A local developer is blaming the new Harmonized Sales Tax (HST) for abandoning plans to build 25 homes at University Heights this spring, eliminating 100 potential jobs with it.
"We are voting with our feet and canceling what was to be a very nice project of 25 new affordably-priced homes at our University Heights master planned community," stated developer Doug Day in an email to media, industry colleagues and Mayor Greg Gardner.
Day, who also developed Thunderbird Ridge, said since the real estate market is bouncing back, he began crunching numbers to start building on the lots. When he discovered last month that his profitability would be down to five per cent per home sold, he sent a scathing letter to Finance Minister Colin Hansen, outlining the HST's impact, which is expected to take effect July 1, when it's added to the myriad other development charges.
"Our share, as the homebuilder and land developer, would be $20,000 after our taxes [on a $725,000 home]," he wrote.
"The grand sum take for the government equals $160,000 per home. I can assure you that I am not stupid enough to go into a deal with a business 'partner' who is not putting up a dime, doing absolutely no work, and getting 800 per cent more of the profit than I would be getting."
The 12 per cent HST amalgamates the five per cent GST and seven per cent PST, and will be imposed on industries that are currently PST-exempt, such as the development industry.
The provincial government formally introduced a law Tuesday (March 30) making way for the unpopular tax. Hansen said he wants the legislation, which repeals the provincial sales tax, to pass by the end of April.
Day said he made this decision now, 10 months after the plans to adopt the HST were made public, because industry leaders "always harbored this secret belief they'd wake up and smell the coffee."
The 25 lots would complete the 56-home first phase of the University Heights master plan, and Day said there's an additional 150 lots that could be developed, but those too will be left to wallow.
Day said he's so disgusted by B.C.'s taxation, he's moving with is family to France for "at least two or three years."
"When the government wakes up and realizes the enormity of their error, we'll come back."
In his letter to Hansen, Day stated he doubted his protest would have any effect.
"Do I expect this to influence your decision to impose the full brunt of the HST on B.C.'s new home building industry? Of course not," he wrote.
"You are a very stubborn man working for an equally stubborn government, making a lot of decisions on the fly, caring less about the end consequences of your actions."
Hansen did not return calls for comment, however a Liberal press release sent this week made his position clear.
"Our current provincial sales tax is a substantial and complex statute that costs B.C. businesses millions of dollars a year in administration and compliance," said Hansen in the release. "By reforming our tax system and introducing the HST, businesses will be more competitive and our province will see an increase in investment, productivity and economic growth."
The NDP pledged an all out battle to defeat the tax following the announcement, stating it will take its campaign on the road to pressure Liberal MLAs to vote against their party.
"It will take seven B.C. Liberal MLAs to defeat this Bill," stated NDP leader Carole James. "Seven MLAs to stand with their constituents and vote against this regressive tax. We're calling on the B.C. Liberals to honour their campaign promise, stand with New Democrats and say 'No' to the HST."
A recent Angus Reid poll showed 77 per cent of British Columbians were opposed to the tax.
