Federal luxury tax stars Sept. 1, and the pain will be real, dealers warn

CADA and other stakeholders have been lobbying the federal government to write in an exemption. But so far, Finance Canada has pushed forward on applying the tax across the board, Williams said. The industry organization continues to lobby MPs and senators as the legislation works its way through Parliament.

Buyers crossing the U.S. border to circumvent the luxury tax represent another challenge for Ottawa.

“Luxury-vehicle buyers are a sophisticated bunch,” said David Adams, head of the Global Automakers of Canada. He expects some buyers to find their way around the tax, potentially diverting sales from Canada.

Pfaff warned of a repeated outcome, saying the market experienced a similar shift in 2018. When the B.C. government raised its tax on luxury vehicles, he said, registrations shifted to Alberta. Faced with a new hurdle, he said, “people start thinking creatively” about how they can get around it.


The tight supply of vehicles, however, could work in the government’s favour.

“We have such pent-up demand. You could argue this is the best time, if ever, to implement this tax,” Pfaff said — before adding that the ramifications for the midto long term are more detrimental.

Likewise, Andrea Baldi, CEO of Automobili Lamborghini America, said his brand’s Canadian customers are not balking over the luxury tax.

“There’s no hesitation, nobody is cancelling or telling us, ‘Oh, my God, 10 per cent more,’”Baldisaid, pointing to the scarcity of vehicles.

With vehicle demand outstripping supply, Lamborghini is expecting no change in its sales numbers, which totalled an estimated 336 vehicles in Canada last year, according to the Automotive News Research & Data Center.

As Ottawa presses forward on its Sept. 1 enactment date, CADA is pledging that the fight will not end there.

“This is an issue that we’re not going to be dropping one way or the other,” Williams said. “We’ll be holding the government to account as we go forward on this.”

Source link

Leave a Comment

Your email address will not be published. Required fields are marked *

Shopping Cart