Luxury Vehicle Tax Could Hurt Sales
Updated: Sep 9, 2022
Canada’s luxury vehicle tax could bring in $779 million over five years, but cause a $2.9-billion drop in sales of the vehicles over the same period, says the Parliamentary Budget Office. It estimated the tax, which is set to take effect September 1 pending parliamentary approval, would bring in less than $200 million per year for the five years ending in 2026-27. Taxing luxury cars would make up the bulk of that five-year revenue: $572 million. However, the office estimated that sales of luxury aircraft, boats, and cars would drop by $2.9 billion or 15 per cent over the five years ending in 2026-27. If approved, the tax would be the lesser of 10 per cent of the total price of the item and 20 per cent of the total price of the item above the threshold. Bill C-19 has passed second reading and is being considered by the Standing Committee on Finance.