Calls to ‘tax the rich’ often fall on deaf ears - but Canada appears to be listening. The country is set to impose a new ‘luxury tax’ on the sale and importation of high-value cars, planes and boats.Coming into effect on 1 September 2022, the Select Luxury Items Tax Act is billed as part of the Government of Canada’s commitment to a fairer tax system.The levy is the realisation of budget proposals first made last summer, which have now received parliamentary approval.The new luxury levy targets certain vehicles and aircraft priced above CA$100,000 (€76,400) and certain boats priced above CA$250,000 (€191,000).
It will be calculated at 10 per cent of the full retail value of the vehicle, aircraft or vessel, or 20 per cent of the value above the threshold.The tax will only apply to new vehicles purchased by consumers for personal use.
It will apply retrospectively to most sales made after 1 January 2022.Canada’s luxury tax aims to make things fairer for taxpayers, ensuring that “those Canadians who can afford to buy luxury goods are contributing a little more,” according to a statement on the Government of Canada’s website.In May, Canada’s Parliamentary Budget Officer (PBO) estimated that introduction of a luxury goods sales tax will generate CA$163 million (€125 million) of revenue in 2023-2024.It could also deter wealthy citizens from purchasing gas-guzzling luxury cars, yachts and private jets - with positive effects for the environment.However, industry spokespeople have raised concerns about the new levy’s potential impact on “Canada’s beleaguered aviation sector and its employees”.“The economic impact of the luxury tax will be significant and [has] not been studied with a comprehensive understanding of our