Canada News: New Tax Targets Used-Car Sellers



April 09, 2012

The British Columbia Provincial Government has hiked the sales tax of used motor vehicles from seven to 12 percent. The Historic Vehicle Association’s Canadian correspondent, Nigel Matthews, reports.

In July of 2010, the British Columbia Government introduced the Harmonized Sales Tax, a compounded, lump sum tax that combined the federal Goods and Services Tax and the regional Provincial Sales Tax. Five of the 10 Canadian provinces signed onto the plan—Ontario, New Brunswick, Newfoundland/Labrador, British Columbia, and Nova Scotia.

Like American state sales tax, the HST rate may differ across these five provinces. For example, the Provincial Sales Tax rate in British Columbia is seven percent. Among other things, this tax applied to the private sale of used motor vehicles in the province. But with the adoption of the HST in 2010, this long standing tax suddenly shot skyward.   

As soon as the HST was introduced, a huge list of items and services saw a federal price hike thanks to the new tax. Everything from a “gentleman’s haircut” at a barber shop to the sale of a used car suddenly had a 12-percent tax added to the service.

Let the Public Decide—Not!  

When the government allowed for a public vote to decide the fate of the new, combined tax, it was no surprise that 55 percent of British Columbians who cast a ballot in the mail-in referendum voted to scrap the 12-percent HST.

Everyone in the classic car community thought that the tax on private, used vehicles would revert back to a flat seven percent provincial sales tax. But that was not the case. A few weeks ago, it was announced that the tax on the private sale of used motor vehicles would remain at 12 percent.

What Gives?   

Faced with a barrage of angry letters and emails from members of the National Association of Automobile Clubs of Canada (NAACC) and the Specialty Vehicle Association of British Columbia (SVABC), the BC government has responded with an insistence that the 12-percent tax will remain in place because it was not related to the HST. In a written response to the NAACC, the Chair of the BC Treasury Board, Colin Hansen, explained:

“The application of the 12-percent tax on the private sale of used vehicles is not the HST and, therefore, the elimination of the HST will not trigger any change. The problem that government faced was that there was an inconsistency in the application of taxes on the sale of used vehicles depending on where the transaction took place. Used vehicles on dealership lots were taxed at 12 percent (and they will continue to do so). This led to a considerable problem with "curbers," which are essentially unregulated car dealers. Applying a 12-percent [tax] to all used vehicle had brought consistency and, to the best of my knowledge, no changes are contemplated.”

The rub, of course, is that now a private individual selling an old car in the paper or along the side of the road will be taxed the same as a professional dealer with dozens of cars on a lot.   

Fighting Back

The NAACC has since kicked off an organized campaign to fight the increase in tax on private, used vehicle sales. “I, along with my fellow car club members in BC, am extremely upset by this NEW tax on the private sale of used collector vehicles,” says John Carlson President of the NAACC. “I have been told that this additional tax—five percent on top of the provincial sales tax of seven percent—was added at the request of the car dealers who want ‘to level the playing field’ with ‘curbers’ who sell cars privately. The NAACC does not agree with this logic and, furthermore, believes this tax increase has come about simply as a result of the introduction of the HST.”

According to the NAACC, “curbers” do not operate in the collector car sales world, which is why they are proposing that all vehicles 20 years old and older sold privately should remain at the seven-percent tax level. These cars, according to Carlson, have already generated many thousands of dollars in taxes as they have been sold and resold many times.

In the end, the British Columbia collector car clubs and their members are only asking for what they had—a 7-percent tax—before the HST came to the province. For more information, check out the websites of National Association of Automobile Clubs of Canada and the Specialty Vehicle Association of British Columbia.  Also, stay tuned to future issues of the HVA eNews to find out if this situation will have a happy ending for the BC hobbyist vehicle community.

 

Comments

  1. Dave p Las vegas

    What a crock. Another tax grab from the Canadian government. As a Canadian, i am appalled by the waste of tax payer dollars. And no wonder Canadian business people move to the US. Too bad

  2. Alan Lea Sooke, Vancouver Island.

    Two years ago I bought an XJS from a friend's estate in Ontario.I paid for it in June and was assured by my financial institution on a stack of Bibles that HST, due to start on July 1st., would not apply. It was shipped out by rail and I hastened to register the car in BC, only to be told that they had been told by BC Government mail on 30th.June that the tax (HST, no other tax mentioned) would be 12% unless it could be proven that the car was in BC before 1st of July. Not having access to freight train retro-tracking I paid. Not exactly what I would call curbside trading, still it taught me never to vote Liberal in this province.

  3. Chris Del Rossi Virginia

    This stinks and all, but be glad you don't live in Virginia. Our tax rate on cars is lower, but we have to pay it EVERY YEAR. We pay the tax when we buy a vehicle, regardless of whether new or used, then every year as long as we own it, we pay that tax again based on Blue Book value. And it does not matter if the vehicle is worth less then BB value, we still have to pay what they say. For example, my daily that I traded in last year was worth half what they said due to some vandalism dents I never fixed and unusually high mileage, but when I voiced my concerns about the value I was being taxed on, they told me too bad, that's the law. If you don't pay it, you can't get your tags renewed, and in VA, that too, is an expensive proposition.

  4. Chris Del Rossi Virginia

    This stinks and all, but be glad you don't live in Virginia. Our tax rate on cars is lower, but we have to pay it EVERY YEAR. We pay the tax when we buy a vehicle, regardless of whether new or used, then every year as long as we own it, we pay that tax again based on Blue Book value. And it does not matter if the vehicle is worth less then BB value, we still have to pay what they say. For example, my daily that I traded in last year was worth half what they said due to some vandalism dents I never fixed and unusually high mileage, but when I voiced my concerns about the value I was being taxed on, they told me too bad, that's the law. If you don't pay it, you can't get your tags renewed, and in VA, that too, is an expensive proposition.

  5. Brian Bauder Alberta

    Wow, I better not grumble when I have to pay the gst when importing a car from the U.S. into Alberta. Too bad Conservative type politics (Wildrose party) don't go over well in B.C., maybe you too would only have the GST to contend with!

  6. Brian Bauder Alberta

    Wow, I better not grumble when I have to pay the gst when importing a car from the U.S. into Alberta. Too bad Conservative type politics (Wildrose party) don't go over well in B.C., maybe you too would only have the GST to contend with!

  7. Ted Lobley Calgary

    The tax is not a Canadian tax. It is a tax imposed by the Province of British Columbia. Vehicles are a provincial responsibility not federal. That being said, OUCH. We don't pay in Alberta but need to be paying attention before the province does copy cat legislation to us. We are blessed in Alberta with minimal legislation and regulation. For example, I do not have to worry whether my 1929 Model A - original - is a an antique or a custom due to float-a-motor motor mounts and a Motometer gauge. With respect to the comment about Wildrose - they did not sell so well in Alberta either if the voters opinion counts.

  8. Candice Thanks for introducing a little rationality into this dbetae.

    Thanks for introducing a little rationality into this dbetae.