Mar 28, 2023

I received an eye-opening email from a reader last week and the issue he raised is what I would call an unintended consequence. We have a few of those right now.

We all have become aware of Silicon Valley Bank after their sudden failure and the resulting global bank melt-down that knocked 10% off my investments in less than a week. It seems that the rapid rise in the Fed’s interest rates were the cause. 

As I write this, I feel that the banking crisis has subsided for now, but Jerome Powell still laid on another 0.25% interest rate increase and there could still be more. I had never heard of Silicon Valley Bank. Credit Suisse was a bank I knew nothing about too and there were others in trouble. The governments stepped in to avert a banking crisis for now but what could be coming?

Last week Boating BC sent out their latest newsletter announcing that they had a successful Vancouver International Boat Show for the first time in 3 years, and that our industry is ready for a great boating season.

However, they added that the Luxury Tax remains and is causing significant uncertainty in the market. They shared a link to a National Post story summing up the negative implications of the tax: https://nationalpost.com/opinion/liberal-luxury-tax-will-hurt-workers-much-more-than-the-rich . It’s well-worth reading that.

They also stated that Boating BC (along with all the other marine trade associations) will continue to gather data on lost sales and job losses as a result of the tax. Please contribute your data to that important effort.

The eye-opening email I received was from a marine industry professional who sold his old boat last year with a plan to upgrade and at the time, there were some good choices he was considering. Apparently now, those choices have dried up. Perhaps the boats were bought by people who would otherwise have bought a new vessel.

Buy the eye-opener is that many people may have taken their used boats off the market because the Luxury Tax has taken them out of the new boat market.

The unintended consequence may turn out to be that the brokerage business suffers just as much or more than the new boat business. We need to ensure that we track and report the full scope of the business slow-down and the resulting unemployment impact.

Andy Adams – Editor