Raising roof on taxes

Melding the PST and GST into one harmonized sales tax could add 6% in taxes to the price of a new home or condo in Toronto, the GTA's home builders' association warns.
The Building Industry and Land Development Association's findings, released yesterday, come as the province considers harmonizing its sales tax with the GST as a means of easing tax regulations on businesses.
For a single family detached home in Toronto with a current price of $745,000, that's an increase of $46,676, the report says.
"As I've said before, many of the business community have made that part of their request to us," Premier Dalton McGuinty told reporters yesterday. "It's one of a variety of options that we're taking a look at."
BILD warned harmonizing the taxes, without exempting the sale of new homes, could ruin an already struggling industry.
While the 5% GST is applied to the selling price of new homes and condos, the PST is only charged on building materials, which BILD estimates adds 2% to the price.
If the two taxes are harmonized, the PST would apply to all products that are taxed by the GST, including new home and condo sales, which would increase the taxes by 6% -- from a 2% provincial portion to 8% of the total price.
That could add an extra $23,220 to the price if an average home in Toronto (currently valued at $387,000 ) was sold new.
'BIGGEST THREAT'
"I've been worried about this since 1991 ... because ever since the GST came into effect, harmonization has been a possibility," said BILD president Stephen Dupuis. "The numbers are just blowing our minds.
"This is the biggest threat that we've faced in a long time," he added.
BILD is not against the harmonization of the provincial and federal sales tax, which would impose one tax collected by the federal government and split with the province, Dupuis said.
In fact, the association said it sees some advantages to it, but wants new home sales exempted.
"We are fighting for housing within harmonization," he said. "It (harmonization) is probably a smart long-term policy."
Although McGuinty did not commit yesterday to exempting new home sales, 28,000 of which were made in the GTA in 2008, he did acknowledge some people don't like the idea of harmonizing the taxes and applying them as one tax.
The PST is currently exempt from some goods such as children's clothing, feminine hygiene products and heating oil.
The Ontario Chamber of Commerce estimates harmonizing the two governments' sales taxes into one would save Ontario businesses $100 million annually -- primarily, because it would cut red tape and reduce administration costs.
The NDP's new leader, Andrea Horwath, said her party's main concern is how the new tax regime will affect prices of goods currently exempt from the PST.
The province has acknowledged the cost of some goods currently exempt from the PST, would increase.
"Children's clothing, feminine hygiene products ... those things will create more expensive costs for people, and that's a problem," Horwath said.
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TAX-FREE
PST-exempt products that could cost more:
- Books
- Footware costing $30 dollars or less
- Feminine hygiene products
- Children's clothing
- Energy
- Some fees and professional services
- Newspaper subscriptions
- Hairdressing services
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PRICE HIKE
- New homebuyers would pump an additional $2.4 billion into the province's coffers if the GST and PST are harmonized.
- According to Building Industry and Land Association, purchasers now pay 6.6% -- 5% GST and and about 2% PST on building materials -- in taxes when buying a new detached home.
- If harmonization occurs, the taxes paid on a new home would increase to 13% -- 5% GST and 8% PST.

http://www.torontosun.com/news/torontoandgta/2009/03/12/8716706-sun.html