72 - Friday, October 6, 1989

- North Shore News

REAL ESTATE

New sales tax to affect housing

affordability, says association

THE CANADIAN Home
Builders’ Association
(CHBA) of B.C. says it is
now clear the new Goods
and Services tax (GST) will
increase the problem of
housing affordability in
B.C., and it poses a threat to
the health of the housing in-
dustry.

Brian Usher, B.C. presi-
dent of the CHBA, called on
the B.C. government to act
on this issue immediately.

The Canadian Home
Builders’ Association ap-
peared before the House of
Commons Finance Commit-
tee recently to express the
housing industry’s concerns
about the GST.

Tom Cochren, National
President of the CHBA, told
committee members that the
GST will increase the price
of a typical new home by
$3,000 — more than six
times the cost estimated in
the Technical Paper
prepared by the Finance
Department.

Cochren said that the in-
crease will vary by market
areas, from a high of $9,200
in Toronto and $4,700 in
Vancouver to $800 and
$1,000 in Charlottetown and
Trois Rivieres, respectively.
These figures show a much
more dramatic increase in
new home prices than the
estimates given in the
technical paper.

“With nrice increases in
these rangvs, the affordabili-

LAURIE
WILSON
986-1901

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ty of horne purchase will be
negatively affected by sales
tax reform,’ Brian Usher
said. “This is in direct con-
flict. with Finance Minister
Micheal Wilson’s commit-
ment on housing affordabili-
ty.””

The CHBA’s research
shows that in order for this
commitment to be met, a
rebate up to a maximum 6.2
per cent on the purchase
price of a typical new home
(not 4.5 per cent as outlined
in the technical paper) is
needed to compensate for
the adverse affect of sales
tax reform. This does not
include additional GST cost
to home builders such as tax
collection or costs associated
with the negative affect of
GST on business cash flow.

“‘The proposed rebate
scheme as currently outlined
in the finance department
technical paper has very
serious deficiencies which
will be inflationary, have
adverse consequences on af-
fordability and will be
disruptive for home
buyers,’’ Cochren told fi-
nance committee members.

In his presentation to the
committee, Cochren further
aoted that:

ethe GST will cause a
urge in buying in 1990 and
a depressed market in 1991
— two very negative conse-
quences for the new housing
market and home buyers;

¢the rental costs to te-

sundeck,

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980-9640

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nants will increase substan-
tially as a result of the new
GST (up to three per cent in
some areas);

® the technical paper is al-
ready having serious
ramifications for the con-
dominium market — where
units are already being sold
for 1991 occupancy;

© the transitional measures
outlined in the technical
paper require major
amendments to avoid
significant disruptions and
inequities within the housing
industry, and;

*the term = ‘‘substantial
renovations’? as described in
the technical paper required
further clarification.

**The technical paper
presents a serious attack on
housing affordability in
Canada which will result in
major inflationary pressures,
and carries the potential for
market disruptions and ine-
quities which wil! have
serious ramifications for
both the industry and its
consumers,’’ Usher said.

“We told the finance
committee that the GST as
described in the technical
paper is unworkable and in
order to make it workable
we believe there should be a
major remodeling of the
technical paper to include
measures for all parts of
Canada which will provide
the guarantee the Finance
Minister made to home
buyers,’’ Cochren said.

features inciude large

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KOBASEW
986-1901 *

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