More than 90 percent of survey respondents oppose a sales tax on services related to the purchase of a new home.
OKLAHOMA – Oklahoma Association of REALTORS® (OAR) and Oklahoma State Home Builders Association recently announced opposition to Gov. Mary Fallin’s proposed sales tax plan to address the state’s nearly $900 million budget deficit, including proposed sales tax on services related to home ownership.
A recent SoonerPoll Quarterly Poll of the state’s likely voters revealed that an overwhelming 93 percent oppose a sales tax on services related to the purchase of a new home, while 78 percent oppose a sales tax on home remodel-related services and industries such as plumbing and heating and air conditioning.
“While we are sensitive to the state’s budget crisis and need for funding, we are also concerned that taxes related to the real estate industry would have an extremely negative effect on home ownership, Oklahoma’s real estate industry and the state’s overall economy,” said Pete Galbraith, OAR president. “Almost half of the $930 million revenue generated from the proposed plan would come from the real estate industry. The cost of everyday necessities such as utilities, water, sewer and electricity would increase by nearly 5 percent, killing the dream of home ownership for many.”
Gov. Fallin’s plan proposes roughly $1 billion in new sales taxes on 164 services to address the state’s budget shortfall without cutting state spending further. The governor contends the state’s economy has become more service-oriented and that state revenues cannot solely survive on taxing products only. The proposed taxes both directly and indirectly touch Oklahoma’s real estate industry, including financial institutions and fees associated with closing costs, title insurance services, professional real estate services, lawn care and services related to new home construction.
“This proposal would have an incredible chilling effect on the homebuilding industry,” said Dan Reeves, president of the Oklahoma State Home Builders Association. “From our analysis, this would be an almost 10 percent cost increase to the building of homes. This increase is not readily absorbed by the market and decreases the affordability of homes. Previous studies have shown that for every $1,000 increase in cost, 660 families are priced out of the market.”
According to SoonerPoll, even when voters were told increased revenues would better fund government services and eliminate the sales tax on groceries, voters still overwhelmingly opposed real estate-related sales taxes by nearly 75 percent. Not a single demographical subset found the proposed new sales taxes on home remodel or ownership remotely attractive.
“Our industry was hit hard by the housing financial recession, hit again by the downturn in the oil and gas industry, and I am afraid this proposal would be such a crippling blow to the industry that many builders would be driven from the business,” Reeves said.
About the Oklahoma Association of REALTORS®
The Oklahoma Association of REALTORS® is the voice and first source for information, expertise and advocacy related to the practice of real estate in Oklahoma. Established in 1921, it is one of Oklahoma’s largest trade associations with more than 9,5000 members involved in all aspects of the real estate industry. For more information, visit www.okrealtors.com.