The Trudeau government's luxury tax, which will take $163 million out of the pockets of the wealthy next year, is likely to drive up car prices even further.
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“There will be a negative effect for the consumer. We will see an increase in the price of used vehicles, which is based on that of new vehicles, ”warns Michel Larin, general manager of Porsche Rive-Sud.
“It is a populist measure. Who will complain that the rich are taxed more? he wonders aloud, adding that prices for used vehicles are already skyrocketing on the market.
"It's not going to help us sell more cars. No one has $30,000 more to spend in taxes on a $300,000 vehicle,” laments Bernard Durand, senior representative of Lamborghini Montreal.
On September 1, a 10% to 20% tax on automobiles and aircraft over $100,000 and on ships over $250,000 will come into effect across the country.
According to a note from the Parliamentary Budget Officer (PBO) last Thursday, it will generate revenues of $163 million in 2023-2024.
“We expect a change in behavior. The actual magnitude of this change is uncertain and depends on consumer price sensitivity,” the PBO writes in its memo.
" Hurry up "
However, a few months before its entry into force, some want to warn buyers of this new measure, which will soon become a reality.
This is the case of PwC Canada tax expert Jean-François Thuot, who recently posted a message on LinkedIn to warn wealthy clients.
"For those considering purchasing property subject to this new tax, hurry, because September 1st is coming fast," he wrote.
At the Corporation of Quebec Automobile Dealers (CCAQ), its CEO, Robert Poëti, does not mince words about the tax measure.
“Quebec and British Columbia already pay a luxury tax, so we are penalized twice,” denounces the big boss of the CCAQ.
$100,000 threshold
To turn the tide, Robert Poëti says he is trying to convince the Trudeau government to back down as soon as possible.
"Just because people have money doesn't mean they have to pay twice instead of once," he sighs.
For Germain Goyer, automotive content producer for The Car Guide, the Ottawa $100,000 sparks the imagination. “The average price of new vehicles just passed the $40,000 mark. The $100,000 threshold is psychological,” he says.
For example, a Ford F-150, which is the best-selling vehicle in the country, can easily exceed $100,000 with options, he recalls.
"Why don't we tax the fourth or fifth vehicle in a household, instead?" he concludes.
Last week, Le Journal pointed out that the price of used cars has jumped by nearly 25% in the space of a year, according to Statistics Canada.
