Luxury Tax Survey Results – Crafting the Message

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Jan 11, 2022

Again, we want to thank the Boating Industry Canada News Week readers who took the time to complete the Survey on the Luxury Tax Impact. Full survey results are included at the bottom of this story. On the survey, we said that “perception is reality” and we embarked on this survey to learn if there was consensus of opinion or expression on this topic. 

At the recent Boating Ontario Conference, association CEO Rick Layzell made a brief and impassioned talk about what the associations have all been doing to fight this and how very serious the potential tax is for our industry. Surprisingly, there seemed to be little reaction afterward and a quiet room after the speech.

That’s why we wanted to learn how the industry will explain this new tax (if it comes in) to boat buyers.

The proposed Luxury Tax will be applied on new automobiles and aircraft priced above $100,000 and on boats priced above $250,000. Given how many new vehicles are above the $100,000 threshold, we should assume our customers will be quite aware of the new tax.

As of this writing, 33 people have completed our survey – a small number considering what may be at stake here.

When asked “Are your customers asking you about the new Luxury Tax now?” 42.42 % said “yes – lots of questions” while 30.3% said they were getting a few and yet, 22.27% said they weren’t getting questions.

This may be because some respondents sell only boats under $250,000. We didn’t ask about the value of the new boats that respondents sold, because we were concerned about the perception our customers may have of all boats and the cost of boating. In other words, will the perception of this Luxury Tax hurt everyone?

We asked how you would handle the new tax in sales presentations and multiple answers were given, but we want to point out that only 9.38% of respondents said they planned to show their pricing on an all-inclusive or “drive-away” basis. That surprised us.

Depending on the price of the boat, the amount of tax can become quite significant and we are concerned some buyers will walk away out of principle or anger.

If the bottom line comes out early in the process (or is included as a monthly payment) the customer may be less inclined to react.

The last two years have brought us a major boost in new boaters and boat sales, while supply chain and other issues have resulted in a shortage of product to sell. Final selling prices are probably up significantly from 2019 levels and customers may already be expecting that bad news.

Perhaps balancing that off, many have seen their homes rise dramatically in value. Should boats be any different?

In addition to the survey results, we received several emails and phone calls. As you would expect, these came mainly from dealers who will get hit hardest. Particularly, many BC dealers sell larger boats and yachts and this may be especially damaging to their businesses.

Almost half of the survey respondents anticipate this will have some impact on their business and 36.36% expect a major impact if this tax is implemented. However, there doesn’t appear to be any particular path forward – each dealer will manage this in their own way and even that may be different in each selling situation.

Our hope of crafting a message or a position that mitigates this seems unlikely. But, our marine trade associations continue the battle.




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