After I posted my blog posting yesterday, I was sent the Federation of Rental Housing Providers of Ontario issued a press release entitled "McGuinty Government Dupes Media and Tenants on HST: Tenants not protected from HST". The press release states:
Today the McGuinty Liberal government misled the media and tenants and caused further harm to rental housing quality by announcing that landlords will not be able to pass on HST costs to tenants in above guideline rent increases (AGIs).
“This bizarre move by the Liberal government was designed to capture headlines and dupe the media into believing that tenants are somehow going to be protected from negative HST impacts” said Vince Brescia, President & CEO of FRPO.
The government gave deliberately misleading information in its press release designed to capture media attention, and also designed to attack landlords rather than help them deal with the huge negative consequences of the HST that are specific to the rental housing industry.
“It is unfortunate that the government has chosen not to help the industry deal with the massive negative impact of the HST on Ontario’s rental stock and tenants” said Brescia. “They seem to be more interested in headlines than in helping tenants”.
This is an interesting press release that goes on to provide more detailed information about the rental housing industry in Ontario and their point of view that harmonized sales tax (HST) costs to landlords will be passed on to renters in the form of higher rents. It is particularly interesting in light of the fact that HST implementation is only 2.5 months away. It is also interesting in light of the wage freeze budget.
The tone of the news release is more provocative than what is usual. But, provocation may be necessary. Many in Ontario can be described as happy sleeping puppies who are not aware of what HST will mean starting on July 1, 2010. If there is misinformation by government officials, then in is n important public service for those who understand what is myth and what is true to come forward.
I will continue to monitor this situation in order to report further on whether landlords will be restricted n their ability to pass on unrecoverable HST costs to tenants/renters of residential real property. I would expect that landlords would be entitled to pass on unrecoverable HST costs in the form of higher rents. It will be a significant development if laws and regulations are passed to limit landlords' recovery rights.
If laws and regulations are passed in relation to one industry, it is a slippery slope to force on businesses unrecoverable HST costs. The initial announcements at the time of the announcement of HST was that the tax reform was beneficial to business. The residential rental property industry may disagree at this time.