For homebuyers and sellers, the impact could be significant, though the jury’s out on whether the net effect of HST will be positive, negative, or more or less neutral. Here are 10 ways the HST will affect homebuyers, sellers and everyone else after Canada Day.
1 Few Canadians welcome any new tax with unbridled enthusiasm, but for the most part, it appears that the HST will have less general impact than most people fear. Some items that were exempt from retail taxes before, such as groceries and prescription drugs, will remain exempt; and the majority of everyday items that were subject to both GST and PST before will experience no change, either. And a third class of products, that were subject to GST but not provincial taxes, such as books, kids’ clothing and so on, will remain exempt from provincial taxes. But a whole raft of items that used to be GST-only will take on a significant tax increase once HST comes into effect, and this is the most controversial aspect of the new tax: gasoline, haircuts, magazine subscriptions, and many other everyday products and services.
2 While neither provincial government will admit that the HST amounts to a rise in taxes, the Ontario government has started sending out rebate cheques of up to $1000, in three installments, to offset the effects of the new taxes on families, combined with tax credits and income tax cuts. British Columbia has opted to tie its rebates more closely to income, with refundable tax credits combined with GST and carbon-offset tax rebates.
3 The government claims that, like the GST, all sorts of hidden taxes on products are embedded in the final price to consumers, and updating the tax collection system will ultimately lead to more competitive pricing on locally manufactured goods and therefore an increase in jobs and reduction in wholesale prices. For homebuyers and sellers, it could mean a reduction in the overall price of some building materials, and other goods manufactured in Ontario and British Columbia.