The proposed transit sales tax – if it passes this spring’s referendum – will apply on all new cars bought by Metro Vancouver residents, even if they’re sold by dealers outside the region in the Fraser Valley, where the tax wouldn’t otherwise apply.
The decision by Transportation Minister Todd Stone to charge the tax based on where buyers live rather than where a new car is sold aims to answer the concerns of Metro car dealers, who feared their customers would go outside the region to save the 0.5 per cent.
ICBC requires vehicles to be registered based on the owner’s home address to determine rates and Autoplan insurance dealers would collect the additional new Congestion Improvement Tax from Metro residents at the time of registration.
The request was made March 3 by mayors’ council chair Gregor Robertson in response to concerns raised about the potential leakage of business outside of Metro.
“We share your objective of a fair and equitable tax,” Stone said in a March 19 letter to the Vancouver mayor, adding the collection method will “promote a level playing field for automotive dealers and consumers.”
Langley Township Mayor Jack Froese said the agreement with Stone ensures Metro auto dealerships remain competitive with those outside the region, in places like Abbotsford, and the tax is fair to consumers.
It follows the same model used by other cities with differential sales taxes such as Seattle and Los Angeles.
“We’re encouraged by this,” New Car Dealers’ Association of B.C. CEO Blair Qualey said. “On the face of it, this goes a long way towards addressing the concerns of our members.”
People who live outside of Metro in cities like Abbotsford or Squamish wouldn’t pay the new sales tax, regardless of whether they’re shopping at a dealership in their home city or inside Metro Vancouver.
It’s not entirely clear what would happen, Qualey added, when a construction company with offices in various cities buys a large fleet of vehicles.
Qualey said it will be up to the new car dealers’ board of directors, which meets again next week, to decide if the association takes any position in the transit tax referendum as a result of the change, adding there are “differing opinions” among directors.
“We’ve always said we’re supportive of strategic investment in good roads, bridges and public transit,” Qualey added. “We recognize there’s an issue of congestion in Metro Vancouver and it’s important that be addressed.”
He had previously predicted Metro dealers would be forced to absorb the tax, equivalent to $150 on a $30,000 new car, to keep from losing customers to the Fraser Valley.
Retail Council of Canada spokesman Greg Wilson wondered if the province would apply the same tax treatment for new cars to other costly purchases, such as appliances.
“If he’s going to enforce it on someone who buys a car in Abbotsford but lives in Vancouver, it leaves you to worry they’re going to enforce it on smaller items,” he said.
The retail council has taken no stand yet in the referendum.
“We don’t know enough to be opposed and we don’t know enough to be in favour,” Wilson said.