By GREG NIKKEL, of the Weyburn Review
A Weyburn contractor, Scott Lawrence, is pitching a proposal to the federal Finance department in the hopes of reducing under-the-table transactions, increasing tax deductions and benefits, and increasing winter work for contractors.
The idea would reduce income tax, create jobs, increase cash flow in the local economy and increase tax revenue to the government - a win-win-win situation if it's instituted the way he's proposed it, said Lawrence in an interview on Friday.
"I used to contribute to RSPs and wanted to work on my house, but I couldn't do both. What I wanted was a program that would treat everybody equally, and would give everybody a tax break, while the government gets an increase in tax revenue," he said.
He has sent his program on to Souris-Moose Mountain MP Roy Bailey, who is supporting it by sending it to the ministers of Finance, Revenue Canada and Industry Canada.
The program would allow taxpaying homeowners a tax deduction for home improvements by licensed contractors; homeowners who do a minimum of $500 worth of improvements in a year would be allowed to deduct the total improvement as if it were an RRSP contribution.
An example he provided is of a homeowner who has an allowable RRSP contribution limit of $7,500 and does $1,000 worth of home renovations which he can claim as a tax deduction. This would allow the homeowner to use only $6,500 as an RRSP deduction.
Receipts from a contractor registered with Consumer and Corporate Affairs would be required, and the result would be that everybody gains in the end, said Lawrence.
"His proposition makes a lot of sense for everybody. By requiring receipts for work done to the home, everyone benefits. Trades people get the work they need. Homeowners get the work that needs done. The government collects tax revenue that it otherwise loses," said Bailey, who noted this proposal could potentially eliminate a large portion of the underground economy in home repairs if homeowners were given this freedom.
Lawrence said there are huge numbers of home renovation projects done on a strictly cash basis right now in order to dodge the necessity to pay provincial and federal sales tax. With the requirement for tax receipts in order to get the tax deduction, some of these cash-only projects could be eliminated.
"It's also a way to regulate work. The simplest way to handle this is to set up a toll-free phone number with Consumer and Corporate Affairs, where contractors would be registered," said Lawrence, explaining that to be eligible to take part in this program a person would have to deal with a registered contractor. This system is not in place right now, he added, but it likely wouldn't need that many people to administer and run it.
"The only people who wouldn't like this program are those doing cash jobs on the side," said Lawrence.
Another way contractors can benefit is by tying the deadline for this program in with the RRSP deadline of the end of February, enabling people to do home renovation work during the winter months, a traditionally slow time of year for contractors, said Lawrence.
The contractor said he's been formulating this proposal over the last three or four years, and almost everyone he's shown it to has said they would support it if it came into reality. He's hoping that by showing it to the local MP and, in turn, to federal finance officials, the wheels might start turning to make it a reality.
"By releasing this information now, I'm hoping to get people talking about it. We lose too much cash out of the country right now," said Lawrence. "I showed this to 15 people the other day, and 13 of them said if this goes through, call me. They would have work done that they wouldn't have done otherwise."
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