Thousands of Canadians have called the federal government in the past six weeks about the new home renovation tax credit, but the measure is expected to have only a "mild impact" on the economy this year, says an economist.

Prime Minister Stephen Harper referred to public interest in the tax credit when he spoke to a business audience in Brampton, Ont., on Tuesday, saying that the 1-800 O Canada hotline (1-800-622-6232) had received 12,000 calls.

"This is a very generous, temporary tax credit," Harper said.

The credit provides up to $1,350 in tax relief on home improvement projects. Eligible expenses would have to total at least $1,000, but not more than $10,000, and the work would have to be done between Jan. 27, 2009, and Feb. 1, 2010.

The Canada Revenue Agency reported Wednesday that it has received 1,255 calls on the topic to its general inquiry phone line for individual tax filers (1-800-959-8281) and more than 80,000 hits to its English-language web page on the credit.

"That's a lot of people who are interested," Caitlin Workman, spokeswoman for the agency, said from Ottawa.

"If it were me, I would want to know what kinds of documentation I will need when shopping at home renovation stores."

The Canada Revenue Agency estimates that 4.6 million families in Canada will benefit from the credit.

But Valerie Poulin, an economist at the Conference Board of Canada in Ottawa, said Wednesday that despite the interest of homeowners, the credit will not likely make a huge difference to the residential construction industry.

Poulin said Canadian consumers are more likely to renovate their houses when they are not worried about their incomes dropping, losing their jobs or their employers going bankrupt. Given the current economic climate, she said she thinks many will postpone large renovation projects.

Many Canadians who will take advantage of the credit were probably planning to renovate already, she said.

Consumer confidence low

Poulin said consumer confidence is currently at levels seen during the recession of the 1990s and is dropping closer to that reached in the 1981-82 recession.

"Many feel their jobs are precarious. When the job market is not stable, the number of consumers who buy new houses or renovate is reduced," she said.

In a report released Wednesday by the conference board, entitled Canada's Residential Construction Industry, Poulin argues that four measures introduced in the federal budget to boost renovation projects and resale activity in Canada will have only a "mild impact" on the economy in 2009.

The four measures are: the home renovation tax credit; a new permanent non-refundable first-time home buyers' tax credit; additional money for the ecoEnergy retrofit program, which offers grants to homeowners for making their homes more energy efficient; and an increase in financial assistance for first-time homebuyers through the home buyers' plan.

"These measures might have a bigger impact from 2010 to 2013," she said, and "the incentives may encourage people to undertake a project sooner or to spend more on that project."

The measures are estimated to cost the federal government $567 million in 2008-09 and $2.3 billion in 2009-10.

Poulin said the numbers represent only 0.5 per cent of residential construction industry revenue in 2009 and 2.5 per cent of revenue in 2010.

"That's only a small portion of industry revenue," she said.

But Poulin said talking about the interest in the home renovation tax credit, as Harper did Tuesday, provides a useful boost to consumer confidence and encourages homeowners to spend money.