HST Will Impact Housing Industry
By 250 News
Prince George, B.C. - The harmonizing f the GST and the provincial sales tax will have a significant impact on housing construction says Alan Creuzot of the Canadian Home Builders Association. Speaking on the Meisner program on 93.1 CFIS FM, Creuzot says the addition of the 7% provincial tax will fuel the underground economy as people look for ways to save dollars. “The underground economy, even here, is huge, and people have to open their eyes. If you get caught there are major repercussions, but I think it’s going to fuel the underground economy even more.”
The B.C. Northern Branch of the Canadian Home Builders Association says the pst component should be 2% not 7% “ The actual pst component, on average, on the construction of a home, is 2%” says Creuzot. He says the CHBA reps met with Finance Minister Colin Hansen last week “The Provincial Association has taken this quite heavy, it just opens up a whole can of worms”.
“Studies show 18-20% of the cost of a new home can be just taxes and levies” says Creuzot. He says the HST will also make it more difficult for people to qualify for a mortgage “You can give me all the rebates that you want, rebates happen at the end. Banks aren’t rubber stamping mortgages anymore so, they’re not taking all that into consideration.”
Creuzot says it is not uncommon for a new home to cost $400 thousand dollars. While the average home price in Prince George is listed as much lower than that, Creuzot says that is because of the value of resale homes. The threshold for the $20 thousand dollar rebate under the HST is $400 thousand dollars. “A $400 thousand dollar home carries a 5% GST, so the actually price is now $420 thousand dollars. In theory, the existing pst component of 2% will be removed and the cost of the home is now $390 thousand, but then add on the 12% HST and the price of the home is $439 thousand. You will have to qualify for 19 thousand dollars more. The banks don’t care that you’re going to get a rebate, because a lot of people take that rebate and head to Mexico for a holiday or buy furniture.”
The impact on renovations is also significant as the HST will be added to labour costs as well.
Creuzot is still hopeful the government will make changes “They say they are listening to us, the say they don’t want to put a strain on the housing industry. So hopefully they will raise the threshold. Hopefully they will see the light.”
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Posted by: lmorge on September 14 2009 4:02 PM
I do not have a job that allows me to own a $400,000 house, and I would imagine that most people in PG are in the same situation. Right now it looks like this is a tax for the rich, if you can afford a $400,000 house, you can pay the tax on it.
If these homebuilders want me to care about the HST on a new house, then they have to stop building these huge houses on big lots, and built something for those of us who make $20/hour.
Give me a 24' wide two story house on a 33' wide lot with a small back yard, 1,200 square feet is more than most of us grew up in, and certainly will house today’s smaller families.