The Ontario NDP’s election promise to slap a tax on luxury vehicles will “negatively impact Ontario’s auto sector,” says the association that represents more than 1,000 new-vehicle dealers in the province.
NDP Leader Andrea Horwath said while unveiling her party's platform Tuesday that if her party wins the Ontario general election on June 7, it will implement “a modest luxury tax of three per cent” on cars sold for more than $90,000. The party says the tax will generate $12 million in annual revenue.
“This is based on an existing measure in British Columbia,” the Ontario NDP website says. “Only about one per cent of sales transactions [in Ontario] will be affected, but those purchasing the most luxurious cars will pay a surcharge.”
The B.C. NDP sharply increased the surtax on luxury vehicles in its February budget, a move characterized by a government spokesman there as “one of the ways our government is improving tax fairness and progressivity.”
Effective April 1 in B.C., vehicles costing less than $55,000 net a seven per cent provincial sales tax, climbing in one per cent increments for each additional $1,000 up to a price of $56,999.99. Vehicles priced between $57,000 and $124,999.99 are subject to a 10 per cent tax. The rate for vehicles priced from $125,000 to $149,999 jumped to 15 per cent, with vehicles costing $150,000 and up facing a 20 per cent levy.
While the Ontario NDP chose a floor of $90,000 and a flat rate of three per cent, it will still hurt the auto industry, says Trillium Automobile Dealers Association Executive Director Todd Bourgon.
The tax “does nothing for the auto sector or those employed in it,” Bourgon said.
“This new $12 million annual tax hike will not help create one job at a dealership or auto manufacturing facility,” he said.
Calls and emails to the NDP were not immediately returned.
“We question the motives behind placing an arbitrary tax on some vehicles,” Bourgon said. “We fear this decision is all about increasing revenue, given the NDP plan to run deficits every year they are in office, if elected.”
The NDP has promised free child care for low-income families and more funding for hospitals. The party would also spend billions to increase Ontario Works and Ontario disability payments. The party projects five consecutive deficits to pay for its promises, starting with a $3.3 billion deficit in 2018-2019.
The deficit would peak at just over $5 billion in 2020-2021, and decrease to $1.9 billion by 2022-2023.
The NDP also wants to return the tax rate on corporate profits to 13 per cent, up from 11.5 per cent, another promise TADA disagrees with.
“Over the past several years, the cost of doing business in Ontario has skyrocketed. Another tax increase will discourage job creation and investment,” Bourgon said. “Tax relief is needed.”