Saskatchewan home builders say it's too early to tell what long-term impact charging PST on new home construction will have in the province, but say the new rule has already produced some negative effects.
On April 1, companies and contractors had to start collecting the six per-cent provincial sales tax on contracts for new homes and contracts for renovated homes destined for resale. It's part of the government's plan to make up for a drop in resource revenues.
Jason Duke, the chair of the Saskatchewan Construction Association, says his own business, Regina-based CertaPro Painters, has lost roughly two to five per cent of its annual residential construction business due to people putting off a project and to "black market" competitors working "under the table."
"We're aboveboard, we belong to a number of organizations and we charge the PST, the GST, and now I'm competing against someone who's charging neither," said Duke.
Under another change that took effect on April 1, contractors are now exempt from paying PST on materials, but not on equipment such as vehicles.
Duke says the latter discrepancy puts some Saskatchewan companies — forced to pay PST on equipment rentals — at a distinct disadvantage compared to companies coming from outside the province.
"You're less competitive to someone in Alberta who doesn't pay PST on their vehicles, equipment," he said.
It's not such a big hit for a painting company like his, he said, but definitely for, say, a highway construction company.
"Just the dump truck alone is a couple hundred thousand dollars," he said.
"If [the government] was trying to help us out like they were saying, they could help us out more by removing that [tax] for construction equipment," he said.
Scaring 1st-time buyers
Christiane Guérette, the CEO of the Saskatoon & Region Home Builders' Association, agreed with Duke that a larger window of statistics is needed to measure the long-term impact of the tax.
But she definitely worries the newly-applied home-sale tax is affecting a particular segment of buyers.
"It's disproportionately affecting those that are simply just trying to get into the market... families and the millennials who are just trying to get into the market, just like their parents did," she said.
"They don't have equity built into a house, so every minor change in the price of a house is truly going to affect their purchasing capabilities and their accessibility."