Inkless Wells

Paul Wells on all the latest out of Ottawa—along with the occasional post about jazz. Follow Paul on Twitter: @InklessPW
He also offers his thoughtful perspective of Stephen Harper’s last 10 years in his recent eBook, The Harper Decade.

Categories: Capital Read, Inkless Wells

While we await the Home Chamber Music Festival Tax Credit…

by Paul Wells on Wednesday, July 22, 2009 3:47pm - 73 Comments

…there’s strong evidence the Home Renovation Tax Credit introduced in the January budget is having its intended effect. Why, in my own house, we had new carpet installed today. And we’re not alone. Yes, we kept the receipts.

Tags: home improvement, stimulus works

More by Paul Wells

http://intensedebate.com/people/PolJunkie PolJunkie

I bought 4 cans of paint and stored the receipts in a mighty safe place.

Dot

Buy another 30 and you might exceed the $1,000 deductible.

http://intensedebate.com/people/robert_mccl6309 Robert McClelland

Or just hang around outside your local Home Depot and snag all the receipts people toss in the trashcan.

http://twitter.com/larrylarry @larrylarry

I find incredibly amusing the commercials playing incessantly on TV right now talking about the 'handy envelope' in which we can store our receipts. However, according to the Economic Action Plan website, this envelope, like the rest of the plan, is still "in progress", and won't be available until September.

Can I thus claim a few grand in home renovations, and say that they receipts were lost because I had no handy envelope in which to store them safely, and the commercial made it sound like we *had* to put it in said envelope?
http://intensedebate.com/people/Silly_Walks Silly_Walks

I've made so many renovations on my house I'm going to have to choose which ones to claim, as I'll surely be maxed out on my credit, however; my house is a money pit, and I would have made them anyways.
http://intensedebate.com/people/robert_mccl6309 Robert McClelland

Sales in the automotive sector rose 2.4 per cent from April, with new car sales increasing 3.4 per cent

That seems like even stronger evidence that the New Car Tax Credit is working.

http://intensedebate.com/people/M_A_N M_A_N

Or perhaps it's the rather insane price war going on right now. Also, the 4 years no interest deals. But what do i know, I'm no economist, like tour Prime Minister.

He's an economist, right?
http://www.intensedebate.com/people/M_A_N M_A_N

Or perhaps it's the rather insane price war going on right now. Also, the 4 years no interest deals. But what do I know, I'm no economist, like our Prime Minister.

He's an economist, right?

http://intensedebate.com/people/Crit_Reasoning Crit_Reasoning

It's refreshing to see a stimulus measure that is actually stimulating the economy in a timely and visible way.

BCer in Mtl

'Refreshing'

Now there's a word I haven't seen since about 2007. Before then it was the most common adjective used by CPCer posting on discussion groups after the dawn of the glorious era of Canada's New Government (TM)

http://intensedebate.com/people/Crit_Reasoning Crit_Reasoning

You haven't seen the word "refreshing" since 2007? You should read more. Anyway, you're confusing me with someone else.

BCer in Mtl

I was referring to its use by CPC supporters in these types of discussions, most noticeably following the election in 2006. Stuff like "its refreshing to finally have a government that . .. "

http://intensedebate.com/people/Crit_Reasoning Crit_Reasoning

I'm sure that people of all political stripes use the word "refreshing" when they feel refreshed by something.
BCer in Mtl

I was only observing its apparent disappearance from CPC supporters lexicon. Perhaps Stephen Harper has gone flat and tepid.

http://intensedebate.com/people/SisyphusThis SisyphusThis

Maybe that's why no one has seen Mr. Ignatieff.

He's busy painting himself into a corner for a huge tax advantage.

Dot

He's doing that after his ViaRail tour of Canada.

http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

Surely he will be the last-minute stimulate-me-now surprise opening act at the Ottawa Chamber Music Festival.

Mickey

If these data are true and, in fact, due to the tax credit, this might be a very useful case study for the impacts of a tax driven stimulus vs. a government spending driven stimulus.
Dot

I believe Sheila Fraser hired Agent 13 to cover that angle.

