Home builders warn against increasing HST on P.E.I.

The P.E.I. Standing Committee on Education and Economic Development heard from people involved in the home construction and real estate industries Thursday morning.

Housing starts in P.E.I. have dropped since introduction of HST says group

The meeting room for the Standing Committee on Education and Economic Development was full. (Kerry Campbell/CBC)

The P.E.I. Standing Committee on Education and Economic Development got an earful from people involved in the home construction and real estate industries Thursday morning.

Home builders and realtors filled the meeting room to tell government about the impact of the Harmonized Sales Tax on their businesses.

Representatives of the P.E.I. chapter of the Canadian Home Builders' Association provided figures from the Canada Mortgage and Housing Corporation showing a 40.7 per cent decrease in housing starts in the province from 2011 to 2015. They told the committee the introduction of the HST on April 1, 2013 is a big factor behind the decline.

There were 940 new housing starts in 2011, and  941 in 2012. In 2013, everything changed: there were 636 housing starts that year, and by 2015 it was down to 558.

The home builders said the 14 per cent tax on new homes is driving some business underground, and has cost the province thousands of jobs and millions of dollars in lost tax revenue because of the impact its had on the industry.

Scott Costain, director of the Canadian Home Builders' Association on P.E.I., said there are other factors, but HST is part of it.

Raising HST to 15 per cent "can't do anything but hurt," said Costain, who owns a construction company in Summerside.

The association is asking the province to bring in HST rebates for new homes and renovations to help offset the impact.

"In other provinces there are rebate structures in place that kind of give people an incentive to do the right thing. It doesn't always take a large incentive to get people to think OK, if I do this, pay my taxes, I'm going to get rebated this amount," said Costain. 

"My hope would be that it would get more activity in our sector. But also that it would get more activity to the people that are actually making a living operating as legitimate business people."

Meanwhile, the P.E.I. Real Estate Association said the HST is unfair to all homeowners who don't heat with oil and asked the committee for an exemption for all home heating.

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