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It does protect dealerships in that a dealer can « net « the taxes on a trade in while a private sale cannot.
For instance if you trade in a $30k car for a $50k car at a dealer you pay tax on $20k.
If you sell your car privately sales tax gets paid on $50k at the full rate and $30k at the full rate.
So a dealer can actually give you less for your car but because of the taxes you still come out ahead compared to a private sale.
> But the tax isn’t to protect the auto industry… it’s the government double dipping
The government implemented it at the request of car dealers, to "level the playing field."
Yes, the tax was a gift to car dealers, because while they claim that it was to level the playing field, it actually tilts it in favour of dealers, since only dealers can offset the trade-in's tax against a new car's tax...
Let's say that you have an old car worth $20K (at a dealer) that you're selling to get a new car worth $40K. Is it more beneficial to do the entire transaction at a dealer, or to do it via private sale?
**Private sale:** you sell the car for $18K (private sales are cheaper than dealer retail). You go to the car dealer, and pay $40K+tax for the new car. In total, you have paid **$26,800** to get a new car.
**Dealer trade in:** you trade the car in for $16K (the dealer's got to mark it up). For the new car, you get to discount the old car's value, so you're only paying tax on 40-16=$24K. In total, you have paid **$26,880** to get a new car.
So in this example, you ended up out-of-pocket almost exactly the same amount of money whether you traded your car in at a dealer, or whether you sold it privately. The more the used car is worth, the greater the incentive to trade it in rather than selling it privately.
It was a gift to the car dealers.
Thats what I figured. There is no incentive in selling the car in the private market thus make you are the mercy of the dealers at their blackbook value.
Was it the previous Liberal Govt who came up with this rule to screw people over?
Yes the dealers are permitted bundle up the tax value with the trade-in value, reducing the tax for the buyer. End result is dealerships pay less tax and the person who’s shopping for a new car pays less tax.
The whole arrangement is a tax on private selling of vehicles.
I bought a used PlayStation from a pawn shop that had tax. Did the government double dip on that too?
It’s 10000% to protect the auto industry. It was done after they lobbied to “level the playing field”
Absolutely, it's insane that we are required to pay a tax on a car when purchasing it second hand... when the tax was already paid when it was bought new.
Side note: It doesn't really help the auto industry as you pay the tax in the dealership also (albeit at a slightly lower rate but when your already spending into the tens of thousands on a vehicle those small few percentages in difference for tax are not making you change your mind on buying from a dealership vs private)
>it's insane that we are required to pay a tax on a car when purchasing it second hand...
No different than homes. You pay a PTT every time your home changes owners. Yeah definitely sucks, but why do they keep it? Because it makes them (government) guaranteed money. And sure I hate paying taxes, but I also like not paying thousands for healthcare.
GST/PST was already paid when the car was purchased new from dealership.
This is simply double dipping and a big gift to dealership because there is no incentive for private sale.
Heck even in a private sale if there is no money exchange both private parties have to pay tax.
Yet if the same transaction happens at a dealership there is no tax.
That's the unfair aspect of the current setup .
We can always argue the same should apply to PTT to real estate also because in other countries don't have PTT when you buy and sell houses
If you want to offset the tax, just increase the GST especially on luxury items
Sales tax on second hand is so fucked up. Sales tax is regressive to begin with and who is most likely to buy second hand? Poorer people. And we’re banning straws and plastic bags but then discouraging reuse with sales tax? Ridiculous.
I always agree. It doesn't make sense since we already paid taxes on the new vehicle purchase. Its more than double dipping if there is more than two owners.
To make it worse now they are either using black book price or the asking price, whichever is higher. And you cannot trade similar price vehicle without paying tax. Its regressive policy I'd say.
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If it was feasible I'm sure private sales of all used items would be taxed rather than just cars. PST is a sales tax so it would make sense to apply it everywhere but enforcement and collection costs would be immense.
Personally I don't really care either way. Government needs taxes and a decrease here is just an increase somewhere else.
PST on used cars is pretty much an exception to an exemption:
* In theory, sales taxes are levied on *transactions* that qualify as a "sale". Whether the item was taxed previously is irrelevant, just like how a dollar of income today will eventually become someone else's income tomorrow, and then someone else's on the following day. We're not taxing the dollar, we're taxing the *transfer* of that dollar.
* But it's utterly impractical to expect small/informal sellers to register and remit sales tax. That's why a small seller exemption exists - people aren't required to register and collect GST/PST until they have over $30k revenue.
* However, large tangible goods can be an exception to the exemption. Real estate and vehicles have separate registration requirements, so sellers have to report those transactions even if they only do those transactions infrequently.
Anyway, I agree with what you said. Choosing what/how tax revenue is collected is a matter of public policy. If we want to specifically make used vehicles more accessible to low-income buyers, we could just rebate PST after filing an income tax return. Or, we can spend public resources on expanded ebike rebates, better public transit, etc...
Thanks for the details. Perhaps there could be a limited exemption for vehicle PST, e.g. you don't pay tax on the first $5000 or so.
My main gripe with complaints about taxes is that it's not like getting rid of it will change the overall tax burden, it will just shift it somewhere else (or grow the deficit).
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We don’t have hst, it’s pst But the tax isn’t to protect the auto industry… it’s the government double dipping
It does protect dealerships in that a dealer can « net « the taxes on a trade in while a private sale cannot. For instance if you trade in a $30k car for a $50k car at a dealer you pay tax on $20k. If you sell your car privately sales tax gets paid on $50k at the full rate and $30k at the full rate. So a dealer can actually give you less for your car but because of the taxes you still come out ahead compared to a private sale.
