New car dealerships face many challenges today – a shortage of new automotive products in a post-COVID economic world, a shortage of microchips needed for these new cars, a shortage of auto parts and pressure on availability of the used vehicle market.
So when provincial and federal taxation impose an additional burden on the industry, it becomes even more frustrating, says Blair Qualey, president of the New Car Dealers Association of BC (NCDA).
“We’re pleading our case but nobody’s listening, nobody’s paying attention,” Qualey said.
The NCDA argues that BC’s luxury vehicle tax is still $55,000, which Qualey says hasn’t been adjusted for inflation and the overall cost of new vehicles. with all the new technologies.
With British Columbia and Quebec being the only provinces to impose such a tax, this leaves the option for consumers to buy a new vehicle elsewhere to save money, which not only reduces sales revenue for car dealerships, but also a loss of tax revenue.
“This tax has been in place since the 1990s and has never been adjusted. That tax threshold needs to be looked at…the average new vehicle now starts at around $55,000 with all the modern bells and whistles,” he said.
And now the federal government plans to deliver on its campaign promise to impose a 10% federal luxury car tax in September on vehicles priced over $100,000.
Qualey said the NCDA has made presentations about the tax’s potential negative impact on consumers and their industry — putting BC car dealerships and the jobs it creates at risk.
“This will further incentivize consumers to relocate, which will have a significant impact on the more than 400 new car dealerships in 55 communities across the province, generating $15.6 billion in economic activity and 27,000 family jobs” , Qualey said.
“We made our case to Ottawa. We know that was an election campaign promise, but we are now waiting to hear from the feds on what will happen in September.
Imposing luxury taxes on new vehicles, he says, places an unfair burden on new car dealers, citing for example the fact that boats and recreational vehicles are not subject to the same taxation.
“We just want a level playing field,” he said.
The NCDA cites a May 26 report from the Parliamentary Budget Officer, suggesting the new luxury vehicle tax would add $572 million to government coffers in fiscal year 2026-27, but cut sales by $566 million. million, or 19%, over the same period. .
He said the vehicle retail industry was still struggling to recover from manufacturing slowdowns imposed by COVID-19.
“Everyone on the vehicle manufacturing side halted production not knowing how things would go and it’s taking some time for it to pick up again,” he said.
“Automakers are trying to catch up with market demand, but there are issues with availability of the microchips you need for these new vehicles. And manufacturers have to loot their own parts supply to get more product from factories, which which in turn creates a parts shortage.
“And with rising interest rates, that continues to pile up because that can present auto loan challenges for consumers. And we don’t seem to be getting relief from the government on some of those challenges.
BC Government Car Taxes