A luxury tax that added 10% onto the cost of a boat more than $250,000 should be repealed, says the Canadian Marine Retailers Association.
The luxury tax was implemented in September 2022 with the Canadian boating industry now calling for it to be repealed stating the Canada Revenue Agency (CRA) grossly overestimated the amount of revenue that would be collected.
Instead, it has had a severe impact on the Canadian marine industry, with notable declines in sales, tax, and employment.
“NMMA Canada manufacturers have repeatedly expressed their concerns about lost jobs, a significant decrease in consumer demand, and an increase in the cost of doing business due to this onerous tax,” said Marie-France MacKinnon, executive director of the National Marine Manufacturers Association (NMMA) Canada. “The 1991 US luxury tax failed and was repealed. We are now witnessing a similar scenario unfolding in Canada.
“To protect Canadian boat builders, workers, and consumers, the luxury tax needs to be repealed.”
With consumers openly refusing to pay the tax and dealers refusing to speculate on the inventory, the government projections were sure to be missed.
Rick Layzell, president of the Canadian Marine Retailers Association
Recreational boating creates around 75,000 jobs across Canada that support more than 4,800 businesses.
The Office of the Parliamentary Budget Officer (PBO) released an analysis in May 2022 estimating that the vessels category would generate $18 million for the 2022-2023 period and an additional $34 million for the 2023-2024 period, a total of $52 million in 24 months.
However CRA data from September 1 2022, to June 7 2024 shows that tax collections have fallen $40 million short of the PBO’s projections.
A total of 450 vessels were subject to the tax, with $12,040,000 collected.
“With consumers openly refusing to pay the tax and dealers refusing to speculate on the inventory, the government projections were sure to be missed,” added Rick Layzell, president of the Canadian Marine Retailers Association.
“We have already witnessed the disappearance of over 100 rural Canadian jobs as the lost opportunities of hauling, detailing and servicing these boats have disappeared.”
