Mar 25, 2025

Canada’s Boating Industry is Taking on Water—It’s Time to Repeal the Luxury Tax

Canada is facing escalating trade tensions with the United States, putting industries, jobs, and economic stability at risk. As businesses navigate new tariff threats, the federal government continues to weigh them down with another damaging policy—the so-called luxury tax on boats.

This tax, applied to boats valued over $250,000, has been a policy failure in Canada and the United States.

Since its introduction, boat sales over $250,000 have plummeted nearly 70%, devastating an industry that contributes $9.2 billion to Canada’s economy and supports 80,000 jobs—many in rural communities. Instead of generating meaningful revenue, the tax has fallen $40 million short of government revenue projections, while driving business to the U.S. and forcing Canadian retailers to close their doors.

The situation is now even worse. The recently imposed U.S. tariffs on Canadian goods are making it increasingly difficult for domestic industries to compete. While Canadian businesses struggle under both the luxury tax and new trade restrictions, their American counterparts face no such burdens.

The result? This imbalance has driven more Canadian buyers to purchase, register, and store their boats in the U.S., funneling jobs and economic activity south of the border. Simply put, by keeping this tax in place during an escalating trade dispute, Canada’s boating sector is fighting with both hands tied behind its back.

Even the federal government’s own numbers confirm that the tax is a failure. It was projected to generate $52 million in revenue over two years. Instead, it has brought in just $12 million. And while it has failed to raise the expected funds, the economic damage it has inflicted is undeniable: lost jobs, business closures, and an eroded tax base that far outweighs any revenue collected.

This isn’t just an economic misstep—it’s an avoidable crisis. The United States once imposed a similar tax on boats but repealed it after realizing it did more harm than good. The U.S. government recognized that taxing a key domestic industry out of existence was bad policy, and Canada must do the same—especially as the pressures of a trade war mount.

Across both sides of the aisle, if Canada is serious about protecting Canadian jobs and strengthening economic resilience, the solution is clear: repeal the luxury tax now. The luxury tax on boats does not level the playing field—it tilts it against Canadian manufacturers and workers. Keeping this tax in place while tariffs escalate is economic self-sabotage.

The government must act now. Repealing this tax is a necessary and urgent step to protect jobs, restore competitiveness, and prevent further economic damage. Every day it remains in place, more businesses suffer—and more economic activity is lost to the U.S. Our industry cannot afford to wait any longer.