Don Cayo
Sun
Unless you’re in the market for a new home, Thursday’s announcement of a bigger HST break on new homes might have you asking, “Why not something for me?”
If so, you’ve got company. There are lots of other losers. They include those whose issue is the cost of restaurant meals, bus tours, funerals, crash helmets, life jackets, first-aid kits, smoke detectors, energy-conservation equipment, non-prescription drugs, bikes, school supplies (but not books), home care for Granny, cable TV, haircuts and manicures, or any of the myriad other things that are exempt now from PST but will be hit soon by HST.
So why such a big perk to B.C.’s relative handful of home builders and buyers, and nothing extra for the masses who buy all that other stuff?
The charitable might argue it’s because housing is so important and so burdened by taxes — more than $75,000 on a $550,000 home — that an added straw from HST might break the camel’s back.
But the cynical would say it’s because the province was able to give housing a break through sleight-of-hand, and this would be harder to do with other commodities and services.
The problem is that Victoria is limited in the exemptions it can give by its agreement with Ottawa. Its seven-per-cent share of a new 12-per-cent HST must apply to at least 95 per cent of the existing GST base. And it has already exempted virtually all of the other five per cent through earlier announced breaks for gas and diesel fuel, books, children’s-sized clothing, car seats and booster seats, diapers and feminine hygiene products.
If you’re an astute reader, you’ll notice I didn’t mention that we won’t pay HST on residential heating costs.
That’s because this is structured as a rebate after the fact, not as a point-of-sale exemption. Therefore it doesn’t come under the five-per-cent cap.
This same trick is how the government is able to create what amounts to a very large exemption on new homes. They’ll simply structure it as a rebate and call it by that name.
When the HST policy was announced last summer, the break was to be five per cent of the first $400,000 a homeowner spends on the purchase, and now it’s the first $525,000. (My colleague Derrick Penner has spelled out in a separate story what this will mean to buyers and to builders.)
The rebate concept works well at this scale. It’s well worth a little paperwork to get a five-figure cheque.
It doesn’t lend itself nearly so well to the other about-to-be-clobbered goods and services on the list. For relatively low-cost purchases, a rebate scheme would almost certainly be costly and unwieldy.
Home heating rebates can be done through utility bills, which is cheap and easy. And it might be possible — if the government is willing to forgo the revenue — to make a rebate scheme work for once-in-a-lifetime large expenditures like funeral services.
But haircuts? Pencils and notebooks? I don’t think so.
Yet nor do I imagine we’ve heard the end of this. You can bet that lobby groups for every interest group will be re-energized when they see how government found such a creative way to bow to pressure from home builders.
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