Orson Bean

Ok, big Kudos on the Get Smart reference. Brilliant effin' tv show.

http://intensedebate.com/people/DerekPearce DerekPearce

We've insulated the basement, put in some new windows, and tomorrow morning the roofers are showing up for a much-needed reshingling.

http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

You reshingle your roofers?

http://intensedebate.com/people/DerekPearce DerekPearce

Oops, heh. I only reshingle the roofers who are peeling and faded! And I spoke prematurely yesterday. The roofers will not be showing up so I can reshingle them today- they only like to be reshingled when it's not pouring all night and day. They don't like soggy skin ;^)

http://intensedebate.com/people/ottawasteph ottawasteph

Wow, rich folks fixing up their homes, thus increase their worth. Whoop-dee-doo!

Wayne

My parents are not rich by any stretch of the imagination and they have just finished using the tax credit. My Brother isn't rich and he is working on his place right now. My Nephew isn't rich and … well I think you get the point. The main thing is that this and the Tax Free Savings Accounts are probably 2 of the best ideas that we have had since the RRSP and major cudos should and no doubt will be given to the CPC come election day especially since the election will be in the Spring with the budget and people will be applying for the refunds .. and as usual the CPC has impecccable timing despite what the left wing nut crowd will tell you.

http://intensedebate.com/people/ottawasteph ottawasteph

Where'd your family get the money for all these tax credits, shelters and other goodies. It takes job security and a disposable income to do all that.
http://www.intensedebate.com/people/ottawasteph ottawasteph

Where'd your family get the money for all these tax credits, shelters and other goodies? It takes job security and a disposable income to do all that.

http://www.TennisVagabond.com Big Dave S

Yeah, and all those carpenters and hardware store clerks are so smug! I hope they get theirs.
http://intensedebate.com/people/DerekPearce DerekPearce

Steph, having disposable income does not make one "rich." We don't own a car and have skipped plenty of other stuff to do house stuff instead. Plus, the vast majority of homeowners still owe a big big pile o' cash to a bank for their house. Sheesh, and here I thought I was on the left of the spectrum here in Macleans comments land.

http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

But if you didn't own that house you wouldn't get that nice $1000 gift certificate from the Canadian taxpayer.

http://intensedebate.com/people/DerekPearce DerekPearce

True. I for one would be totally amenable to a tax credit for the purchase of anything by anyone. Or instead, the government could have mailed everyone a cheque to be fair. Or they could have been true conservatives and not done anything at all. I just got a bit riled at being called "rich" when I know I sure as heck ain't!

http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

I hear you; didn't mean to pile on. I see the logic of getting people with some disposable income to spend it, especially on hard-hit sectors like construction, and come to think of it I can't quite figure out what the low-income equivalent to home renovation would be; but surely the professionals could think of something.

Davey

People in construction working instead of collecting gov't benefits. How un-Canadian.
And Robert M. The stimulus meant deficits. While I agree with you and prefer we have none, I am certianly pleased with the short term programs such as this that had some of the most immediate benefit.
Always the same – tax reductionby CPC took money from our grandchildren's mouths. When the Liberals do it, it is stimulus or investment.

http://intensedebate.com/people/Lord_Bob Lord Bob

The libertarian in me is feeling very smug that the things which are working are the tax credits.

(Note: the libertarian in me is all of me except for the part that likes "Hockey Night in Canada" and train rides.)

http://www.TennisVagabond.com Big Dave S

Best comment in the thread.
Thanks.
http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

Tax credits work at getting people to spend money is . . . What on earth does that have to do with libertarianism?

http://intensedebate.com/people/Lord_Bob Lord Bob

Fewer taxes = more spending. If people have money, they will use it to buy things. If the government has money, it will use it to not pay people to collect garbage. It was more a joke than a serious rhetorical comment, mind, so let's not overanalyze here.

http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

Can we at least spell "analyse" properly? You'll note that it's from ἀνάλυσις, i.e. with an s; -ize is from the -ιζω suffix (though that has mutated, in Canadian English, via French -iser into -ise not -ize).

