Headline news from the Ghost of Campaigns to Come … in 2019:

It’s summer, and Finance Minister Pierre Poilievre has called a news conference in suburban Ottawa to help launch the fall election campaign, with Stephen Harper seeking an unprecedented fifth consecutive term as prime minister.

Dressed in a Tory blue Santa Claus suit, Poilievre said he has arranged for the Canada Revenue Agency to print up special $600 tax credit cheques to the first recipients of the permanent Home Renovation Tax Credit program. Promised in the 2015 election campaign, rollout of the program was delayed as the Canada-only recession stretched into 2018.

“We’re so thrilled to get the cheque,” said Melanie Dufour, a mother of three. “Without it, we never would have been able to afford our above-ground swimming pool.”

“We love our new sauna,” said John Balaban, another happy cheque recipient.

Mr. Poilievre said all the cheques should be in the mail within the next two weeks, well before election day in October. He also hinted that the Tories were considering a new tax credit for second cars …

The Harper Conservatives’ promise this week of a permanent home renovation tax credit, to be phased in over the next couple of years, is yet another example of the complete corruption of Canada’s tax system by a government bent on distorting it through boutique tax credits designed to do nothing but buy votes.

When the federal government introduced a temporary home renovation tax credit in 2009, it was an extraordinary measure designed for a single year. The idea was to keep the construction industry rolling during a period of extreme economic turmoil by encouraging homeowners to accelerate investments in home repairs like new roofs and rec rooms.

It was just a small part of a massive stimulus program that involved billions of dollars invested in highways, sewers and university facilities. The advantage of a temporary program for home renovation was that it would get the work started almost immediately, in contrast with the longer timeline for public works projects.

A permanent home renovation tax credit would only feed the dangerous real estate bubbles in Toronto and Vancouver and would do nothing to make home ownership more accessible for young Canadians in those cities — the ones unable to shoulder $1-million mortgages. A permanent home renovation tax credit would only feed the dangerous real estate bubbles in Toronto and Vancouver and would do nothing to make home ownership more accessible for young Canadians in those cities — the ones unable to shoulder $1-million mortgages.

But what the Tories loved most of all about the credit was that it was popular with the demographic it was trying to woo: suburban families. I can still remember Finance Minister Jim Flaherty’s eyes lighting up when it was suggested by Finance officials that the credit could be used for less-than-essential renovations like new decks. No problem — that was exactly what Flaherty had in mind.

(Incidentally, the 2009 credit ended up being significantly less popular than originally expected. The government initially thought that the credit would cost it $3 billion; in the end it cost 25 per cent less, or $2.26-billion, presumably because fewer people took advantage of it.)

Making a renovation tax credit permanent would have no long-term effect on homeowner behaviour. After a possible initial upward blip in the first year or so, homeowners would simply take it for granted that they can get a bit of help (a maximum 15 per cent credit on $4,000 of work) for paving the driveway or painting the kitchen.

And while Harper tries to make it sound like the new credit will help “every Canadian homeowner regardless of income,” this is a fundamentally unfair proposal that privileges the wealthy over the poor, the old over the young.

The problem ought to be obvious: not all Canadians are homeowners. According to Statistics Canada, 69 per cent of Canadians owned their own homes in 2011. The other 31 per cent won’t get dime one from Harper’s newest credit. In Quebec, close to 40 per cent of people are renters. And only 55.6 per cent of lone-parent households can afford to own their own homes.

The richer you are, and the older you are, the more likely you are to own your own home. “Across all groups,” StatsCan reports, “households with higher annual household total income had higher home ownership rates.”

While over 90 per cent of households earning over $100,000 a year own their homes, only 37 per cent of households earning less than $20,000 are homeowners. Even among the lower-middle class — households earning between $40,000 and $59,000 a year — only 65 per cent are homeowners.

So 35 per cent of these middle-class families would get no benefit whatsoever from the Harper renovation credit.

Homeowners have plenty of tax benefits in our system already — most notably the capital gains exemption of the sale of a principal residence. In fact, a permanent home renovation tax credit would only feed the dangerous real estate bubbles in Toronto and Vancouver and would do nothing to make home ownership more accessible for young Canadians in those cities — the ones unable to shoulder $1-million mortgages.

Who would benefit most from a permanent home renovation tax credit? The same high-income individuals who benefit from income-splitting, higher Tax Free Savings Accounts exemptions and other boutique tax credits brought in by the Tories. Income disparities will only increase.

If the government has too much money sloshing around in the consolidated revenue fund, it should cut tax rates across the board, improve benefits to veterans or encourage forward-looking measures like research and development. Paying homeowners in Aurora or White Rock to put down new sod in their backyards is irresponsible.

Alan Freeman is a Senior Fellow at the University of Ottawa’s Graduate School of Public and International Affairs. He came to the U of O from the Department of Finance, where he served as assistant deputy minister of consultations and communications. Alan joined the public service in 2008 after a distinguished career in journalism as a parliamentary reporter and business journalist for The Canadian Press, The Wall Street Journal and The Globe and Mail. At the Globe, he spent more than 10 years as a foreign correspondent based in Berlin, London and Washington.

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