I guess it’s OK that new boats are getting more expensive
Nov 28, 2023
I have been very impressed with the amazing advances in outboard motors more than any other thing. The Mercury V12 and V 10s are simply stunning in their power and performance. Electronics is leaping ahead as well and we can now get 4K resolution on our MFD. Looking at the sort of boats that companies in the industry are now promoting most aggressively, I feel like a quarter of a million for 26-feet is the new standard for family boats. As your humble scribe, I realize that what would be totally out of reach for me, may be quite realistic for dual executive income household.
But there’s been even more money coming from investment.
We’ve all heard about the crisis in real estate and one of the moves that the government is pushing for, are new levels of taxation on short term rentals to try and push out Airbnb so that investors either return those properties to the more conventional residential rental stock, or perhaps better yet, sell the property to a family who needs a home.
If you look at the rise in real estate values in all types of residential property, and especially prime waterfront all the way across Canada, that price inflation has had a powerful wealth effect for property owners. Sadly, it has a powerful depressing effect for Canada’s generation of young people who are priced out of the market for everything.
Apparently the expression we’ve all heard for many years, that the “rich are getting richer”, is true.
In the November 11th edition of the Globe & Mail Report on Business, a small Canadian Press story stated that the top 1% of tax filers saw their incomes increase by almost 10% in 2021. Things may be even more dramatic now, but the story quotes Statistics Canada as saying that the country’s top 1% of tax filers saw their incomes rise by almost 10% in 2021 while those in the bottom half (I guess that’s me), saw their average income decline.
The story went on to say that the incomes of the top earning group (excluding capital gains), jumped 9.4% higher to $579,000. More remarkably, filers in the top 0.1% saw their average income increase 17.4% to almost $2.1 million and those in the top 0.01% experienced an average income increase of 25.7% bringing their earnings income to $7.7 million.
While I think many of us in the boat business like to say that boating is an affordable family activity, that seems out of date. Looking at the top 1% and their 10% income rise in 2021, I guess it’s no problem for them to afford a new boat. At the same time, filers in the bottom half saw their average income fall by $1400 to a meager $21,100 in 2021 as the government ended many of its pandemic benefit programs. And the government is now trying to claw back millions of dollars that were handed out to people who didn’t properly qualify.
My advice to people in the boat sales business is to know your customers as well as you possibly can because it’s not always easy to tell who’s actually got the money. But clearly, there’s a small group of Canadians who can easily afford a new boat or yacht and by the way, if the luxury tax seems like an impediment to sales, I suspect it’s the annoyance or unfairness, not any lack of cash.
Andy Adams – Editor
