The Canadian government’s proposed “luxury tax” on new recreational boats valued above $250,000 CAD went into effect September 1, 2022.
This month, the Canadian Department of Finance released a study and analysis on the economic impacts of the tax, which predicts a severe drop in sales revenue and hundreds of job losses from the federal luxury tax on new boats, airplanes and cars.
As reported in the Globe & Mail, when broken down by sector, the report says the vehicles market would be hardest hit in terms of reduced sales, with an impact of between $125.2 million and $210.2 million. Vessels would be next, with reduced sales of between $32.7 million and $102.9 million, followed by aircraft at between $13.5 million and $28.7 million.
The government study findings include:
- The direct recreational boating sector will sustain 30-44% of job losses (70-220 full-time equivalents), while only making up 21% of luxury tax revenues.
- Sales losses for boating will amount to between $33M to $103M, or 1.84% to 5.81% of total domestic dales (compared to 0.15-0.26% for auto and 0.24-0.51% for aerospace).
- When factoring-in indirect and induced economic impacts, the boating industry could see GDP losses between $17.6M and $55M and job losses between 127-401. Again, 21% of revenues but 32% to 46% of job losses
Canada’s Parliamentary Budget Officer also put out a costing note that estimated $2.9 billion in lost sales over five years because of the tax–and the boating industry would take 75% of that hit. Marine businesses across the country have been reporting economic damage through an ongoing survey by Canada’s Marine Trade associations. The latest data shows $277 million in lost sales and over 100 job losses.