Many B.C. homeowners planning renovations are delaying their projects in the hope that the switch back to the provincial sales tax will save them thousands of dollars on labour costs.
The HST – which combines the five-per-cent federal GST and the old seven-per-cent provincial tax – must still be charged on all services provided in B.C., including labour for home renovations.
The 2011 referendum spelled the end of the HST, but that won’t come into effect until next April. When the PST was in effect previously, it did not apply to services like labour.
Glen McNeil is in no hurry to do the renovations to the garage and kitchen of his North Vancouver home.
“I’ve put everything off until, you know, the dreaded HST is going to go away for renos,” McNeil said.
He calculates the wait will save them $4,200.
Members of the Greater Vancouver Home Builders' Association were outraged when the province slapped HST on labour.
The extra cost drove an even larger wedge between those contractors in the underground economy who work for cash – and don't charge tax – and legitimate contractors who do things above board, according to association president Peter Simpson.
Former B.C. finance minister Kevin Falcon said in May that the old PST rules would apply.
"As promised, on April 1, 2013, consumers will only pay PST on those goods and services that were subject to PST before the implementation of the HST. All permanent PST exemptions will be re-implemented," said Falcon.
Simpson says if that changes, the government will get a clear message from the industry.
“If it remains on the labour component, they’re going to hear from this industry right across the province,” he said.
But it does not appear that new Finance Minister Mike de Jong is planning any surprises. A ministry spokesperson says home renovators – and the McNeils – can rest easy because the province has no intention of taxing labour once the PST is reintroduced.