June 2, 2009

Harmonized Sales Tax Act

Posted in Uncategorized at 1:15 pm by sosren

“The Devil’s in the Details”

 Heard that one before?  You’ll hear it over and over again every time this Act and the other two are brought up in discussion.  Basically this Tax sounds rather sublime as McGuinty explained it, as a blending of the Provincial and Federal Taxes into one simple and easily calculated tax on purchases of goods and services.  With very few actual details available as yet we do know that we will be paying for many goods and services that were exempt from the previous divided taxes but the real horror story here is what is going to happen to the Real Estate Market when this Bill comes in effect in July of 2010.

Any house selling for under $400,000 will not be subject to any changes in the First Time Buyer’s Tax on the home which is good news, at least it sounds like good news but go to Toronto for instance and try and find a house under $400,000.  The average home price even in the middle of a recession which could be called a Depression by anyone out of work even though that isn’t “politically correct”, is now $525,000.  In fact almost 90% of all home sales are well over the 400,000 dollar cutoff price.

 Now take a first home buyer and crunch these numbers………they first have to put a down payment of 20,000 dollars (5%) on a $400,000 home and after July 2010 they will also have to come up with an additional $32,000 for McGuinty’s HST dream.  That additional $32,000+ is not “Mortgageable”.  Banks will not mortgage a tax.  That $32,000+ has to come out of the First Time Home Buyers personal account in cash!

That’s 52,000 dollars on a 400,000 dollar home before the “key turning ceremony”.

 Nova Scotia adopted a Harmonized Sales Tax a couple of years ago and it has been a Disaster! 

Now McGuinty and his “Financial Wizards” are going down the same slippery slope.  The first sign things are going wrong when this hits Toronto is the fact that over 30,000 new home starts will not take place! (average new home starts are 100,000 per year). That will be the most direct visible and immediate hit on the Real Estate Market.  Sales of new homes will be “off” by at least 30 to 40 %.  When growth over the last 10 years in Toronto on homes sales has shown one of the healthiest markets in the world with a fairly controlled and affordable increase in prices and sales make this destructive Tax all the more “Mind Boggling”!

 WHY would a Government body try and ruin a successful and stable market in one piece of Legislature and basically take away the “dream” of every Canadian of owning their own home after working in an honest and successful economy such as once existed in Ontario?  Could it be that the Government needs a huge influx of cash to finance The Green Energy Act that will demand at least 5 thousand millions of dollars (5 Billion) PLUS to prop up and industrialize Rural Ontario with a Wind “Scam” that basically does nothing positive for anything other than create a huge Energy Supply for a U.S.A. power hungry nation?  We will look into this in more detail as the picture unfolds in additional posts.……….

Suffice to say that for the Government to answer these questions we will have to demand a Public Inquiry!

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