the economy and employment;
• Shifting contractor renovation activity into the underground economy;
• Undermining government policies and programs to promote housing affordability and choice, and
environmental objectives; and
• Reducing the quality and maintenance of the existing housing stock
The B.C. Government plans to move to a Harmonized Sales Tax effective July 1 of 2010.
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Yes it will cost the citizen money, if you add 7% to 5% for 12%. If they show up with a 10%HST, it will be a bit more pallatable.