Luxury Tax issues – Government report prompts response

Andy Adams 2018 Edited 400

Mar 21, 2023

Do you remember a kids game called Whac-A-Mole? It has become a metaphor for life and I think it applies really well to the way our government seems to be working. From apparently nowhere, a nasty problem pops up and we have to run like crazy to whack it down.

Boating has faced both the impact of the Luxury Tax on boats and now in Ontario, the industry has had to quickly respond to changes in anchoring rights. There is an issue with what they call, “Floating Accommodation”. 

The Luxury Tax is a battle that is not over. Yes – the tax has been implemented but all the marine trade associations continue to battle against this tax by collecting sales and employment data to oppose the tax. This week, the government released their own report saying that their Luxury Tax analysis anticipates job losses. Boating Ontario has responded that we already have significant job losses.

The government anticipated some losses of tax revenue but in fact, the losses are already mounting. When this new and widely resented tax came in, some consumers cancelled their new boat orders so then, the government loses the tax revenue they would ordinarily have gotten on the sale.

A new Federal Budget is coming and Finance Minister Chrystia Freeland has already announced that the government will need increased tax revenues. Well, the boating industry employees who have just lost their jobs will be moving from the income tax contributor side of the ledger to the unemployment claimant side. The marine dealers who saw this unfolding, did not order big new boats for inventory due to market uncertainty, so those sales and tax revenues won’t be coming in either. You can’t sell what you haven’t got.

Worse than just playing Whac-A-Mole on small issues, last week we saw the second-largest bank failure in US history and it appears that the very rapid rise of interest rates was the cause. Is this how governments will control inflation? As a response, stock markets crashed. Many people saw their retirement accounts drop 10% in one week. This circles back to my column last week where we noted that inflation was driving older people back into the work force. They whacked down one problem and another one pops up.

Boating Ontario just put out a notice that said, “In late February, the MNRF announced a series of proposed changes that would affect ‘camping on the water’.  These were intended to address some of the recent challenges with several ‘unique’ floating accommodations units that have appeared on our waterways. The initial language gave the impression that recreational boats, used for overnight purposes, would also be caught up in these new proposed changes.  Boating Ontario has been very active on this issue since the announcement and have received calls directly from the Minister, as well as his Chief of Staff.  Both have assured us that recreational boats will not be affected.

A revised document has just been provided by the MNRF – please read the announcement here .”

There is a public consultation period that is open until April 11. It seems that our marine trade associations, particularly Boating Ontario, Ontario Sailing and the NMMA Canada  have done a great job of managing this threat to the rights of Ontario boaters and cruisers but the other side that was lobbying for the changes, may not accept this decision.

Whac-A-Mole is a kids game and governing is serious business. I think the goal should be smart, forward-thinking and steady governance that supports the lives and livelihoods of Canadians. In the absence of that, we need to get active and put our support behind the marine trade associations that support us. Their workload seems to grow every day.

Andy Adams – Editor

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