Illegal cash jobs can be alluring
Posted By Jenn Watt
Posted 2 months ago
"That'll be $1,130 or I'll take $1,000 cash."
Who among us hasn't been confronted by that irresistible offer; a great deal on a big-ticket item, if only we toddle off to the bank and return with a wad of cash?
We know what's happening is illegal, that we're supposed to pay our sales tax, but the savings are just so good.
Now, think about that same savings multiplied by the cost of a major home renovation.
This is what the homebuilders fear.
Right now, if you call up the local contractor to do some work on your kitchen, he'll quote you a price plus GST – five per cent – already enough to make you think twice about that new sink or the more expensive floor tiling.
On July 1, that extra tax will leap to 13 per cent and some contractors in the area worry clients will ask for a cash-only price, asking businesses to act illegally.
Does the contractor forfeit the job – maybe one of her only good jobs all winter – or does she give in and take the cash, breaking the law?
On Friday, a group of homebuilders gathered at Emmerson Lumber to speak with the leader of the PC party, said many of them would take the cash.
The Liberal government recently announced that some rebates and exceptions to the harmonized sales tax would apply to certain industries.
Taxes on new homes have been greatly reduced, but this doesn't apply to much of the work in Haliburton County, which revolves around the cottage industry.
In 1991 when GST was introduced, a huge amount of black market dealings went on in the construction sector. Some of that business eventually resurfaced from the so-called "underground," but not all of it.
Between the years of 2003 and 2005, the Ontario Construction Secretariat estimates that $2 billion of income taxes were lost to the federal and provincial governments because of illegal transactions.
There is already a strong tendency for Ontarians to duck the law in order to get a better price on a new home or renovations to their cottage.
Looking at the construction secretariat's numbers, it is likely Haliburton's homebuilders are right in their assertion the construction economy will go underground in the wake of the HST.
The Ontario government has indicated there may still be some wiggle room in what is subject to HST (think coffee and newspapers), so perhaps homebuilders' campaigns for tax relief have a hope.
If not, we may see a very different economy in the Highlands come summer.
