The Canadian Automobile Dealers Association is urging the federal government to address key concerns surrounding implementation of a proposed 10-per-cent luxury tax.
The CADA said in a statement this week that it met in September with the federal finance minister’s office, where it tabled its submission on the proposal, which would apply a levy to vehicles with a sticker price of more than $100,000. The group has been fighting the measure since it was originally proposed by the federal Liberals in 2019.
Ottawa had invited stakeholders to make submissions regarding the proposed levy.
CADA CEO Tim Reuss said his chief concern is the issue of compounding luxury taxes in Quebec and British Columbia, which have their own versions of the tax. Luxury vehicles in B.C. would be taxed at an effective rate of up to 38 per cent, which would have a “catastrophic effect” on dealers in that province, said Reuss.
“While the government is trying to basically hit rich people, if you will, with this tax, the ones affected from our members will actually be the hard-working people, the lot attendants, the mechanics, working at dealerships.”
The luxury tax is slated to be implemented on Jan. 1. The federal Liberals say the tax would apply to either 10 per cent of the full value of a vehicle or 20 per cent of its value above $100,000, whichever is less. It would apply to a vehicle’s price after PST, GST and HST are added, a federal official previously told Automotive News Canada.
Reuss said compounding taxes in B.C. and Quebec would prompt many buyers to look elsewhere for their vehicles.
“Consumers will buy around that tax, either not buying at all… or they will buy a used vehicle or will buy in the U.S. or another jurisdiction, and that’s the worst outcome.”
The CADA also wants electric vehicles to be exempt from the tax and said the industry needs more clarity on how it will be implemented. For instance, Reuss said it remained unclear how leased vehicles would be handled under the tax.
“There are quite a few topics that are just not as clear as they should be. There’s been a joint consensus of industry that if you’re going to go ahead with this, maybe delay it by a bit until all these details can be ironed out.”
