EDITORIAL: HST may be fairer, but it will hurt consumer spending
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Updated: November 20, 2009 4:47 PM
The province has announced it is raising the threshold on which the amount of HST paid will be no higher than taxes paid at present—from $400,000 to $525,000.
This is a major shift, and is an acknowledgment by the provincial government that the HST will hit new home buyers with a wallop. It will still penalize those who buy homes over $525,000—they will be paying 12 per cent on the purchase price, and their maximum rebate will be $26,250—the same aamount that goes to those buying homes at $525.000.
So if a buyer buys a new $800,000 home, the net HST paid will be $69,750, after the rebate. That buyer will also pay another $14,000 in property purchase tax, which the province has no intention of removing. There will also be added HST on legal bills and real estate commissions.
There is no question that the HST is a fairer tax than the PST, from the point of view of taxing the end product. It will likely lead to some lower prices, perhaps even for housing. But those who buy new homes will pay much more. This will likely have a huge impact on the actual number of new homes built for some time.
The HST will help many businesses, but it will almost certainly reduce consumer spending.
