Skip to main content
Sister Publication Links
  • Automotive News
  • Automotive News Europe
  • Automotive News China
  • Automobilwoche
Subscribe
  • Subscribe
  • login
  • HOME
  • News
    • News by Brand
    • Auto Shows
    • Canadians Abroad
    • Photo Galleries
    • Automakers
    • Suppliers
    • Retail
    • Dealer Best Practices
    • Government Relations
    • Trade and Tariffs
    • Technology
    • Labour
    • Aston Martin
    • BMW
      • Mini
      • Rolls Royce
    • Daimler
      • Mercedes Benz
      • Smart
    • Ferrari
    • Ford
      • Lincoln
    • General Motors
      • Buick
      • Cadillac
      • Chevrolet
      • GMC
    • Honda
      • Acura
    • Hyundai
      • Kia
    • Mazda
    • Mitsubishi
    • Nissan
      • Infiniti
    • Stellantis
      • Alfa Romeo
      • Chrysler
      • Dodge
      • Fiat Chrysler
      • Jeep
      • Fiat
      • Lancia
      • Maserati
      • Ram
    • Subaru
    • Tata
      • Jaguar
      • Land Rover
    • Tesla
    • Toyota
      • Lexus
    • Volkswagen
      • Audi
      • Bentley
      • Bugatti
      • Lamborghini
      • Porsche
    • Volvo
    • VinFast
    • Toronto Auto Show
  • Opinion
    • Blogs
  • Video
  • Podcasts
  • EVENTS & AWARDS
    • 2021 Auto News Canada All Stars
    • 2021 Canadians To Watch
    • Best Dealerships To Work For
    • Canada Congress
    • Retail Forum: Dealer Discussions
    • Leading Women Roundtables
    • Embracing Diversity Roundtable
  • Jobs & Classifieds
  • +MORE
    • IN THE DRIVER'S SEAT
    • NEWSLETTERS
    • SUBSCRIBE
    • CLASSIFIEDS
    • PEOPLE ON THE MOVE
    • COMPANIES ON THE MOVE
    • WEBINARS
    • ADVERTISE WITH US
    • CONTACT US
    • DIGITAL EDITION
    • PUBLISHING PARTNERS
MENU
Breadcrumb
  1. Home
  2. Retail
October 23, 2019 12:00 PM

Dealers call Liberal pledge of 10% luxury-vehicle tax 'very concerning'

Greg Layson
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    The $4.6-million Pagani Huayra BC would be subject to 23 per cent in taxes if sold in Ontario. In B.C., it would be subject to a tax bill of 35 per cent.

    Canadian luxury vehicle dealers will have to add and explain to their customers a new 10-per-cent sales tax on new vehicles priced above $100,000 if the newly elected minority Liberal government sticks to its platform and implements the fee.

    That’s “very concerning” to dealers in British Columbia, where a similar provincial tax already exists.

    In a single line in the party platform, the Liberals promise to “introduce a new 10-per-cent tax on luxury cars, boats and personal aircraft over $100,000.”

    But, because the party holds fewer than half the seats — 177 — in the House of Commons, implementing any budgetary measures would require support from opposing parties. However, the tax aligns with the economic philosophy of the NDP, which holds 39 seats and arguably the balance of power.

    The NDP had promised to “ask the very richest multi-million millionaires to pay a bit more towards our shared services with a new one-per-cent wealth tax on wealth over $20 million.”

    At a provincial level, the B.C. NDP on April 2018 raised the provincial sales tax to 15 per cent from 10 per cent on new and used vehicles priced between $125,000 and $149,999. On vehicles priced at $150,000 or more, the tax increased to 20 per cent from 10. 

    Blair Qualey, head of the New Car Dealers Association of B.C., says another tax is going to hurt business — and government coffers.

    “In a province where we already have a luxury tax and luxury supertax, up in those high levels, it’s very concerning,” he said of the proposal. “We’re seeing this layering of tax burdens by jurisdictions that don’t seem to be talking to one another. The burden is getting pretty difficult.”

    One year after the B.C. NDP instituted the new taxes, dealers noticed fewer sales.

    Related Article
    B.C. luxury dealers feel taxman's pinch

    “Not only were the effects real, they were immediate,” Paul Killeen, customer-relations supervisor at Brian Jessel BMW in Vancouver, told Automotive News Canada in April 2019. “Watching the PST go up as high as it did ... made people think differently about how they are fiscally, and that pause is what’s really brought the market down.” 

    At Ferrari-Maserati of Vancouver, General Manager Mark Edmonds said sales declines of between 15 and 20 per cent led to staff cuts.

    Qualey claims tax remittance to the B.C. government by his member has fallen by a third since the implementation of the taxes.

    However, the new tax also came into effect as total new-vehicle sales across the country began to fall. Monthly auto sales have declined for 19 consecutive months, according to the Automotive News Data Center in Detroit. Total luxury sales are down more than five per cent through September, according to the data centre. And, Dennis DesRosiers of DesRosiers Automotive Consultants said there is also “a glut of used luxury vehicles in the marketplace.”

