P.E.I. forum told HST could hike cost of residential construction

Mitch MacDonald
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Richard Lind, a certified residential builder from Nova Scotia, speaks Tuesday night during a meeting in Charlottetown hosted by Canadian Home Builders Association P.E.I.

A harmonized sales tax poses a threat to new P.E.I. homeowners as it could increase the cost of residential construction by up to eight per cent, a public forum was told Tuesday night.

The public session discussing the possible HST impact on home construction and renovations was held in Charlottetown.

The session was hosted by the P.E.I. Residential Construction Sector Council (PEIRCSC) with sponsorship from the Canadian Home Builders Association PEI (CHBA PEI).

Peter Brown, PEIRCSC president and owner of Bayside Builders in Summerside, said the group held the session not to promote a position on HST, but rather to raise some concerns and questions regarding the tax’s future effect on the sector.

“We think this is an extremely crucial discussion to have on either encouraging or discouraging Islanders who first of all own their own homes, or off-islanders to come and invest in our beautiful Island.”

The harmonized sales tax is set to be implemented April 1, 2013, making P.E.I. the final Maritime province to switch to the tax from the goods and services tax (GST) and provincial sales tax (PST). The tax rate on most items will drop from 15.5 per cent to 14 per cent, however, there will be fewer exemptions.

Brown said there are four primary concerns in the sector due to increased construction costs under the tax: job losses due to fewer homes being constructed, a growing underground economy, affordability for seniors and all new rentals, and first-time homebuyers delaying ownership.

Brown said, for the sake of discussion, the group estimated the cost of a new home increasing four to eight per cent for a homebuyer.

A presentation from Beth Gaudet, provincial tax commissioner, pegged the cost at three per cent.

Brown said the estimate came from an impact study done in N.S. and N.B. following the implementation of HST, where the average homebuyer paid an extra eight per cent.

However, Brown pointed out that, from their organization’s research, if every business passed on savings through HST, it would be a 3.5 per cent increase.

“I don’t understand the math, if you take an industry that is valued somewhere close to a billion dollars and you increase the cost to the end user by four to eight per cent, what happens?” he asked.

“Does everyone build an eight per cent smaller home? Do they wait eight per cent longer in their thinking and planning to build a home? Do they have to save eight per cent more before they can get into the homebuyer market? We don’t have answers, whatwe’re doing is posing the concerns.”

Richard Lind, a homebuilder who was president of the Canadian Home Builders Association of Nova Scotia when the province implemented HST in 1997, said they found that some had to hold off building their home but there was a major upswing in the industry before the tax was implemented.

He added that at the time the entire provincial economy was on an upswing, which also reduced worries of a burgeoning underground market.

“There was lots of work around for everybody, whether you were legitimate or underground. Although we saw the potential for an increased underground economy because of this new tax ... we took it in stride,” he said.

“The whole economy was on an upswing so the crunch that we felt from losing some things to the underground economy didn’t hurt so much. From what I understand, you’re not looking at a strong upswing in the economy right now in P.E.I.”

The province is hosting a community forum on the HST tonight at the West Royalty Community Centre at 7:30 p.m.

 

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Recent comments

  • arthur bernard
    June 27, 2012 - 20:03

    Can you people not understand, everyone will have to pay more, gas will increase from 5 percent GST to 14 percent hst, electriclty will rise. wake up.

  • HMR
    June 27, 2012 - 11:45

    Uncle Ruckus must be totally blind,not follow the news,have his Liberal head in the sand to have faith in the non leadership of Ghiz- one of the worst Premiers in PEI history. Under his lack of leadership the net debt of the Island has doubled in just five years that was built up since confederation. Money wasted on sand hills in Borden, Homburg hotel, huge empty buildings in Upton park, moving the Department of Education to Summerside, paint shop to Tignish, an unnecessary huge school in his own riding, closing schools, the PNP issue,and on and on! What a Premier!!!!

    • Sentance
      June 27, 2012 - 13:53

      I don't see the point of wild exaggeration. Yes, the Ghiz government has run up the debt while in office, mainly on infrastructure projects, but by a factor of perhaps a third, far from doubling it.

  • Low Income Islander pro HST
    June 27, 2012 - 11:25

    So Brown is admitting that after business savings from HST, the real increase is only 3.5%... I don't see what he fuss is about? I have to honestly say that so far this government has stayed true on their word to low income islanders. I don't see this affecting any household that makes under $55,000 cause none of us have the luxury of building a new home, or even paying a premium for renting a brand new spot. That goes for low income renting seniors too. Bottom line if you are in a position to build a new home, you should be able to pay a little extra for the greater good.I can really see this 'consumption/value-added tax' helping us balance the budget while protecting our most vulnerable citizens. If this is all that is coming out at these consultations then I say it can't be implemented soon enough.

  • Uncle Ruckus
    June 27, 2012 - 08:46

    maybe it does and maybe it doesn't.... but in the end it's for the greater good of pei and these systems only work if we all buy in as citizens and stand behind our leaders. having faith in ghiz and the good moves he makes will help we avoid the great depression 2.

    • Townie
      June 27, 2012 - 09:07

      Do you get paid by the word to say this drivel? When you lay it all out on the table and put it into simple terms this tax is a tax grab that will break the backs of mid to lower income families on PEI.

    • youasked forit
      June 27, 2012 - 09:32

      unkle rukus what planet are you from. ghiz hasn't made a good decision sinc he took office. the hst will collect 25 million in newmoney and will probaly be alot more. who do you think will pay for this certainly not the wealthy beacuse only they can afford the big ticket items which will be cheaper.the poor and middle class will pay for it and suffer more.when you go to purchase something and they ask you for hst just tell them you will give it to them when you get your rebate. hahaha. and rem,ember you asked for it

    • Uncle Ruckus
      June 27, 2012 - 11:27

      "breaking backs of islanders" now whos talking drivel, i'm in the mid range myself (i think) and i think it's a necessary move to clear the debt and counter the ei changes that harper's hitting us with... yeah times are going to be tough but sometimes life isn't all sunshine and rainbows. would you rather pay a little extra now or end up like greece in 2 years? ghiz is wisely thinking long terms and you'll be thanking him later.

  • City girl
    June 27, 2012 - 08:43

    Saskatchewan does not have the HST.

    • Resident
      June 27, 2012 - 12:13

      I am going to pay 9% more for my kids hockey expenses. We will have to drop some of the sports my kids now participate in... This is no good.