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New taxation scheme to fund Metro Vancouver transit development

November 28, 2014

Gas taxes, property taxes, carbon taxes, vehicle levies… Translink needs cash, citizens need transit and there’s no blood from stones. The province and Lower Mainland municipalities are battling it out for where the funding shall come from, and on whom the political fallout shall settle.  The province insists that new taxation to fund Translink shall be subject to a referendum. Most Canadians are allergic to referenda, and the mayors of the region are (probably rightly) afraid a loss at the polls will force them to raise property taxes and fall on their swords politically. There is a tantalizing solution at hand – and probably in the hands of the province to enact.

That proposal is a hike in luxury car taxes.

At present ICBC PST rates are dependent on the price of the vehicle. The breakdown is as follows:

$55,000 to $55,999.99 7% plus 1%
$56,000 to $56,999.99 7% plus 2%
$57,000 and over 7% plus 3%

We can think of this as the normal PST rate of 12% on a new vehicle, progressively climbing from there.

The Australian government charges a luxury sales tax of 33% over and above the threshold of $60,316 AU (2013-14).  Their system accounts for the existing GST already paid and charges the 33% on the amount not already taxed. That threshold converted to Canadian dollars is $58, 630, to which the province would apply +1%.

There may be a revenue stream that is under-appreciated here. Not that 33% should be the target necessarily — but there is merit to creeping that up a bit.

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