You remember your first car.
Maybe at sixteen you spent a summer flipping burgers and mowing lawns to save every penny you could for your first drummer. Maybe it was held together with duct tape and chewing gum, but you probably loved this car.
This fall, the BC government made it more expensive for people to buy used cars.
Instead of paying provincial sales tax on the actual price of a used car at a private sale, people will now be at the mercy of ICBC bureaucrats and their black book of car prices to determine the rate of tax they pay. This tax hike is going to cost people looking for a used wheelset $30 million one year increasing DVT.
Instead of recording what people spent on their used cars and taxing them, the provincial government calls these people liars and charges them whatever PST it deems appropriate.
Imagine a young family with baby number three on the way. The Prius worked well when mom and dad had two kids, but with the new baby due any day and a golden retriever to insert, it’s time to start looking for something bigger.
The cost of gas and groceries is at an all-time high and the interest on their home’s mortgage has suddenly spiked this fall, so the family can only afford a used van .
After shopping, a friend reaches out and offers the family a great deal on their old van. It is a little dull with 250,000 km on the odometer. The family is delighted. For $5,000, they get a great deal on the vehicle they need for their growing family.
Until last month, that meant the family had to pay 12% on the selling price of the used vehicle. That 12% tax bill. 100 is $600. That’s the cost of about a month’s worth of groceries for the family.
The Canadian Black Book is intended for general assessments of vehicle value. It cannot take into account the realities on the ground or the offers offered. So, to the family’s surprise, ICBC bureaucrats slap them with a tax bill for the medium value of their vehicle instead.
If the Black Book lists the average value of their vehicles at $12,000, the family would end up paying $1,440 in PST. That’s more than double the tax.
The provincial government claims these tax changes are meant to crack down on tax cheats, but in reality, they are a cash grab that will hurt people looking to save money on a used vehicle. If the government suspects someone of cheating the system, it can already launch an investigation. It is ridiculous to assume that everyone who buys a used car in the province is committing fraud until proven guilty.
This tax is a punishment for those who can least afford it – people who buy used items to save money.
To challenge ICBC bureaucrats’ assessment, family with van would have to pay private fee additional $350 for an appreciation. Even if the family wins their challenge, they end up paying hundreds of dollars that are needed for diapers, food and gas to get the kids to school.
People who buy used goods do so because they want to save money. With about 20 percent of Canadian families are skipping meals, why is the province cracking down on people who can’t afford to put food on their table?
Carson Binda is the British Columbia Director for the Canadian Taxpayers Federation.