Starting July 1, 2010, Ontarians can expect to pay a harmonized sales tax (HST) rate of 13% on a long list of goods and services that were previously exempt from the 8% Provincial Sales Tax
(PST). While the impact of the tax will be felt by all Ontarians, the province’s 3 million
homeowners and the thousands who buy and sell a home every year will be hit particularly hard
by this latest tax grab.
Real estate professionals know how important the dream of home ownership is to Ontario
families. Unfortunately, thanks to the forthcoming HST, that dream is going to become much
more expensive. After July 1, 2010, every residential real estate transaction in Ontario will face a significant tax increase. Specifically, home buyers and sellers can expect to pay 8% more on
legal fees, appraisals, real estate commissions, condo fees, home inspection fees, moving costs
and the provincial government’s recently introduced system of mandatory home energy audits.
According to the Ontario Real Estate Association (OREA), Ontarians will pay, on average, an
additional $1,449 in new taxes on their next residential real estate transaction.
If these new taxes on real estate transactions are not bad enough, a HST will add 8% more tax on a series of home-related costs. Specifically, a HST will add hundreds, potentially thousands of
dollars in additional tax on utility bills, such as gas, electricity and home heating fuel, on home
renovation labour, the cost of lawn upkeep or landscaping and the cost of snow removal.
Moreover, a HST will increase the cost of living with 8% more tax on gasoline, personal and
professional services, meals under $4, dry cleaning, cab fares, magazine subscriptions, plane
tickets, vitamins and cell phone charges.
When added together, the impact of a HST on an Ontario family’s disposable income will be
considerable. In short, a HST will reduce the people of Ontario’s quality of life by taking more
of their hard earned money to fund government initiatives.
While the Government of Ontario plans to compensate homeowners by offering sales tax
transition cheques and modest income tax reductions, these measures will in no way offset this
new tax. A onetime payment of $1000 (for a family of four) and a modest $368 reduction in
income taxes will do very little to offset the burden of an 8% tax increase on a litany of items in
perpetuity.
You can help the real estate profession oppose this latest tax grab. I encourage you to write to
your MPP and tell him or her that Ontarians do not need higher taxes on home ownership. To
find the name and address of your MPP, visit http://www.ontla.on.ca/ and click on Members.
1 comment:
The HST will mean better jobs and will allow more people to realize the dream of home ownership.
A recent report by the TD Bank estimates the HST will reduce cost of doing business in Ontario by roughly $5.3 billion and that the majority of cost savings will be passed on immediately to consumers.
A report by economist Jack Mintz, “Ontario’s Bold Move to Create Jobs and Growth” confirms that Ontario needs to reform its tax system to create jobs and put Ontario back on its feet. It says, as a result of the HST and our tax package, within 10 years Ontario would see:
o An estimated 591,000 additional new jobs
o Increased capital investment of $47billion
o Increased overall annual worker incomes of up to 8.8 per cent, or $29.4billion
As a result of moving from two taxes to one, businesses across Ontario will save $500 million in paperwork costs. Realtors will receive tax credits for the things they need to run their business from vehicles to computers. As in other industries, realtors will be able to pass on savings to their customers.
Realtors have to ask themselves, are they going to hoard massive profits or be fair to their customers. We ask consumers will have to watch this too and chose our representative accordingly.
This is being done to create jobs. As the TD report stated, the HST “should help spur business investment, employment and income growth.”
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