[afransen]

That would explain the recent recession I guess. All those great predictions and policy changes.

Let's put it this way: do you pay any attention to weather forecasts, even though they only have a certain degree of accuracy? Sometimes the meteorologist misses completely. Does that mean you'd rather try to predicting the weather yourself with chicken bones, your own gut feelings?

Like I said, sometimes economists are wrong, but the flip side of that is that they are usually right. If they weren't, the government would be total chaos, since they would have no idea what effect their policies would have, and the Bank of Canada would do a terrible job of setting interest rates, and there would be massive swings in inflation rates. These things don't happen because economic theory does have decent predictive ability for simple changes and well-understood phenomena. Ignore that knowledge at your peril.

 

[pilinha]

I have many family members that are in the building trades and they keep telling me that the HST is going to really hurt the construction industry in Toronto including building of new condos and houses.

 

[kettal]

let me guess, they also told you that land transfer tax would bring about a real estate crash.

 

[afransen]

let me guess, they also told you that land transfer tax would bring about a real estate crash.

It did. Just look at Arizona. Toronto City Council has awesome power to wreck havoc on the world economy.


That said, I don't think the LTT is a particularly intelligent tax.

 

[pilinha]

We survived the Brian Wilson tax, David Miller tax, and we're going to assume that if interest rates stay down then we'll be fine. I'm not confident abou this.

No, none of the builders or union guys I know were talking about the land transfer tax.

 

[adma]

We survived the Brian Wilson tax, David Miller tax, and we're going to assume that if interest rates stay down then we'll be fine. I'm not confident abou this.

You mean Michael Wilson, don't you? A Brian Wilson tax is only if you support nutty Beach Boys frolicking in sandboxes...

 

[Darwinkgo]

I have many family members that are in the building trades and they keep telling me that the HST is going to really hurt the construction industry in Toronto including building of new condos and houses.

You know that they will all effectively pay no PST anymore since they can write it all off when it is the HST right? No more PST on wood, nails, hiring subtrades, etc. All that savings will reduce input cost more than the discounted HST rates for new housing. (for the first $400,000 of the sales price there will be a 2% rate for the HST instead of 8%)

 

[kettal]

You know that they will all effectively pay no PST anymore since they can write it all off when it is the HST right? No more PST on wood, nails, hiring subtrades, etc. All that savings will reduce input cost more than the discounted HST rates for new housing. (for the first $400,000 of the sales price there will be a 2% rate for the HST instead of 8%)

It improves the situation for material goods, but hiring subtrades never had PST on it in the past.

 

[Mike in TO]

You know that they will all effectively pay no PST anymore since they can write it all off when it is the HST right? No more PST on wood, nails, hiring subtrades, etc. All that savings will reduce input cost more than the discounted HST rates for new housing. (for the first $400,000 of the sales price there will be a 2% rate for the HST instead of 8%)

The first $400,000 is supposed to be approx revenue neutral for home buyers. New homes and condos previously had about 2% PST embedded into the cost due to the cost of materials you listed in your post being taxed at 8%... materials typically make-up approximately 25% of the cost of a new home (therefore the embedded PST of 8% * 25% = 2%) - which is why the provincial government's tax structure as it applies to new homes for the PST is 2% on the first $400,000. Additional taxes are levied on the incremental value of the home over $400,000 - essentially becoming a luxury tax.

Input tax credits on the material portion of a new home should theoretically put some downward pressure on prices. It remains to be seen if suppliers and manufacturers pass savings onto builders and for those savings to be passed onto consumers. Also it will take a while for the system to get up and running (e.g. a home being delivered on July 5th won't benefit from input tax credits on supplies delivered during construction prior to HST implementation).