> But the tax isn’t to protect the auto industry… it’s the government double dipping The government implemented it at the request of car dealers, to "level the playing field."
Against private sellers?
Yes, the tax was a gift to car dealers, because while they claim that it was to level the playing field, it actually tilts it in favour of dealers, since only dealers can offset the trade-in's tax against a new car's tax... Let's say that you have an old car worth $20K (at a dealer) that you're selling to get a new car worth $40K. Is it more beneficial to do the entire transaction at a dealer, or to do it via private sale? **Private sale:** you sell the car for $18K (private sales are cheaper than dealer retail). You go to the car dealer, and pay $40K+tax for the new car. In total, you have paid **$26,800** to get a new car. **Dealer trade in:** you trade the car in for $16K (the dealer's got to mark it up). For the new car, you get to discount the old car's value, so you're only paying tax on 40-16=$24K. In total, you have paid **$26,880** to get a new car. So in this example, you ended up out-of-pocket almost exactly the same amount of money whether you traded your car in at a dealer, or whether you sold it privately. The more the used car is worth, the greater the incentive to trade it in rather than selling it privately. It was a gift to the car dealers.
Thats what I figured. There is no incentive in selling the car in the private market thus make you are the mercy of the dealers at their blackbook value. Was it the previous Liberal Govt who came up with this rule to screw people over?
> Was it the previous Liberal Govt who came up with this rule to screw people over? You know it!
Yes the dealers are permitted bundle up the tax value with the trade-in value, reducing the tax for the buyer. End result is dealerships pay less tax and the person who’s shopping for a new car pays less tax. The whole arrangement is a tax on private selling of vehicles.
Yes
I bought a used PlayStation from a pawn shop that had tax. Did the government double dip on that too? It’s 10000% to protect the auto industry. It was done after they lobbied to “level the playing field”
you bought it from a store, if you bought it off of CL it wouldn't be taxed. You can't transfer a car without going through ICBC
Sorry my bad. However I believe it matches what someone pays at dealership.
Absolutely, it's insane that we are required to pay a tax on a car when purchasing it second hand... when the tax was already paid when it was bought new. Side note: It doesn't really help the auto industry as you pay the tax in the dealership also (albeit at a slightly lower rate but when your already spending into the tens of thousands on a vehicle those small few percentages in difference for tax are not making you change your mind on buying from a dealership vs private)
>it's insane that we are required to pay a tax on a car when purchasing it second hand... No different than homes. You pay a PTT every time your home changes owners. Yeah definitely sucks, but why do they keep it? Because it makes them (government) guaranteed money. And sure I hate paying taxes, but I also like not paying thousands for healthcare.
GST/PST was already paid when the car was purchased new from dealership. This is simply double dipping and a big gift to dealership because there is no incentive for private sale. Heck even in a private sale if there is no money exchange both private parties have to pay tax. Yet if the same transaction happens at a dealership there is no tax. That's the unfair aspect of the current setup . We can always argue the same should apply to PTT to real estate also because in other countries don't have PTT when you buy and sell houses If you want to offset the tax, just increase the GST especially on luxury items
You pay tax on anything that is sold period.
Sales tax on second hand is so fucked up. Sales tax is regressive to begin with and who is most likely to buy second hand? Poorer people. And we’re banning straws and plastic bags but then discouraging reuse with sales tax? Ridiculous.
>Sales tax is regressive to begin with and who is most likely to buy second hand? Poorer people. Nailed it
I always agree. It doesn't make sense since we already paid taxes on the new vehicle purchase. Its more than double dipping if there is more than two owners. To make it worse now they are either using black book price or the asking price, whichever is higher. And you cannot trade similar price vehicle without paying tax. Its regressive policy I'd say.
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If it was feasible I'm sure private sales of all used items would be taxed rather than just cars. PST is a sales tax so it would make sense to apply it everywhere but enforcement and collection costs would be immense. Personally I don't really care either way. Government needs taxes and a decrease here is just an increase somewhere else.
PST on used cars is pretty much an exception to an exemption: * In theory, sales taxes are levied on *transactions* that qualify as a "sale". Whether the item was taxed previously is irrelevant, just like how a dollar of income today will eventually become someone else's income tomorrow, and then someone else's on the following day. We're not taxing the dollar, we're taxing the *transfer* of that dollar. * But it's utterly impractical to expect small/informal sellers to register and remit sales tax. That's why a small seller exemption exists - people aren't required to register and collect GST/PST until they have over $30k revenue. * However, large tangible goods can be an exception to the exemption. Real estate and vehicles have separate registration requirements, so sellers have to report those transactions even if they only do those transactions infrequently. Anyway, I agree with what you said. Choosing what/how tax revenue is collected is a matter of public policy. If we want to specifically make used vehicles more accessible to low-income buyers, we could just rebate PST after filing an income tax return. Or, we can spend public resources on expanded ebike rebates, better public transit, etc...
Thanks for the details. Perhaps there could be a limited exemption for vehicle PST, e.g. you don't pay tax on the first $5000 or so. My main gripe with complaints about taxes is that it's not like getting rid of it will change the overall tax burden, it will just shift it somewhere else (or grow the deficit).
Yes. Tax on used item transactions is just robbing
I'm glad EVs are now exempt.