Government Meddling in the Housing Industry
Despite recognizing weakness in the housing sector, various levels of government continue to meddle in the sector, further exacerbating the problem.
It has long been recognized that the housing sector is the "horse that pulls the cart" when it comes to the economy. Further to this, Home Owners are the lifeblood of the economy. They are the most stable group that contributes the most to the economy.
Consider this...
When a person becomes a home owner the beneficial spinoffs for the economy are huge. Home owners spend more money than non-home owners, supporting the economy and enriching the lives of all of society.
Income Taxes
Property Taxes - schools, police, education, etc.
Purchase of a home - builders, carpenters, electricians, plumbers, bricklayers, carpet layers, drywallers, realtors, lenders, lawyers, roofers, home inspectors, etc.
Components - carpets, tiles, wood, paint, windows, doors, plumbing fixtures, appliances, lighting fixtures, drywall, lumber, concrete, bricks, siding, etc.
Utilities and Services - electrical, gas, water, sewer, cable, telephone, internet, garbage pickup, recyclin, etc.
If that weren't enough, jsut think about what happens when someone moves into their home;
They paint, change the flooring, buy new appiances, replace windows, buy window coverings, renovate, buy furniture, decorate, landscaping, flowers, gardening tools, water hoses, power tools, ladders... etc.
By now you are getting the picture. The purchase of a home affects many many people, some directly but many more indirectly.
You would think that the governments would treasure and coddle home owners. It is pretty obvious that the more home owners you have the better for society and the economy as a whole. So it would even seem logical that governments should do everything within their power to make home ownership more affordable and get more people buying homes.
Unfortunately, just the opposite is true.
It takes a certain amount of income to own a home, placing homeowners in tax brackets that generate the most income tax. As a whole, home owners pay the most in income tax.
I can only assume, that because home owners are the elite of the money source for governments, the governments squeeze and squeeze additional money out of them at every opportunity.
As obvious as it would seem, even a child, by continuing to make home ownership more expensive they are reducing the number of people able or willing to own a home.
Higher income tax rates
Property taxes
Levies
GST
Land Transfer Tax
If this wasn't enough, recently the City of Toronto enacted their own Land Transfer Tax (LTtx) effectively doubling the amount home owners have to pay in LTtx. Already the LTtx was by far the largest expense associated with buying a home. Now they have doubled it.
Does this make sense to you?
NOTE: Every single month since this policy was enacted, home sales have dropped!
Not to be outdone, the Province now wants to add even more money to the cost of purchasing a home.
Energy Audit - Government wants ALL home sellers to conduct an energy audit of their home prior to sale. Let me tell you first hand (I am a Realtor after all) that in order for a seller to want to sell they want/need to achieve a certain price for their home. Do you really think they are going to just suck up another expense? They are going to try to pass this on to the buyer.
Regardless of whether the Buyer or Seller ends up paying this, it adds to the cost born by home owners.
Harmonizing Sales Tax - Hard to determine exactly how much this one will end up costing home owners and those considering buying a home, but rest assured it will be significant. Rumour has it that it will apply to all products and services. If in fact that is the case just think about this.
If your home is your primary residence, there is currently no tax on the sale.
Lawyers fees and real estate commissions currently have the only gst tax on them.
There are currently many consumer items that are tax exempt.
Additional taxes make home ownership less affordable, especially to first time buyers. First time buyers fuel the housing market (you have to have someone to sell to). Making it more expensive to buy eliminates some would be home owners which eliminates some would be sellers and as you can see, this affects everybody.
And these are just examples that are top of mind... the tip of the iceberg if you will.
Taxes of any kind reduce the discretionary incomes of people and it is discretionary income that fuels the economy.
Hello!... The math isn't that difficult... is it?
Kudos to Home Owners... Shame on the Governments!
