Thank you, Mr. Chairman.
Let me introduce John Kenward, chief operating officer of the Canadian Home Builders' Association. I'm Gary Friend, CHBA's national president, and I've been building homes in the Surrey area of British Columbia for 25 years.
The Canadian Home Builders' Association represents Canada's residential construction industry. Our membership includes new home builders, renovators, developers, suppliers, trades, manufacturers, lenders, and other professionals.
Today I'd like to provide the committee with brief comments on some of the aspects of Bill C-51. I will focus my remarks on how the bill relates to the home renovation sector of our industry. Specifically, I want to address the home renovation tax credit and the issues pertaining to home renovation activities by Canadians.
The CHBA supported the introduction of the home renovation tax credit earlier this year. Given the economic uncertainty that confronts our nation, the HRTC is an appropriate measure to stimulate consumer investment in home repair and renovation. The HRTC is having a significant and positive effect on the level of home renovation activity across the country. In their work with customers, renovators report that the HRTC is a significant factor in motivating homeowners to initiate home renovation projects. This view is reinforced by retailers of building materials, who also report increased sales as a result of HRTC. In short, the experience of our industry is that the HRTC is stimulating a significant level of economic activity.
Here are some additional brief comments I'd like to offer the committee in relation to HRTC.
First, there is evidence that the HRTC is complementing other federal initiatives, such as the ecoENERGY home retrofit program. Our renovator members report many consumers are including energy efficient measures in their projects. This allows them to take advantage of both the HRTC and ecoENERGY grants as well as compatible provincial grants and incentives.
This observation is supported by data from Natural Resources Canada showing an impressive consumer demand for home energy evaluations, a prerequisite for ecoENERGY grant availability. Taken together, the HRTC and the ecoENERGY grants form an effective package that is working well. This is stimulating home renovation projects that are enhancing both the value and environmental performance of Canada's housing stock.
The HRTC is also delivering another important benefit: it's encouraging consumers to carry out their projects using the services of legitimate tax-paying renovators. By requiring receipts to support HRTC claims, the government is moving consumers away from dealings with underground cash operators. Given the Canada Revenue Agency's apparent inability to address the underground cash economy through tax compliance measures, it's instructive to see that the HRTC is having a positive impact in this area. This benefit is shared by consumers, who are better served by dealing with legitimate tax-paying companies. It also benefits governments through higher tax and other revenues that would otherwise be lost to the underground economic activity.
I will conclude my comments with a caution. It's clear that the HRTC is having a very positive impact on the level of home renovation activity in Canada. This initiative will end by early-2010. A few months later, harmonized sales tax will be introduced in both Ontario and British Columbia, resulting in a tax increase on home renovations in the amount of $1 billion each year. Our industry is extremely concerned about this situation. Clearly, it will have a significant impact on both the level of renovation activity and the number of jobs lost to the underground cash economy. To put it more simply, the prospective benefits flowing from the HRTC will be more than nullified by the impacts of sales tax harmonization.
In order to address the situation, the CHBA is calling upon the federal government to introduce a permanent 2.5% GST rebate for home renovation expenditures. This would achieve tax neutrality with the pre-GST federal sales tax. In both Ontario and British Columbia, we're urging provincial governments to enact similar renovation tax rebates to achieve tax neutrality in relation to the provincial portion of harmonized sales tax.
I would point out that our association recognizes that harmonized sales tax offers broad economic and competitive benefits. However, housing presents a very unique case, where HST impacts will be particularly significant and unfair. This presents an acute problem in relation to home renovations and can be best addressed through a permanent renovation tax rebate.
Thank you.