Drollery aside, having the government tell you how you can and can't claim back your taxes seems to me the most anti-libertarian measure around. And since this particular tax credit is forcing people to help out the hard-hit construction sector, it seems to me proof that anti-libertarianism works.

Matthew Fletcher

Exactly, this is a pretty statist attempt at manipulating the economy. That some are convinced it is libertarian I think actually enhances its authoritarian quality.

http://intensedebate.com/people/Stewart_Smith Stewart_Smith

For anyone who is planning to or has run over the top of their deduction limit, it is still a good idea to hang onto those receipts. There is an emerging market to resell the receipts at about 4 cents on the dollar to people who need them to make their claim.
Wayne

Hey all of you naysayers and jokemakers about this brilliant idea. I am just finishing a serious amount of work on my place and hopefully will get darn close to the full refund and so have 2 other people in my family alone as well as I have 2 friends doing the same. If you do not take advantage of this then you are just .. well I am trying to think of a polite way way to say limited intelligence.

sbt

"If you do not take advantage of this then you are just .. well I am trying to think of a polite way way to say limited intelligence."

Or a renter.

Wayne

testing
Wayne

weird

http://intensedebate.com/people/SisyphusThis SisyphusThis

Agreed.

Orson Bean

I've never considered myself part of the anti-Harper crowd. Having said that, there's no question that this particular program, whatever its merits, is aimed squarely at the demographic that Harper & Co consider to be their sweet spot: middle class to upper-middle-class and higher married people with families and houses. I remember during one of the Harper govt budgets, I remarked to a friend of mine that there was absolutely nothing in that budget for someone like me, i.e., a single person sans children living in rented accommodation. Of course it's fully open to a government to favour married people over single people, people with children over the childless, and homeowners over renters. But I think those homeowners on this board ought to be cognizant of the fact that there is a huge swath of people in this country who don't own homes, can't afford to and are basically shut out of this little boondoggle — as well as the other big Kahuna, the childcare payment.

http://www.TennisVagabond.com Big Dave S

I think the part that people are talking about here, the renos that each has personally committed to, is overshadowing the actual economic point of the stimulus: to help the lagging construction trade, with its many tentacles.

I can understand the resentment of renters that they were not somehow chosen as a vehicle for this stimulus, but just because there are side-winners does not cancel the actual stimulus benefit, which supposedly was necessary to lift the whole economy.

http://intensedebate.com/people/ottawasteph ottawasteph

Lagging construction trade? I thought there was a shortage of skilled workers, which means unregulated, fly-by-night non-union shops are picking up the slack, hiring day labourers who own their own steel-toed boots and get paid in cash at the end of the day. When it comes to employment, I prefer quality to quantity, long-term to short-term, careers to dead-end jobs.

http://www.TennisVagabond.com Big Dave S

Have you heard of this thing people have been talking about called the recession? The downturn in housing starts?
Have you wondered what people are talking about?
Try mixing in a newspaper with your preconceived rants.

Orson Bean

Still though, that does raise a legitimate issue about the extent to which we rely on home and other construction, housing starts and related sectors (like home renos) to drive our economy. There was a statistic that came out a short while ago about the percentage of jobs in British Columbia which were represented bhy the construction industry. It was a big number, and was significantly in excess of other jurisdictions and historic comparables. It is a bit ironic that some people out there will go on and on about "sustainability", yet in the next breath will favour policies that encourage new home construction en masse. Personally, I think this whole North American obsession with home ownership (especially the detached single family home) is not healthy, and I am very far from left wing politically.

http://intensedebate.com/people/DeliciousLattes DeliciousLattes

The aim of the credit was two-fold: to offset the downturn in new home construction, and to encourage some of the under-the-table deals that are common in the renovation business to become legitimate.

Both these aims would explain higher reported retail sales in the home renovations sector, but only one would actually mean actual higher sales.

I don't mind this policy as a strict stimulus measure. But I also never want to hear a Conservative squawking about government not picking winners and loser again.

