ATAMANENKO: Home Renovation Tax Credit is worth repeating
By Alex Atamanenko
The Home Renovation Tax Credit (HRTC) program recently came to an end. By all accounts it was such a success that people are clamouring for the government to continue the credit for another year. New Democrats agree, and are calling for the credit to be maintained and enhanced to promote energy-efficient, green technology for home improvements.
The goal of energy efficiency makes sense for all Canadians. It fits well with our desire, and new obligation by way of the Copenhagen agreement, to reduce our greenhouse gas output. For residents of BC, more efficient energy consumption makes economic sense as well, as we soon could be taxed at a higher rate for our energy if the Harmonized Sales Tax becomes a reality. For this reason alone it makes sense to tie green technology to an extension of the HRTC.
For people with neither the means nor the ability to complete home renovations last year, an extension of the HRTC would provide another chance to take advantage of the credit. The HRTC is a positive means the government can use to encourage taxpayers to contribute to the economic recovery in an opt-in manner—an important consideration given that we are not yet out of the economic crisis that gave rise to the HRTC.
Consumer spending and confidence are important elements of recovery. Extending and enhancing a popular and effective measure like the HRTC makes more sense than dropping our guard and hoping the recovery continues. What the government should have learned from this exercise is that people respond well to incentives. Out of the many different stimulus measures offered federally, this was by far the most equitable and least contentious.
NDP Finance Critic Thomas Mulcair said of the credit, “This was a time the government got it right.” Despite its popularity the HRTC it is not without its problems. It is important to understand that the HRTC is a refundable tax credit—a person has to be paying federal income tax in order to be eligible for it. Simply put, it is not a rebate. People who do not pay tax to the federal government have no means to take advantage of the credit.
New Democrats made the pitch to extend and improve the HRTC at a press conference. Had the House of Commons been in session (as it was meant to be), the proposal would have been part of the pre-budget consultations of the Finance Committee.The Canadian Retail Building Supply Council, the Canadian Hardware & Housewares Manufacturing Association and the Canadian Home Builders Association have requested an extension of the tax credit program into 2010. These groups have all reported increases in renovation activity, from boosts in residential building permits to greater sales at local hardware stores.
We will find out soon enough if the Finance Minister has been listening to Canadians.
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