Premier Dalton McGuinty's Liberals are sweetening the pot in a bid to make the controversial harmonized sales tax more palatable to Ontarians.
In a surprise move this moring, the government announced it was capitulating to homebuilders' demands by effectively reducing taxes proposed on new homes.
Under the change, buyers of new homes in all price ranges would recive a 75 per cent rebate of the 8 per cent provincial portion of the HST on the first $400,000 of the cost.
In th March 26 budget, Finance Minister Dwight Duncan had said that while people purchasing new homes costing less than $400,000 would be eligible for the tax break, those buying more expensive homes would get little relief.
It would have been a recipe for disaster for consumers and developers because there would be a gradual increase in taxes on homes costing between $400,000 and $500,000 and a massive one on those priced above $500,000.
For residents of Greater Toronto, where homes are more expensive than in the rest of Ontario, it would have been epecially onerous.
The Liberals also announced a new rebate to encourage builders to construct rental housing units.
The HST, which will blend the 8 per cent provincial sales tax and the 5 per cent federal GST, is to come into effect July 1, 2010.