The rejection of the harmonized sales tax (HST) has created a boatload of uncertainty for the B.C. housing industry.
B.C.’s move to the HST in July 2010 added seven per cent to the cost of labour in home renovations – a tax that wasn’t applied under the PST. New homes over $525,000 are also taxed under the HST – for the time being.
Now, in the wake of the referendum, contractors in B.C. are caught in the transition back to the provincial sales tax, which Finance Minister Kevin Falcon said would take 18 months.
Peter Simpson, President and CEO of the Greater Vancouver Home Builders’ Association, says the B.C. government didn’t offer up much of a tax plan that businesses can use for the intervening year-and-a-half.
Will B.C. residents step away from the market? Simpson says no one can predict the exact outcome, but he expects consumers will put off some reno projects, lowering revenue for contractors.
Emergencies like a leaky roof will get taken care of, he says, but a kitchen or a media room reno may have to wait.
One solution would see the province offer tax rebates for renovation projects between now and the shift back to the PST, but Simpson says nothing like that was mentioned by Falcon or Premier Christy Clark after the results came out – even though she said the Liberals had prepared a plan B.