Luxury Tax Survey – PRELIMINARY RESULTS
Jan 4, 2022
First, thank you to all those Boating Industry Canada News Week readers who have already taken a moment to answer our brief survey on the Luxury Tax. Our survey asks what people are saying (or are not saying) to their customers about this new tax and what impact they anticipate it will have on their business.
NMMA Canada and all the Marine Trade Associations are continuing to actively oppose this with all their resources. We strongly encourage everyone to work with their associations to support the opposition to this tax. We still have some time before it can be implemented.
Recently, NMMA Canada wrote that in the government’s Fall Economic Statement, the finance minister confirmed the Luxury Tax will not be coming into effect on January 1, 2022 as originally promised. Instead, the government will release draft legislation early in the New Year. Parliament returns on January 31st and the legislation will have to go through debate and committee hearings.
PRELIMINARY SURVEY RESULTS
We will hold our survey open another week to gather additional input but so far:
- 46% of respondents are getting lots of questions on this
- 22% plan to “Not raise the matter if they don’t” in sales presentations
- 55.5% plan to “Get out ahead of the question at the start of the sales presentations, for example: Volunteer that prices are plus HST and plus Luxury Tax, which is also plus HST”
- 39.3% plan to set an “up-front policy” on how they handle the question
- 55.6% say they have reduced the number of boats they have for stock in anticipation of this
- In the verbatim responses, some dealers are preparing for annual sales declines in the millions of dollars
In December, NMMA Canada released a third-party analysis by renowned economist Dr. Jack Mintz which showed that consumers could easily avoid the luxury tax by purchasing and keeping their boats abroad, especially for those who reside in communities near the Canada-U.S. border. The study establishes that if consumers avoid the tax as expected, our industry will bear the brunt of the damage—estimated by Dr. Mintz at a minimum of $90 million in lost sales and 900 lost full-time jobs.
In the most recent NMMA Day on the Hill, I was part of a small meeting with an MP who was heading up the budgeting process. After we explained about the economic damage this would cause, the ease of tax-avoidance and the unemployment that would result, he suggested that the Luxury Tax proposal was a strategic election campaign move – not business or revenue-based.
Well before the September 2021 Federal Election was called, the NDP was very clear about their plans to tax the rich. Rich Canadians would pay more tax so that average Canadians would not have to. The NDP did not win the election, but their support is essential to the new minority Liberal government lead by Justin Trudeau.
So, the boating industry has two things to do; first, work with your MTA and write your local Member of Parliament using this template letter that the NMMA has developed and/or request a meeting to discuss the impact on your business with your MP. (You can look up your MP here). Get engaged on this and get on the record with your MP.
The second thing is to communicate with your customers and other influencers in your communities. That’s why we set up this survey to share the best messaging from our industry.
This tax could be terrible for our industry. Oppose it now with all our resources, but be prepared with your own communications strategies in case it does come in.
We will share the best ideas on this in next week’s News Week.
Click here for the Boating Industry Canada Luxury Tax survey.
