HST prov­inces see hiccups in early go­ing

Winnipeg Free Press - Section G - - HOMES - By Mike Moore

BRI­TISH Columbia and On­tario re­cently achieved tax no­to­ri­ety with the in­tro­duc­tion of a har­mo­nized sales tax on July 1. Al­though there were cer­tainly pros and cons sur­round­ing the de­ci­sion to har­mo­nize, the cons have been con­sid­er­ably more prom­i­nent the past few months.

In B.C., for­mer premier Bill Van­der Zalm has waged a lengthy fight against the HST, cul­mi­nat­ing in a pe­ti­tion of more than 700,000 sig­na­tures rep­re­sent­ing over 10 per cent of the reg­is­tered vot­ers. The courts and the chief elec­toral of­fi­cer have ruled this pe­ti­tion to kill the HST valid and or­ga­niz­ers are now wait­ing for the next step in the process.

In fact, Van­der Zalm has threat­ened to re­call ev­ery Lib­eral (the party in power) MLA if there is fur­ther de­lay to his pe­ti­tion’s progress. He has asked cur­rent Premier Gor­don Camp­bell to con­duct a fall vote on this is­sue.

This could have huge im­pli­ca­tions for the HST in other prov­inces cur­rently with the tax or those con­sid­er­ing it.

In On­tario, there has been noth­ing nearly as rad­i­cal. How­ever, there has been some im­me­di­ate im­pact. An ar­ti­cle in the Fi­nan­cial Post es­ti­mated 75 per cent of all ren­o­va­tion con­tracts have gone the way of the un­der­ground econ­omy as a re­sult of the HST in­tro­duc­tion.

The ad­di­tional eight per cent tax was enough to push an al­ready tax-wary group of clients to­ward il­le­gal and un­safe ren­o­va­tion prac­tices. So, the On- tario govern­ment is col­lect­ing a new eight per cent tax on 25 per cent of the busi­ness, but los­ing 100 per cent of the taxes on 75 per cent of the busi­ness. There has to be a bet­ter way of deal­ing with the un­der­ground econ­omy in ren­o­va­tions.

Back in B.C., the pro­vin­cial real es­tate as­so­ci­a­tion is gear­ing up for a cam­paign against the prov­ince’s prop­erty trans­fer tax. It is propos­ing a phase-out of the tax. B.C. has the high­est such tax in Canada; Man­i­toba has the sec­ond­high­est. Win­nipeg Real­tors have been in­volved in a sim­i­lar cam­paign for the past year.

Some crit­i­cize Man­i­toba for tak­ing the slow, steady ap­proach but, based on what we are see­ing in B.C. and On­tario, it ap­pears to be bet­ter to do it right the first time rather than rush in un­pre­pared and then have to cor­rect things later. As seen in both prov­inces, per­haps the best tax is no tax at all.

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