All Manitobans love deals. We clip coupons, we attempt to negotiate prices even though they are clearly listed, we drive across town in order to save a few cents. We are famous for our frugality. However, sometimes what looks like a deal is not a deal, but rather a recipe for disaster. Feeding the underground economy with your renovation work is a perfect example.
Everyone has a friend of a friend of a friend who is reputed to be handy with a hammer. Do you really want this stranger using that hammer on your most valuable possession — your home? But, you argue, I’m getting a really good price. Cash. No questions asked. I’m saving a ton on taxes, permits, manpower and other expenses.
Are you really saving money?
No receipt and no contract means there is no record of the work being done. If your contractor cuts a few corners and uses sub-standard materials, there’s no record or recourse because there was no formal agreement. If the workmanship was shoddy or some damage was caused to your house, again, there is no formal record of the work ever taking place. If you encounter problems a month or two down the line, don’t bother calling the person who originally did the work. Technically, he was never there.
Legitimate contractors take out all necessary permits and ensure that a licensed tradesperson does the necessary work. Do permits cost money? Yes. Do licensed tradespeople cost more than do-it-yourselfers? Probably. However, both of these things, combined with a written contract, are your best insurance. If you don’t take out a permit or you take it out in your name rather than the contractor’s, then you become the prime contractor by default. That means that you are responsible for any problems that are encountered during or after the work is completed. That means that you are on the hook for any injuries that may happen to workers on the job.
Licensed tradespeople spend years honing their skills. Just because you own a pipe wrench does not mean that you can hook up a furnace. As a matter of fact, if you do not utilize a licensed tradesperson for jobs that require this certification, you may not be insured if something goes wrong.
Does saving a few dollars really justify the risk of a gas explosion or an electrical fire? How about when you have to pay all damages out of pocket?
The person that you are paying cash for some renovation work is likely not declaring this income. Cash transaction for thousands of dollars of goods and services with no receipt tend to work that way. We all pay when that happens. When they don’t pay PST or GST, the rest of us pay for them. Government costs don’t go down, so we all pay a little bit more when someone decides to live in an underground economy. Activities such as failure to file appropriate taxes, failure to register a business, falsifying employment status or workers, skimming or only declaring partial income and moonlighting by doing cash deals on the side result in honest taxpayers being burdened with more than their fair share.
So, if your contractor tells you that you can save a few bucks by using any of the previously mentioned tactics, consider the real and potential cost. Manitobans who want a true deal don’t put themselves at risk. The underground economy in renovations is risky business.
