HST
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August 17, 2009 |
Written by |
Volume 9, Issue 29 |
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INHARMONIOUS TAX |
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The proposed tax harmonization, planned for July 1, 2010, has caused more headache than harmony. Nearly 20 GVHBA builders and renovators attended an HST roundtable meeting last Tuesday. Topics of discussion included thresholds, rebates, indexation, transition and the expected multiplier impact on the already burgeoning underground economy. Last Wednesday a meeting was convened at CHBA-BC to determine the provincial association’s position. Attending from GVHBA were CHBA National President Gary Friend, CHBA Canadian Renovators’ Council Chair John Friswell and yours truly. At noon today we are meeting with Finance Minister Colin Hansen to express industry concerns with the proposed harmonized sales tax. Instead of meeting independently as a local association representing a major-market residential construction industry, as invited by Minister Hansen, GVHBA will join the CHBA-BC delegation, comprised of First-Vice President Bob Deeks from Whistler and CEO MJ Whitemarsh. GVHBA leaders wish to support the CHBA-BC delegation and position as well as personally verbalize the impacts of HST on our members locally. As you know, I have been responding to a steady stream of media questions since this bomb was dropped on July 23, expressing concerns with the HST proposal as presented and cautioning that whatever rolls out on July 1 must be tax neutral, so that home buyers and homeowners contemplating renovation will not pay any more tax under HST than they do now. The tax burden on home buyers is growing. After calculating taxes, fees and levies imposed by the federal, provincial, regional and local governments, a new single-detached home selling for $564,933 (municipality identity withheld) was determined to have a tax component of $75,481. That’s onerous enough, but on July 1, 2010, the tax whack will be $82,974 – an increase of $7,493 or 9.9%, increasing the selling price to $572,486. The buyer of that home (firefighter, nurse, police officer, teacher) will more than likely be lumping the lion’s share of that tax burden on a mortgage amortized over 25 years. Perhaps the builder should advertise his home as available for $489,500 – plus applicable taxes, fees, charges, levies, etc. – like the auto dealers do. The extent of the anti-HST firestorm was likely underestimated by the provincial government. The B.C. reaction is far greater – and much more vitriolic – than the pushback when HST was announced in Ontario earlier this year. GVHBA, CHBA-BC, UDI, the Ministry of Finance Tax Policy Branch and others will meet to discuss HST technicalities, including a crucial element requiring clarification – transition rules. Interactive consultation workshops are being considered. This thorny issue has cast a dark cloud on a sunny summer. |
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