Windfall for Victoria in good-behaviour incentive
Jim Jamieson
Province
Victoria has yielded to pressure from the construction industry by allowing a “grandfathering” period for a controversial new tax rule relating to windows.
As part of last month’s budget, Finance Minister Carole Taylor announced that double-glazed windows and related products would no longer be eligible for exemption from the seven-per-cent provincial sales tax.
To get the exemption, only windows built to the higher Energy Star standard would qualify.
Stakeholders in both the residential and commercial construction industry were unhappy that there was no notice of the change and no transition period to protect developers and builders who had already signed fixed-price contracts based on the previous exemption.
Late Monday, the Ministry of Finance decided to allow a transition period to the higher standard.
Contractors, businesses and individuals who entered into agreements before Feb. 21 will quality for a sales-tax refund. Only products purchased from Feb. 21 to March 31, 2009, to fulfill those agreements, will qualify.
“From B.C.’s tax point of view, we are firmly committed to using the tax as an incentive for environmentally positive behaviour,” Taylor told The Province yesterday. “This was an effort to incent behaviour toward Energy Star windows.
“Members of the [construction] community came forward and we felt they had a legitimate concern, so we brought forward an amendment,” Taylor said.
Todd Domstad, president of the Glazing Contractors Association of B.C. and an owner of Surrey-based Nu Glass Projects, said he was concerned the refund process will be “an accounting nightmare.”
“It’s good to see the government responding to us,” he said. “But why collect a tax and have a slew of problems refunding it, when you could just not collect it in the first place?”
Others — in the commercial building sector — will lose their exemptions because the large glass installations in tall office towers don’t line up with Energy Star specifications.
It will become a moot point after March 31, 2009, when Energy Star compliance for window products will become part of the B.C. Building Code — so even that tax exemption will go away.
It shapes up as a tax windfall for the B.C. government.
According to the glazing association, a recent survey of 15 companies showed they had $106 million worth of contracts on their books, including $58 million in glass products that mostly had been tax exempt. It’s not uncommon for the glass contract in a large commercial tower in downtown Vancouver to cost $10 million — the majority of which would have been tax exempt.
“Removing the exemption completely just takes away any incentive to put higher-end energy efficient products in a building,” said Domstad.
© The Vancouver Province 2007