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L’impact de la taxe de luxe sur l’industrie nautique canadienne

L’impact de la taxe de luxe sur l’industrie nautique canadienne

The Canadian government is running a huge deficit to support many Canadians during the Covid-19 pandemic. It is a dire situation for the younger generations to have to bear this burden. We all know the rich pay a higher share of taxes to help fund programs in our great country. But a luxury tax on boats over $ 250,000 will negatively impact many businesses, owners and employees. The luxury tax may not even have a positive net gain on tax revenue.

Global History of the Luxury Boat Tax

History shows that many customers simply won’t buy an item if it’s associated with a luxury tax. The Washington Post wrote that US production of yachts over $ 100,000 peaked at 16,000 in 1987 and in 2020 at 4,250. Employment at the two North Carolina plants of the largest luxury boat maker, Hatteras, has gone from 1,550 to 500 since 1987.

According to Boating Ontario, “Luxury taxes have backfired on them a number of times before. In the early 1990s, the United States introduced a similar luxury tax on boats that devastated the industry. One yacht builder went from 220 to 50 employees, another from 95 to 8. The tax was finally repealed … but not before destroying thousands of jobs and causing a net loss of income of 8 million dollars for the government. New Zealand, Italy, Norway, Turkey and Spain have already introduced luxury boat taxes, all of which were eventually repealed due to the net negative economic effects. «

The NMMA has research that explains how each cruiser or yacht has its own microeconomics with economic payoffs from service, storage, fuel sales and more. A $ 500,000 Canadian boat has a local economic impact of approximately $ 40,000 each year

Negative effects of the luxury tax

Originally the proposed threshold was $ 100,000, but NMMA’s lobbying efforts have succeeded in raising the tax threshold to a level where most family-type or cabin-type boats will not be in the area. tax bracket, but many cruisers or keelboats will exceed the threshold.

The luxury tax offered on boats over $ 250,000 is 10% of the total value of the boat. And will come into force in January 2022.

In Canada, the luxury boat tax can have the following effects:

        • Decline in boat sales and Canadian business revenues
        • Cancellation of orders for boats over $ 250,000
        • Job cuts and layoffs
        • Permanent closure of businesses
        • Less inventory in the future used boat market
        • Reduce tax revenue

If you have a yachting business and your business book contains “luxury boats,” we encourage you to research what the luxury tax will mean for your business and your bottom line.

Resources:

Press Release by Boating Ontario Association 

Tax on luxury goods – Alliance of the nautical industry of Quebec (alliancenautique.com)

What are the odds, by Andy Adams, Editor of Boating Industry Canada

CTV News: Luxury-tax-on-yachts-cars-and-personal-aircraft-laid-out-in-new-federal-budget

Washington Post: How to sink an industry and not soak the rich  

Tips for buying a boat

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