You remember your first car.
Maybe at sixteen-years-old, you spent a summer flipping burgers and mowing lawns to save-up every dime you could for your first beater. Maybe it was held together with duct tape and chewing gum, but you probably loved that car.
This fall, the government of British Columbia made it more expensive for people to buy used cars.
Instead of paying the provincial sales tax on the actual price of a used car in a private sale, now folks will be at the mercy of ICBC bureaucrats and their black book of car prices to determine the tax rate that they pay. This tax hike is going to cost people looking for a second-hand set of wheels $30 million a year in increased PST.
Instead of recording what people spent on their used car and taxing them on it, the provincial government is calling those folks liars and charging them whatever PST it sees fit.
Let’s 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 squeeze in, it’s time to start looking for something bigger.
The cost of gas and groceries are shattering records and the interest on their home’s mortgage suddenly shot up this fall so the family can only afford to buy a second-hand minivan.
After shopping around, a friend reaches out and offers the family a great deal on his old minivan. It’s a bit dinged up with 250,000 km on the odometer. The family is ecstatic. For $5,000 they get a good deal on the vehicle that they need for their growing family.
Up until last month, that meant the family would pay 12 per cent on the sale price of the used vehicle. That 12 per cent tax bill is $600. That’s the cost of about a month’s worth of groceries for the family.
The Canadian Black Book is for broad based vehicle value assessments. It can’t take into account realities on the ground or deals offered. So, to the family’s surprise, the bureaucrats at ICBC slap them with a tax bill for the average value of their vehicle instead.
If the Black Book lists their vehicles average value at $12,000, the family would wind up paying $1,440 in PST. That’s more than double the tax.
The provincial government claims that these tax changes are to help crack down on fraudsters, but, in reality, it’s a cash grab which is going to hurt people looking to save money on a second-hand vehicle. If the government suspects someone of cheating the system, it can already launch an investigation. It’s ridiculous to assume everyone who is buying a used car in the province is committing fraud until proven otherwise.
This tax is a punishment on those who can least afford it – people who are shopping for used items so they can save money.
To challenge the evaluation by the ICBC bureaucrats, the family with the minivan would have to pay a private additional $350 for an appraisal. Even if the family wins their challenge, they end up paying hundreds of dollars which are badly needed for diapers, food and gas to get the kids to school.
Folks who are shopping around for used goods are doing it because they want to save money. With around 20 per cent of Canadian families skipping meals, why is the province going after people who can’t afford to put food on their tables?
Carson Binda is the British Columbia director for the Canadian Taxpayers Federation.