NMMA Canada releases statement around proposed luxury tax on new boats
by CM Staff
The proposed tax could lead to a minimum $90 million decrease in revenues for boat dealers and potential job losses of at least 900 full-time equivalent employees.
According to the National Marine Manufacturers Association of Canada, the federal government’s proposed luxury tax on new boats will likely lead to significant job losses and could result in far less revenue than predicted.
The federal government announced in the Budget last spring that it plans to introduce a tax on select items, including new boats above $250,000, beginning January 1, 2022. “Unfortunately, the government has failed to recognize that a luxury tax won’t target the rich. Instead, it will punish the dealers, manufacturers and middle-class workers who will become collateral damage,” said NMMA Canada president Sara Anghel.
According to the paper by economist Dr. Jack Mintz – An Economic Evaluation of the Proposed Luxury Boat Tax – written in collaboration with Fred O’Riordon (National Leader, Tax Policy – EY Canada), the proposed tax would lead to a minimum $90 million decrease in revenues for boat dealers and potential job losses of at least 900 full-time equivalent employees.
“Dr. Mintz’s analysis confirms what we know to be true: the proposed luxury tax will be economically destructive to Canadian businesses and is a self-defeating policy that will hurt middle-class workers at dealerships and manufacturing facilities – not to mention those who are employed at marinas and service shops in many boating communities,” said Anghel. “NMMA Canada urges the federal government to correct course on this misguided tax announced in the last budget. We cannot afford to jeopardize our fragile economic recovery by decimating our domestic industry and putting thousands of good, middle-class jobs at risk at a time when we need them most.”
“These findings demonstrate that a luxury tax on boats would hurt, not help, Canadians,” said Dr. Mintz. “Luxury taxes on boats in many other countries have been repealed due to their ineffectiveness in generating revenue, their high administrative costs, and their negative impacts on boat sales. This research confirms the findings of previous literature and underscores the lessons learned from international case studies of similar luxury taxes.”
“A survey of our customers concluded 66% would not consider making a purchase if subjected to an additional tax. It is clear that a luxury tax will be devastating to our business. We will have no choice but to slash operating expenses. Good-paying, year-round jobs in all areas of our business will be lost. It is a painful irony that the proposed luxury tax, designed to punish the rich, will in fact only hurt middle-class workers.” said Jason Crate, Crate’s Lake Country Boats, Orillia Ontario.