    Still, Qualey and his members say luxury taxes deter people from buying high-priced vehicles in B.C.

    That’s because there is also the five-per-cent federal GST, bringing the total tax bill on a $150,000 car to $37,500, a full 25 per cent. 

    As a result, Qualey said people who can afford high-end cars are finding ways to avoid paying additional taxes on them.

    “People are creative. Those people that can afford vehicles at that level either are pretty bright folks or have surrounded themselves with pretty bright folks who can guide them in ways,” he said. “They might have a home in another jurisdiction where they can register the vehicle. They still buy it in British Columbia but don’t have to pay the tax.”

    In Canada, when a non-resident of a province purchases goods or services and takes possession of them in the province, the provincial sales tax is charged.  However, there are a few exceptions, such as motor vehicles or aircraft, in some provinces.

    “And the money they save in tax, they can ship the vehicle back and forth from British Columbia for many, many years; drive it in the summer and ship it back in the winter,” Qualey said. “They buy it somewhere else and we lose the tax because of that.”

    Dealers also lose, he said.

    “Just layering on another tax isn’t going to help the cause of our members,” Qualey said. “What continues to happen is that you don’t make additional investments, you don’t replace people who leave [your dealership], you don’t make investments in technology or training. It’s not a good situation at all.”

    Qualey said he hopes the Canadian Automobile Dealers Association, which is based in Ottawa, will speak to MPs about not moving forward with the tax.

    Tim Reuss, head of the association, wasn’t immediately available for comment.

    RECOMMENDED FOR YOU
    VW to launch ‘satellites’ into Canada’s retail space
    Recommended for You
    VW Satellite Store Concept
    VW to launch ‘satellites’ into Canada’s retail space
    Polestar Montreal Shipping Container Showroom
    Polestar Canada plans new showrooms, leaving shipping containers, malls behind
    2022_jeep_compass_1.jpg
    Jeep making inroads on both ends of lineup
    Luciano Butera
    Sponsored Content: Expert insights | The used-car inventory crunch
    Digital Edition
    May 2022 Cover
    View latest issue
    See our archive
    Sign up for free newsletters
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Get Free Newsletters

    Sign up today for our Weekly Newsletter, Daily Newsletter and Breaking News Alerts. We'll deliver the news you need to know straight to your inbox.

    You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.

    Subscribe Now

    An Automotive News Canada subscription includes 12 monthly issues – delivered in print to your doorstep, and digitally to your inbox – plus unlimited, 24/7 access to our website.

    Subscribe Now
    Connect With Us
    • Facebook
    • Twitter
    • Instagram

    Our Mission

    The Automotive News Canada mission is to be the primary source of industry news, data and understanding for the industry's decision-makers interested in Canada.

    Contact Us

    1155 Gratiot Ave
    Detroit MI 48207

    1-877-812-1257

    Email Us

    ISSN 2475-5001 (print)
    ISSN 2475-501X (online)

    Resources
    • About us
    • Contact Us
    • Digital Edition Archive
    • Advertise with Us
    • Reprints
    • Ad Choices Ad Choices
    • Sitemap
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Automotive News Canada
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • HOME
    • News
      • News by Brand
        • Aston Martin
        • BMW
          • Mini
          • Rolls Royce
        • Daimler
          • Mercedes Benz
          • Smart
        • Ferrari
        • Ford
          • Lincoln
        • General Motors
          • Buick
          • Cadillac
          • Chevrolet
          • GMC
        • Honda
          • Acura
        • Hyundai
          • Kia
        • Mazda
        • Mitsubishi
        • Nissan
          • Infiniti
        • Stellantis
          • Alfa Romeo
          • Chrysler
          • Dodge
          • Fiat Chrysler
          • Jeep
          • Fiat
          • Lancia
          • Maserati
          • Ram
        • Subaru
        • Tata
          • Jaguar
          • Land Rover
        • Tesla
        • Toyota
          • Lexus
        • Volkswagen
          • Audi
          • Bentley
          • Bugatti
          • Lamborghini
          • Porsche
        • Volvo
        • VinFast
      • Auto Shows
        • Toronto Auto Show
      • Canadians Abroad
      • Photo Galleries
      • Automakers
      • Suppliers
      • Retail
      • Dealer Best Practices
      • Government Relations
      • Trade and Tariffs
      • Technology
      • Labour
    • Opinion
      • Blogs
    • Video
    • Podcasts
    • EVENTS & AWARDS
      • 2021 Auto News Canada All Stars
      • 2021 Canadians To Watch
      • Best Dealerships To Work For
      • Canada Congress
      • Retail Forum: Dealer Discussions
      • Leading Women Roundtables
      • Embracing Diversity Roundtable
    • Jobs & Classifieds
    • +MORE
      • IN THE DRIVER'S SEAT
      • NEWSLETTERS
      • SUBSCRIBE
      • CLASSIFIEDS
      • PEOPLE ON THE MOVE
      • COMPANIES ON THE MOVE
      • WEBINARS
      • ADVERTISE WITH US
      • CONTACT US
      • DIGITAL EDITION
      • PUBLISHING PARTNERS