Colin Oswin – BC Local News
Hold on to your hats: The rejection of the HST has created a boatload of uncertainty for the B.C. housing industry.
Elections B.C. announced on Aug. 26 that 54.73 per cent of the voters who participated in the referendum wanted to get rid of the HST and move back to the old PST system, while 45.27 per cent wanted to keep it.
The move to the HST in July 2010 added seven per cent to the cost of labour in home renovations – a tax that wasn't applied under the PST. New homes over $525,000 are also taxed under the HST – for the time being.
Now, in the wake of the referendum, contractors in B.C. are caught in the transition back to the PST, which Finance Minister Kevin Falcon said would take 18 months.
Peter Simpson, President and CEO of the Greater Vancouver Home Builders' Association, says the provincial government didn't offer up much of a tax plan that businesses can use for the intervening year-and-a-half.
Will B.C. residents step away from the market? Simpson says no one can predict the exact outcome, but he expects consumers will put off some reno projects, lowering revenue for contractors.
Emergencies like a leaky roof will get taken care of, he says, but a kitchen or a media room reno may have to wait.
One solution would see the province offer tax rebates for renovation projects between now and the shift back to the PST, but Simpson says nothing like that was mentioned by Falcon or Premier Christy Clark after the results came out – even though she said the Liberals had prepared a Plan B, just in case the HST was rejected.
"They need a Plan C, because Plan B is not cutting it for our industry right now," Simpson says.
"This whole HST has been a debacle since it was introduced in July 2009 and it will continue 18 months from now."
He says the government needs to come up with a plan to get people to pull the trigger on renos and home purchases immediately, not in 18 months.
"There has to be some kind of system that makes it neutral whether you do it now or wait," he says. "They have to address these issues."
Simpson notes that by the time it's all said and done and B.C. moves back to the PST, four years will have passed since the HST was introduced. That's enough time to earn a university degree.
Rob Currie, co-owner of waterproofing contractor Basement Systems Vancouver Inc., says consumers were waiting even before the referendum result was handed down because they weren't sure how the tax situation would affect the bottom line.
He says the province needs to hammer out a transition plan very quickly, so consumers can make their decisions and contractors can get to work.
"People who are out there bidding and quoting need to have a real understanding of where we're at," he says.
"We're looking for a policy to very clearly explain the plan, so we can make decisions and our customers can make decisions as well."
He says lots of people just want some clarity on a very simple question: how much am I going to spend?
With the tax regime in a state of flux, Currie says no one knows.