Orson Bean

Depends on your definition of "Conservative", doesn't it? I can see your point, if by "Conservative" you mean card-carrying members of the CPC who actually support all of the CPC's policies. But there are, e.g., lots of people out there who consider themselves to be fiscal conservatives who are quite understandably horrified at the current govt's abandonment of fiscal conservatism. I think the latter group are perfectly entitled to squawk all they want about governments picking winners and losers.

http://intensedebate.com/people/DeliciousLattes DeliciousLattes

My use of the capital C was intentional.

JkG

I think it is worth noting that a Maclean's article, a very long time ago, mentioned that one of Harper's key election strategies against Paul Martin was to specifically target the middle-class family who owns a home, especially out in the suburbs of major metropolitan cities. To paraphrase the article, they were more interested in John, Mary, and their children Sue, and Tom out in Richmond Hill and not Sarah, the Starbucks drinking single urban professional who lives in a condo and Younge and Dundas. When you think about it, this tax program is simply an extension of that but doubly effective, since not only does it cater to and galvanize the already established electoral target group, but also, any positive stimulative effect will be seen as progress in recovering the economy, which will please the not-home-owners. The latter part is crucial because it will have to outweigh the fact that this tax measure is remarkably exclusive thereby implying that those who do not own homes are essentially "bailing out" the housing sector. Moreover, as Deliciouslattes notes, its benefits will also have to eclipse the fact that this is a reversal of the original Conservative position of not meddling with the market. That will then allow them to downplay their ideological 180 by noting that this was an exceptional case, which through prudent action, was immensely successful.

Of course, this entire scenario is wholly conditional, and we will have to see….

JKg

*at Younge and Dundas

whoops

http://intensedebate.com/people/DerekPearce DerekPearce

Heh heh, going to pick on you a bit and say, it's Yonge. No "u." And to pick further, there are no condos at Yonge and Dundas, only office space & retail ;^)

JkG

hehe, point taken, I need to brush up on my Toronto geography :)

http://intensedebate.com/people/Inkless Inkless

JkG gets it, pretty much. The target for this isn't Ottawasteph's "rich people," because the richer you get, the less you'll notice a pretty modest tax advantage. The target is families who will never own anything more valuable than their home; have occasional trouble paying for that; and will appreciate both the chance to improve their home and pocket a tax savings. An important secondary market is the contractors, who are not normally reckoned among the rich but have had a busy summer.

Still, I can't imagine a government of any partisan stripe that would have foregone some variation on this program if it were developing a January budget. It encourages people to spend the money they already have, which is faster than sending them money any other way.

It would be odd to have argued, in December, that a stimulus was so important the government should fall for failing to deliver one, and then to argue in July that stimulus efforts are pointless. And if the Harper Conservatives win the next election — I have no idea whether they will, but if they do — it will be handy to have considered a few reasons why that might happen.

JkG

Thank you, though I guess it wasn't an all that great a comment. Anyway, I agree that a variation of this program would have been implemented regardless of party in power due to its simplicity, and it is its multiplier effect that make it such an attractive and obvious policy move. I was just noting that not only the socio-economic benefit would be significant, since it is targeting the middle class within the housing sector but also very beneficial from a political and tactical standpoint, especially in the context of having a Harper government. The stimulative effects need to show up in the indicators to demonstrate its comprehensiveness despite targeting a particular group, but since this policy, at the very least, will result in tangible benefits for a lot of individuals, it will be received a lot more positively than say, for example, the auto bailout, which was criticized as too narrow and exclusive.

Furthermore, to your last point, that is precisely another reason why I think this move was effective both economically and politically. The opposition is sort of painted into a corner. The opposition will have a tough time because on the one hand, as you said, arguing that the stimulus was particularly insufficient would be strangely inconsistent (albeit they could frame this as a government mishandling). On the other, if the stimulus is effective, the opposition will have to argue that they were responsible for its success in a variety of ways. In the first case, the opposition will be undercut due to the effectiveness of the Home Renovation Tax Credit, so any criticism of the stimulus being too narrow and thus pointless will be unconvincing. In the second, the opposition will be undercut because as Orson Bean pointed out, the middle class is the constituency with whom Harper greatly associates. Given that Harper introduced well before this stimulus income splitting for families with kids under a certain age, he has shown he wants to the help the middle class. It would be strange for the opposition to convince that large constituency it was their idea. In other words, this situation is more or less win-win, and I would suspect Harper understands that. I would not be surprised if this were to be cited the next election race as evidence of their track record.

