Let’s not allow houses be a the new Provincial Government ATM.

Rumors abound regarding HST after Ontario Premiere Daulton McGuinty and Finance Minster Dwight Duncan have openly mused about implementing a so-called “Flat Tax”. HST, which stands for harmonized sales tax, would be applied across the board at a current rate of 13%. It would replace the current separate taxes of GST and PST.

Off the cuff, many people might ask, “Who cares?”, or “What’s the difference?”

Well there are major differences when it comes to taxing items that are currently exempt from PST. Primary, “Services”. For example, if you hire a plumber to come to your house to repair a drain and the job involves only labor, then the only tax you pay is GST at the current rate of 5%. If the HST is implemented, then you would then pay a 13% tax. On a $500 repair bill it means that you the consumer would be taxed an extra $40.

Now let’s take this HST into the real estate realm.

There are 2 sets of tax implications when it comes to residential real estate. There are new homes, which are currently subject to GST and there are resale homes which are not. In either case, gst is applicable to of commissions, lawyers fees, cmhc fees, etc and now HST would come into effect and dramatically increase the costs.

Here is the breakdown:

*based on $300,000 sale price, 5% down payment, 5% commission on resale home, 2.0% commission on new home, average Closing Cost of $1200 and house inspection of $300

In 2008 approx 181,000 resale homes were sold in Ontario and this increased tax would cost citizens over $300MIL per year. On the new home front, the new tax is estimated by The Building Industry Development Association to cost Ontarians a whopping $2.4BIL per year.

With the real estate sales industry generating over $1.3Bil in spin off economic impact per year, and accounting for approx 110,000 Ontarian jobs, the HST would seriously impact this sector in a negative way. In fact, the added taxes may have such an impact on affordability that many first time buyer’s will be pushed right out of the market.

So from plumbing, to real estate, to countless other services be prepared to pay through the nose should the Ontario Government introduce HST. My thoughts- aren’t we paying enough tax already? If we need more taxes, is now the appropriate time to be making such considerations? Is putting an additional tax on services not counterproductive?

Let’s start rethinking taxes and (dare I say it…) “Shift” tax off economically productive activities (such as home ownership) and on to wasteful, counter productive, polluting activities. Let's stop taxing what we want and start taxing what we don't. Let's make it clear to The Ontario Government that we do not want HST and especially don't want increased taxation right now, or ever!