John Rustad promised tax relief for buyers of used vehicles if the BC Conservative Party wins Saturday’s election.
Under the current policy, British Columbians who now buy a used vehicle pay 12 per cent in provincial sales tax.
Rustad said he will scrap that tax.
“We’re going to eliminate PST on affordable used vehicles, and that would apply to most vehicles,” said Rustad. “Where we want to be more careful is when you have a more expensive vehicle somebody might own for a short time and they flip it as a way to avoid a PST tax. We haven’t set the price tag yet (on luxury vehicles) but for most used vehicles we want to see PST eliminated because they’ve already been taxed."
Rustad also promised to increase the threshold upon which the luxury tax on used vehicles takes effect.
“The luxury tax on vehicles is $55,000,” said Rustad. “You can’t buy a work truck for that now, and that to us is wrong.
“The average price of a vehicle now is $55,000-$60,000. We would set (the luxury tax) just above the average price for a car or truck. It will change annually with prices.”
On Oct 1, 2023, the NDP government began collecting 12 per cent PST on privately sold used vehicles using a formula that bases the tax on the Canadian Black Book value rather than the actual sales price. That was expected to result in the province collecting $30 million in annual tax revenue.
When vehicles are in an accident and the cost to repair them is more than they are determined to be worth, they are written off by the provincial insurer ICBC, which uses a different black book to determine their value.
Rustad said a vehicle he sold to his nephew was rear-ended and written off and he received less for the total value than the tax Rustad paid when he bought the vehicle. The Conservative leader and Nechako Lakes MLA promised he would fix that element of the used vehicle tax structure to make it more fair for motorists involved in accidents.
The 12 per cent rate applied on privately purchased new and used vehicle sales has been in place since July 2010, when Gordon Campbell’s BC Liberal government introduced the harmonized sales tax (HST) that boosted the rate from seven per cent to 12 per cent.
The BC Liberals abandoned the HST on April 1, 2013 but did not drop the tax rate on vehicles back to seven per cent when PST was reinstated.
On passenger vehicle sales bought privately or if the vehicle is received as a taxable gift, the 12 per cent PST rate applies to all vehicles worth less than $125,000, rising to 15 per cent for a vehicle worth between $125,000 and $149,999.99. The rate is 20 per cent for any vehicle worth more than $150,000.
The current PST charge does not apply if the vehicle is bought from a licensed motor vehicle dealer, and vehicles modified for disabled passengers are tax exempt. The higher book-price tax also does not apply on vehicles obtained where a trade-in is applied to the purchase price of the vehicle on a dealer’s lot.
The current PST rate for any passenger vehicle bought at a dealership, received as a gift from a licensed dealer, imported into Canada or leased is as follows:
- Less than $55,000: seven per cent
- $55,000-$55,999.99: eight per cent
- $56,000-$56,999.99: nine per cent
- $57,000-$124,999.99: 10 per cent
- $125,000-149,999.99: 15 per cent
- $150,000 or more: 20 per cent
Rustad intends to eliminate the monopoly ICBC has on basic auto insurance and would allow private insurers to offer that to BC drivers.
He said Thursday he also promised to eliminate the tax on tips for service industry workers which he hopes will entice more workers to take on jobs in restaurants and hotels.