8^)

I love the people who think that the tax credit is 'aimed at the rich' – hey people – THEY'RE PUTTING CONTRACTORS TO WORK AND GETTING PEOPLE TO BUY PRODUCTS THEY MAY OTHERWISE HAVE!____Yes, the guy getting the hottub may be rich, but the guys on the supply chain aren't.____Except for at my house, I only employ millionaires to do odd jobs. It's more expensive, but adds a certain cachet.
8^)

The government supports homeowning families!

GAAH! – What is the meaning of this!!

How dare they!!

What about me me ME! says the childless upscale urban professional.

Who will finally come to the defence of this downtrodden demographic?

Well, ultimately I guess it will be my children who look after them, or they can get their Louis Vuitton bags to do it.

Isa

"Childless upscale urban professional"… is that me? Childless, yep; upscale, not so sure (as I don't have any Louis Vuitton bag, I guess not); urban, yes (if you consider living downtown Ottawa to be urban); professional, yes I confess that I am.

I can't wait for your children to look after me. In the meantime, is it my pleasure to contribute, through my taxes, to help parents and families get benefits to make sure that I have people looking after me when I am old and useless…

8^)

Precisely…and no, Ottawa is not 'urban' in any real sense.

NB – there's nothing wrong with being a CUUPie, but there is something wrong with folks who want to point out that government policies that support single income many people living & eating (that's SIMPLEtons) preferentially is somehow cynical and 'unfair'.

This is something you are not doing. You, by contrast, seem like a, uh, human being, who lives in a, err, society.

Isa

I am not a CUPPIe or, for that matter, member of any union.

Now, if you'll excuse me, I have to take two labs out to the park because, you know, that is what childless people living in a, err, society do. Too bad these dogs will not be able to look after me..:)

André

The way I see it is 2 Billion in tax credit is 20 Billion in economic stimulus, providing 1 billion in GST tax to the federal government.

Tax payers not getting the credit spend 1 billion and the economy gets 20 billion.

Am right?
http://intensedebate.com/people/Jack_Mitchell Jack Mitchell

These are excellent comments; and I have to admit there are worse ways of buying public support with public money. As Mr. Wells says, at least the contractors (and their employees) are getting some business.
http://intensedebate.com/people/SophiaGeffros SophiaGeffros

This is actually a good idea. Yes, it is aimed purely at those with disposable income, it provides employment to people in the construction industry, thus providing them with a bit more, which they will then spend or save.
Seriously, well done.
Kaplan

I'll actually tip-toe past my partisan self and admit that Harper's got himself a winner with this tax credit…but lord it hurts to do so.
http://intensedebate.com/people/robert_mccl6309 Robert McClelland

It's interesting that you believe everybody should be forced to pay–via the increased deficit–for your family's new countertops.
Wayne

if you had a real point I would respond to it. Think of it more as a retroactive rebate of monies I have already paid through my past taxes and therefore has no affect on your taxes!
http://intensedebate.com/people/robert_mccl6309 Robert McClelland

This tax credit is going to add 2 billion to the debt. That debt will have to be repaid by everyone.
http://intensedebate.com/people/Crit_Reasoning Crit_Reasoning

Do you have any stats on the % of government revenue that originates from taxpayers who are also homeowners?
Isa

Do you have any stats on the % of government revenue that originates from taxpayers who are not homeowners, earn a more than decent salary, are single as far as the government is concerned and do not have kids? Furthermore, do you have any stats as to what kind of tax cuts or tax credits these taxpayers get? I am more than willing to pay my fair share of taxes, but, from time to time, I do get the bitter feeling of being a "milk cow" in the eyes of governments. Heck, they don't need our votes as long as families and baby boomers are happy…