HOMEOWNER spending on renovations has had an up-and-down ride across Canada, although it's been fairly steady in Manitoba.
Most of Canada was hit harder by the recession in late and early 2009 than we were in Manitoba, and so national spending was reduced accordingly. However, the introduction of the Home Renovation Tax Credit quickly turned things around in terms of renovation spending. As the economy improved in 2010, so did renovation spending.
In general, spending on renovations increased by 9.2 per cent across Canada and 11.5 per cent in Manitoba last year. Forecasts for 2011 have spending declining a bit across the country while increasing ever so slightly here in Manitoba.
In Ontario and British Columbia, the Harmonized Sales Tax (HST) has hit the legitimate renovation industry hard. With the introduction of the HST and no relief or exemptions to encourage renovations, taxes for honest contractors have doubled. This has resulted in an estimated 75 per cent of renovations going to the underground economy, forcing honest people to bear the brunt of the tax load.
In 2010, renovation spending totalled $60 billion in across Canada, with improvements accounting for 75 per cent and repairs the rest.
The Home Renovation Tax Credit was introduced in the 2009 federal budget and was a resounding success. About $2.3 billion was paid out, or about 75 per cent of what was originally set aside. Residential renovation spending rose 18 per cent over the period, with three million homeowners (one in three owner-occupied households) subscribed and receiving an average rebate of $700.
Since this was obviously a tremendously successful program for the government, consumers, retailers and contractors, perhaps Ottawa and/or the provincial government should look at resurrecting it in some fashion. Since contractors and consumers must declare the work performed in order to collect rebates, increased tax revenue alone would pay for the program.
It's certainly food for thought, given the projected increase of 3.5 per cent in renovation spending forecast for 2012.
Mike Moore is president of the Manitoba Home Builders' Association.
