OTTAWA, ON: The Canadian Taxpayers Federation is raising concerns that the federal government’s luxury tax, which takes effect today, will lead to job losses.
“The Trudeau government’s luxury tax will raise revenue on the backs of working Canadians who lose their job,” said Franco Terrazzano, Federal Director of the CTF. “The United States tried luxury taxes, but repealed them because of the thousands of jobs it cost. It’s the workers who may lose their jobs making cars, boats and planes that can’t afford this tax.”
Despite promising not to raise taxes, the federal government is imposing a luxury tax applied on cars and planes that cost more than $100,000 and boats that cost more than $250,000. The tax takes effect today, Sept. 1, 2022.
In 1991, then U.S. president George H. W. Bush imposed a luxury tax on boats, expensive cars, planes, jewelry and furs. The tax led to 25,000 job losses in the boat building industry. Additionally, “75,000 more jobs were lost in companies that supplied yacht parts and material,” according to economist Walter Williams. In 1993, then president Bill Clinton repealed all but the luxury car tax. The luxury tax on cars was fully phased outby 2003.
“We thought we were doing the right thing,” said former Democratic senator John Breaux. “No one expected that the impact of that [luxury] tax would have such a devastating impact on the marine manufacturing industry.”
Canada’s luxury tax “will not achieve the desired purpose of taxing the wealthiest, but will instead have a dramatic, negative impact on Canadian manufacturing and on Canadian jobs,” according to the Aerospace Industries Association of Canada. The luxury tax would lead to “potential job losses of at least 900 full-time equivalent employees,” according to National Marine Manufacturers Association Canada.
“At worse the luxury tax will cost many Canadians their job and at best it’s silly political posturing,” said Terrazzano. “Trudeau’s deficit spending would burn through this cash in less than a day.”
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