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Blanket taxes, fees hurt local economies and homeowners

Last week, we talked about the new mortgage rules introduced by the federal government; rules that were designed to slow down the price escalation that has been going on in Vancouver and Toronto.

Whether this stress test of qualifying at higher mortgage rates succeeds in these two cities or not remains to be seen; however, it is fairly certain that these rules will hurt almost every other Canadian city that didn’t have escalating price problems. Preliminary calculations are that some new home buyers could have their mortgages affected by $20,000 to $40,000.

Now, they’ve managed to cool down an entire country. Local economies will suffer from national actions.

Also at the national level, the Canadian Borders Services Agency, in a knee-jerk reaction to a single complaint, increased tariffs on gypsum board (drywall) by anywhere from 105.2 per cent to 276.5 per cent. This will add an extra $1,500 to $2,500 in cost to the average new home. Little to no consultation was done.

You may also recall the City of Winnipeg increased permit fees on new home construction by an outrageous 62 per cent commencing June 1 of this year. Development permit fees increased by considerably more. Consultation, openness and transparency was zero save for a meeting on the Friday before the passing by council. With the simple raising of hands at a council meeting, millions of dollars were sucked out of the pockets of Winnipeg taxpayers.

Last but not least, is the growth fee/development charge/impact fee that the City of Winnipeg most recently announced for vote in October and implementation in May. The name is immaterial; it’s another new tax. The recommendation is to impose an arbitrarily calculated fee on all new homes, all office construction, all commercial construction, all industrial construction and all infill construction over the next three years. Research and reasoning were deeply flawed.

Intent was clear before the process began. The results are the same.

Affordability at the local level has taken a tremendous hit; one that hasn’t been seen since the introduction of the GST in 1991. For years after the GST was introduced, the residential construction industry went into hibernation. Are we willing to go down that path again?

 

Mike Moore is president of the Manitoba Home Builders’ Association.

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