How does Alberta's lack of a provincial sales tax (PST) affect real estate construction costs compared to provinces with PST or HST?
Correct Answer
D) Costs are lower, as materials and services carry only 5% GST instead of HST or GST plus PST
Alberta does not have a provincial sales tax (PST) and is not part of the Harmonized Sales Tax (HST) system. Building materials, trades services, and other construction inputs are subject only to the 5% federal GST, compared to 13-15% HST in provinces like Ontario or the Maritimes. This results in lower construction costs and, ultimately, lower home prices.
Why This Is the Correct Answer
Alberta charges only the 5% federal GST on construction materials, labour, and services. Provinces with HST (such as Ontario at 13% or Nova Scotia at 15%) or separate PST regimes charge significantly more. This 8-10% tax saving on all construction inputs reduces overall building costs, which contributes to relatively lower new home prices in Alberta.
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