Canada to Roll Out Luxury Tax for Cars, Boats, Private Planes Over $100K
All new cars and planes priced above $100,000 and boats above $250,000 will be subject to the new tax, which comes out to 10 percent of the item’s total cost.
Canada will impose a new tax targeting luxury vehicles, including cars, boats, and private planes.
The Select Luxury Items Tax Act was revealed as part of the Canadian government's 2022 budget measures and released last month, according to Robb Report. Going into effect on Sept. 1, it will apply to consumers purchasing new vehicles for personal use.
All new cars and aircraft priced over $100,000 will be subject to the Act, along with boats exceeding $250,000. The tax incurred is 10 percent of the full value of the item. It will also apply to "written sales agreements" from Jan. 1, 2022 onwards in a retroactive measure. Manufacturers, wholesalers, retailers, and importers must register under the act before selling or importing vehicles subject to the new tax. It's probably important to note that these thresholds are in Canadian dollars and that 100,000 of those is equal to about $77,777 USD as of this writing.
The tax is intended to raise revenue from those who have done better in the difficult pandemic trading conditions. "Some sectors of the economy have flourished," a government statement from August last year read, adding, "That’s why it is fair today to ask those Canadians who can afford to buy luxury goods to contribute a little bit more."
A May 26 Legislative Costing Note from the Parliamentary Budget Office claimed that the new sales tax will result in $163 million of revenue between 2023 and 2024.
Unsurprisingly, the move has drawn the ire of some. “This tax will destroy the industry and have job losses across the country,” said Sara Anghel, the president of the National Marine Manufacturers Association, according to the Toronto Sun. Anthony Norejko, the president and CEO of the Canadian Business Aviation Association, said, “The economic impact of the luxury tax will be significant and [has] not been studied with a comprehensive understanding of our industry,” per Robb Report.
However, private planes in particular have been a target for criticism of late. Celebrities like Taylor Swift, Floyd Mayweather, and Kylie Jenner, have been accused of polluting the planet with their use of private aircraft. A study by Yard suggested Swift is one of the most egregious users, while Jenner drew condemnation for apparently taking a plane on a 17-minute flight.
The Select Luxury Items Tax is a part of the broader Bill C-19 which passed into law on June 23, 2022. It includes tax breaks for companies producing zero-emissions technologies as well as a variety of disability and housing tax measures. Many governments spent big to keep their countries afloat during the pandemic. Finding additional revenue to cover those costs has been a priority, and it appears Canada has created a straightforward way to do just that.
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