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Canada’s new Select Luxury Items Tax Act has received parliamentary approval and will be enforced from 1st September 2022. The levy will add a 10% tax on the full value of any Canadian purchases of vessels that exceed CA$250,000 (c. €190,561) and aircraft and cars that exceed CA$100,000 (c. €76,214).
The Canadian government states the new tax will not only help reduce inequality by distributing wealth, but will also discourage the country’s wealthiest from purchasing emissions-hungry vehicles, thereby protecting the environment.
A statement on the Canadian government website says, “Some Canadians have lost their jobs or small businesses [during COVID-19], while some sectors of the economy have flourished. That’s why it is fair today to ask those Canadians who can afford to buy luxury goods to contribute a little bit more.”
The new levy has divided opinions, with Bill Yeargin stating on the Boat Boss podcast that luxury taxes are appealing to politicians looking to redress rising wealth inequality, but that history shows they don’t work.
Bill Yeargin, CEO of US-based boatbuilder Correct Craft, commented, “A number of countries have tried to do the same thing and every single time, it fails. In the United States, we tried it in the early 90s. Thousands of jobs were lost and it created a deficit for the federal government because of the sales that were lost. So, it was repealed pretty quickly.”
In 1991, the United States introduced a 10% luxury tax on boats, which was designed to help solve the budget crisis. The tax was linked to a rapid decline in sales across the US marine industry, putting thousands out of work.
Anthony Norejko, president and CEO of the Canadian Business Aviation Association, said, “It will have serious implications for business aviation in particular, at a time when the drivers of our economic recovery and growth are facing challenges that are without precedent in a generation.”
National Marine Manufacturers Association (NMMA) Canada has also been advocating against the tax since it was proposed in 2020.
An analysis completed by Oxfam in 2021 found that in 2015, the richest 1% of the population accounted for a staggering 15% of global carbon emissions.
Source: Marine Industry News
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