The Toronto Real Estate Board President’s Col­umn as it appears in the Toronto Star

Start­ing July 1, 2010 Ontar­i­ans can expect to pay a har­mo­nized sales tax (HST) rate of 13% on a long list 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.

As real estate pro­fes­sion­als, Real­tors know how impor­tant the dream of home­own­er­ship 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, home inspec­tion fees, mov­ing costs and the provin­cial government’s forth­com­ing 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 it’s not bad enough that the new tax will increase the cost of buy­ing a home, then con­sider the impact on the costs of own­ing and liv­ing in that home after it’s been pur­chased. 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 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.

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.

Cer­tain basic needs, like gro­ceries, pre­scrip­tion drugs, and children’s cloth­ing, would be exempt from the new tax. Unfor­tu­nately, the provin­cial gov­ern­ment is not propos­ing to pro­vide a sim­i­lar exemp­tion for home pur­chas­ing costs. Hav­ing a roof over one’s head is about as basic as needs get, and the gov­ern­ment should rec­og­nize this by ensur­ing that the costs asso­ci­ated with pur­chas­ing a home are exempt from the new tax.

Help oppose this lat­est tax grab. Write to your MPP and tell them that Ontar­i­ans do not need higher taxes on homeownership.

Tom Lebour is Pres­i­dent of the Toronto Real Estate Board, a pro­fes­sional asso­ci­a­tion that rep­re­sents 28,000 Real­tors in the Greater Toronto Area.

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