Sunday, May 9

Canada Considers Luxury Tax on Boats

Google+ Pinterest LinkedIn Tumblr +

The Canadian government is considering a new luxury tax on boats, bringing back memories of the devastating 10 per cent luxury tax that crippled the U.S. boating industry in the early 1990s.

The governing Liberal Party in Ottawa proposed the tax as part of its federal budget starting next January 1. The tax would apply to cars and airplanes costing more than C$100,000 and recreational boats costing more than C$250,000. (At current rates, $250,000 in Canadian dollars is equal to just a little more than $200,000 in U.S. dollars.)

Chrystia Freeland, the federal finance minister, said it was fair to ask those who prospered in the past bleak year to do a little more for those who need help. “This budget lives up to our promise to do whatever it takes to support Canadians in the fight against COVID, and it makes significant investments in our future,” she said in Parliament. “All of this costs a lot of money.”

The tax is calculated on 10 percent of the value of the boat, car or airplane, or as 20 percent of the value over the threshold, whichever is lower.

“If you’re lucky enough, or smart enough, or hard-working enough, to afford to spend $100,000 on a car, or $250,000 on a boat – congratulations!,” Freeland wrote in the budget’s forward. “And thank you for contributing a little bit of that good fortune to help heal the wounds of COVID and invest in our collective prosperity.”

In the U.S., Congress passed and President George H. W. Bush signed a luxury tax that went into effect on Jan. 1, 1991. It was 10 percent of the cost of a new boat over $100,000, of cars over $30,000, of planes over $250,000, and of furs and jewelry over $10,000.

The luxury tax came on top of the stock market crash of 1987 and a recession in 1990, and it devastated the boating industry. The National Marine Manufacturers Association estimated that new boats sales fell 40 percent in general, but large boat sales fell 80 percent in two years; more than 30,000 people lost their jobs as boat factories cut back or shut down.

Congress repealed the tax in 1993. Read more:

https://www.ctvnews.ca/politics/luxury-tax-on-yachts-cars-and-personal-aircraft-laid-out-in-new-federal-budget-1.5393511

 

 

 

Facebooktwitterredditpinterestlinkedinmail
Share.

About Author

Leave A Reply