A local marine industry leader fears the economic effects of a pending federal luxury tax for boats.
Rom Van Stolk, owner of North Saanich’s Cedar Grove Marina, president of Custom Yacht Sales and vice-president of British Columbia Yacht Brokers Association, said experience from other countries shows that the tax has had a detrimental effect on the boat industry by stopping the purchases of new boats, with knock-on effects for other related industries.
The federal government plans to apply the tax Sept. 1 to new cars and aircraft with a retail sales price of more than $100,000 and to boats over $250,000. The tax would apply to either 10 per cent of the total purchase price or 20 per cent of value of the threshold, whichever is lesser.
Van Stolk said new and used boats are already heavily taxed. “As soon as that tax is introduced, the public has an aversion,” he said. “They feel penalized and they will go spend their recreational dollars elsewhere.”
The United States had a luxury tax on boats, but later repealed it.
Several companies on the Saanich Peninsula specialize in servicing boats, offering high, well-paying jobs.
“It (the tax) has a lot of appeal because it sounds like you are taxing toys and you are taxing the rich,” Stolk said. “Unfortunately, you are penalizing the people that work on those boats. The rich will just go and spend their money somewhere else.”
First proposed in the spring of 2021, the tax has been working its way through the legislative channels. Van Stolk was part of a delegation from B.C. that lobbied federal officials, with local MP Elizabeth May helping them to arrange meetings.
May said in an interview with Black Press Media that luxury tax (which she called “poorly conceived”) is more pretending to care about income inequality than actually doing something about it.
“The Parliamentary Budget Office has looked at this and said by 2024-25, this luxury tax will bring in about $170 million in tax,” she said. “This (figure) sounds like a lot, but compared to the billions that get thrown around in front of these industries, it is hardly a lot of money.”
At the same time, that same office also found the tax will reduce sales by about $628 million with boat sales reduced by about $473 million, May said. Sales of aircraft — another industry with deep ties to the Saanich Peninsula — would drop by $31 million and auto sales would drop by $123 million.
Black Press Media has since reached out to the federal ministry of finance for comment.
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