$2,100 tax credit. Another ploy by the Sask Party to benefit major private corporations?

The government of Saskatchewan (Sask Party) has recently (Dec 2020) announced a renovation tax credit of upto $2,100 which would cost the province around $124,000,000 over a period of 2 years. It carries a tag line saying that it would make renovations more affordable. (Harkens back to the Devine era), The home renovation tax credit offered at that point in time i.e. 1984 was called a 5 year senior citizen home repair program which offered grants of up to $1,000. 

This program targets people who want to renovate their homes and it does not include routine maintenance such as cleaning gutters and furnace repairs. The price of lumber and basic construction material has gone through the roof due to spacing requirements in the mills, people staying at home instead of going on a vacation, due to the pandemic and the basic principle of supply and demand. At this point in time the price of lumber is around 3 times the price of what it was before the pandemic. i.e. March 2020. 

Many of the big box lumber yards, to my knowledge, bought several lift loads of lumber when the price was high anticipating even higher lumber prices in the coming months. It is not only lumber yards buying lumber. Manufacturers of kitchen/ bath cabinets, trusses, doors and pre-fab sheds are also buying up lumber. Effectively the price of your basic product goes up by 200% and you get a rebate of 10.5% based upon the renovation tax credit. 

The tax credit also lets consumers claim for any permanent fixture professionally installed. It sounds great until you realize that unlike in the past where you only had to pay the GST on the service and the product, you know have to pay both the GST/ PST and that difference is around 6%. 

Who gains the most out of this? In my opinion, I would say that the major forestry companies, major manufacturers and big retailers would have a bigger selling to buying ratio. Major freight transport corporations such as CN and CP will not have a dip in revenue due to slumping oil prices, thanks to an increase in lumber and other commodity prices. 

Once the pandemic is over, hopefully sometime in spring 2022, there is a high chance the province will look for a way to "balance" the budget by either increasing the PST to 7% or cutting a social program. Remember the cost of this program is estimated to be $124 million dollars over 2 years. 

References: 

Legislative Assembly of Saskatchewan. (1984, 03 21) Hansard http://docs.legassembly.sk.ca/legdocs/Legislative%20Assembly/Hansard/20L3S/840321Debates-PM.pdf

Royal Bank of Canada (RBC)  (2021, 04 08) Canadian federal and provincial fiscal tables http://www.rbc.com/economics/economic-reports/pdf/canadian-fiscal/prov_fiscal.pdf

Government of Saskatchewan (2020, 12 03) Home Renovation Tax Credit https://www.saskatchewan.ca/home-renovation-tax-credit#utm_campaign=q2_2015&utm_medium=short&utm_source=%2Fhome-renovation-tax-credit

NorthShore News (2020, 09 25) Lumber hits record high prices due to low supply and high demand https://www.nsnews.com/local-news/lumber-hits-record-high-prices-due-to-low-supply-and-high-demand-3128123#:~:text=in%20the%20making.-,Lumber%20prices%20across%20North%20America%20have%20nearly%20tripled%20since%202019,2019%20average%20annual%20of%20%24499.