Mortgage News

Mortgage news & commentary from Lou Perrotta, CPMB

My First Blog Posting is Not About Mortgages!

I’ve spent at least one-half hour trying to decide on the topic of my first blog posting.  Should it be about mortgage financing, which is the nature of my business?  Should it be about the rebound in residential real estate in Ontario, which is related to my business?  Should it be about banks’ continuing tight commercial credit granting policies, which are hurting business owners?  I’m sure that I can spin off a few hundred words on each of these topics.

But no, I thought that I would post about something that will affect us all in Ontario by March 1, 2010.  Can anyone tell me why we haven’t heard or read more in the media about the Harmonized Sales Tax (the “HST”), which the Ontario provincial government proposes to introduce?

Can anyone tell me why the information that is on the Ministry of Finance’s web site is so obscure?  Here’s an excerpt from the site:

The Budget proposes to:

  • fundamentally reform Ontario’s tax system to help position Ontario for the next generation of economic growth and prosperity by:
    • implementing a single sales tax on July 1, 2010 to further strengthen Ontario’s economic growth and tax competitiveness;

Does anyone not think that the government should be telling us how the HST would achieve this bold prediction, rather than simply making the statement?

It’s a safe bet that the HST will provide more money for provincial coffers.  How is it going to be spent?  Will the additional revenue be used to pay down provincial debt?  Will it be used to pay for programs, some of which are of questionable value, that have been announced?  Don’t you think that the taxpayers of the province have a right to know?

Should the introduction of the HST have been the subject of a plebiscite so that taxpayers could decide?  Should there have been public consultation at the very least?  I don’t recall receiving an invitation to comment, did you?

And then there are all of the proposed rebates and exemptions.  My head was spinning when I read them.

On the one hand, the HST will likely mean less paperwork for business owners, but at the expense of consumers who will pay “provincial” sales tax on items that they currently don’t.

Imagine if you’re buying a resale home after March 1, 2020. (Ahh!  Finally!  The real estate and mortgage connection!) Here’s a short list of services that you’ll end up paying HST on, which you currently don’t:

legal fees; real estate sales commission; construction-related services (mechanical, carpentry, electrical, etc.); home inspections; landscaping; driveway, pool and patio installations; home heating fuel; internet/cable/satellite television; water consumption; the list goes on and on… and of course, don’t forget to add $4.00 to that $50.00 hair styling every month!

Now if you’re a purist, and believe that in all fairness everything should be taxed so that no one industry or sector has an unfair advantage over another, that’s O.K.  But what’s not acceptable to me, is that given the huge windfall that will certainly occur, why do we need to keep the provincial portion at 8% of the proposed 13% HST rate?  Consumers could use the break!

Anyways, that’s it for my first rant… I mean blog posting!  I hope that it gets you thinking.  If you feel like registering dissatisfaction, or approval, with the government, here are some links to which you can send your message:

Ciao for now!