The Trudeau government’s luxury tax, imposed on certain high-end cars, boats and private planes cost $19 million to enforce while bringing in only $137 million, according to newly obtained information.
A Question on the Order Paper was tabled by Conservative MP Scot Davidson in Parliament earlier this month, requesting details about the luxury tax and the accompanying administrative costs.
The government response revealed that the tax was levied against 72,000 cars sold in Canada, 398 boats and 71 planes.
The tax is applied to any car or plane that holds a purchase price of over $100,000, for leisure boats the threshold is increased to over $250,000.
The tax calculates either 10% of the total purchase price or 20% of the cost above the thresholds of $100,000 and $250,000, whichever one is less.
Finance Minister Chrystia Freeland told reporters at the time of the tax’s announcement that she thought it was entirely reasonable to request higher taxes from those who have the money to spend on a $100,000 vehicle.
“It’s also fair to ask those who have prospered in this bleak year to do a little more to help those who still need help. That is why we are introducing a luxury tax on new cars and private aircraft,” said Freeland during the Liberals’ budget speech.
The tax was first mentioned in the 2021 budget, however, it was not implemented until September 2022.
According to the government’s estimates, $137 million was collected, just shy of the projected $140 million it was expected to bring in annually, with an eventual increase to $145 million
The Parliamentary Budget Officer expected it would bring in even more, projecting the tax would accrue around $163 million.
The number amounts to far less, however, once the cost of administering the tax is factored in.
The Canada Revenue Agency reported that as of March of this year, it cost $19 million to enforce the luxury tax for one year and another partial year.
“The Trudeau government’s luxury tax will raise revenue on the backs of working Canadians who lose their job,” Franco Terrazzano, federal director of the Canadian Taxpayers Federation told True North.
According to the CRA, the administration fees of the luxury tax will be about $15 million per year going forward, a figure which the agency projects will include all costs for the government’s IT branch and employee benefits.
“The cost of collecting the luxury tax is generally comparable to that of other taxes, and we expect it to stay relatively the same,” said the CRA in a statement.
Terrazzano said that something similar was tried in the US but was later repealed as a result of such costs.
“The United States tried luxury taxes but repealed them because of the thousands of jobs it cost. It’s the workers who may lose their jobs making cars, boats and planes that can’t afford Trudeau’s tax,” said Terrazzano.
“At worst the luxury tax will cost many Canadians their job and at best it’s silly political posturing. Trudeau needs to stop hiking taxes and instead cut spending to balance the budget.”
