Harper Pledges C$1.5 Billion Canada Home Renovation Credit

Updated on

Canadian Prime Minister Stephen Harper, seeking re-election in October, is bringing back a slimmed-down version of a popular tax credit on home renovations.

The permanent, 15 percent annual credit would apply to renovations between C$1,000 and C$5,000, for a total cost of C$1.5 billion ($1.1 billion), Harper said Tuesday in Toronto, though he did not say when it would take effect. The original program was introduced in 2009 with a C$10,000 cap, and a total cost of C$3 billion, before it expired in 2010.

Harper, who kicked off the campaign Sunday, is in a tight-three way race for the Oct. 19 vote. The prime minister has been criticized for pressing to balance the federal budget, at a time when growth is faltering; gross domestic product has shrunk for five straight months.

The tax-credit measure unveiled Tuesday, and an expanded apprenticeship funding announced Monday, come ahead of the first campaign debate scheduled for Thursday in Toronto.

“Canadians already know first-hand how this tax relief will help,” Harper said, adding 3 million Canadians took advantage of the original credit.

The tax credit would take effect during the next parliament but not necessarily in 2016. Harper said it will come “mid-mandate” so that it is affordable for the long term.

“If you look at the fiscal track, we’ll have that fiscal room, but we’ll be sure that it is affordable and sustainable before we bring it in,” Harper said.

Not ‘Inexpensive’

The tax credit would apply to anyone who owns a home or condo. “The Home Renovation Tax Credit is not just about home renovations. This tax credit will help generate jobs,” Harper said during a campaign stop at a tile manufacturer in the Toronto riding of Finance Minister Joe Oliver.

The government estimated the 2009 credit pumped C$4.3 billion into the Canadian economy. Oliver’s predecessor, Jim Flaherty, did not extend the initial 2009 credit, saying in 2010 it was not “inexpensive” and had been designed to “try and preserve jobs in this very difficult past year.”

Low interest rates have fueled a blistering real-estate market, with home prices and debt levels at record levels. In June, the Bank of Canada warned that a housing crash poses the biggest risk to the country’s financial system.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE