August 21 - CHBA releases major report on HST on renos

August 24, 2009

CHBA releases major report on HST on renos

In the wake of the Ontario HST experience and with the Province of British Columbia announcing that it will harmonize its PST with the federal GST on the same effective date as Ontario (July 1, 2010), the Canadian Home Builders’ Association commissioned Altus Group Economic Consulting to prepare a report on the impacts of harmonization on the renovation sector.

The report -- The Potential Impacts of Sales Tax Harmonization on the Residential Renovation Sector in Canada -- discloses that the proposed HST will increase the effective tax rate on contractor renovations in Ontario to 8% and in British Columbia to 7%. “The HST proposals in Ontario and British Columbia represent a massive tax increase on renovation activity,” notes CHBA president Gary Friend.

The report observes that the most effective and efficient way to ameliorate this impact and achieve tax
neutrality is for the provincial governments to reduce the rate of the HST applied to contractor
renovations, which in Ontario means a renovation tax rate of 2.6%.

The report further observes that unless this action is taken, there will be a number of negative effects,

• Reducing 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 report was the subject of a recent Toronto Star New in Homes section column by Stephen Dupuis which can be found by clicking HERE. The complete Altus Group report can be found by clicking HERE.