Tuesday, February 24, 2009

Not To Bite The Hand That Feeds Us But. . .

So the federal government is offering up to $1,350 in tax rebates to home owners who spend $10,000 on home improvement projects this tax year. Nice, right? Sure, but when you stop to think of it, what does it really mean? How much will $10,000 buy you? A bare-bones reno of a small kitchen with off-the-shelf cabinetry, maybe. Certainly not a professionally installed dream kitchen.
I can't help but think that Ottawa could have been bolder. If the point was to get people to invest in their homes and keep the cash registers at the big box stores ringing, they could have gone two ways. A higher spending limit would have been an option. Why not boost the limit to $20,000, as Quebec has done with its recent home renovation tax scheme?
Another idea would have been to keep the limit at $10,000 but increase the tax rebate to 20 per cent. As it is, you have to shell out for purchases and pay sales tax of 12.87 per cent in order to get a 15 per cent income tax rebate. Nice, but not a huge incentive. Boosting the tax rebate would encourage more owners to invest in things like paint, wood for decking, landscaping, flooring of all kinds. It might not create construction or renovation jobs, but would certainly make it more interesting for DIY types to get busy with home improvement projects.
But then, maybe that's the point. Perhaps the aim isn't to help Canadians keep more money in their pockets. Perhaps the aim is to strike a blow against under-the-table contractors.

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