Used car tax hike hits taxpayers dealing with rising cost of living

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You remember your first car.

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Maybe when you were 16, you spent the summer flipping burgers, mowing the lawn, and saving all the money you could for your first beater. It may have been held on with duct tape and chewing gum, but you probably liked that car.

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This fall, the government of British Columbia has increased the price at which people buy used cars.

Instead of paying state sales tax on the actual value of a used car in a private sale, you are at the mercy of ICBC’s Black Book of Car Prices to determine the rate of tax you pay.

Instead of recording and taxing how much people spend on used cars, state governments charge PST as they see fit.

Imagine a young family with a third baby on the way. When mom and dad had two kids, the Prius worked well.

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With gas and grocery costs breaking records and mortgage rates skyrocketing this fall, the family can only afford to buy a second-hand minivan.

A friend reaches out and gives the family his old minivan a great deal. The odometer is slightly off at 250,000 km. The family is overjoyed. For $5,000, you can get the car your family needs to grow.

Until last month, that meant families would pay 12% of the used car’s selling price. Its 12% tax for her is $600. This is about a month’s worth of groceries for a family.

The Canadian Black Book is for broad vehicle valuation. It cannot take into account the realities of the field or the deals offered. So, much to the family’s surprise, the ICBC bureaucrats instead charge taxes on the average price of their cars.

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If the black book lists an average vehicle price of $12,000, the family will pay $1,440 in PST.

State governments say these tax changes will help crack down on scammers, but it’s a cash grab that hurts people trying to save money on used cars. If so, the government can already initiate an investigation. It’s ridiculous to assume that everyone buying a used car in the state is committing fraud until proven otherwise.

This tax is a punishment for those who can afford it most, such as those who buy second-hand goods to save money.

To challenge an ICBC bureaucratic evaluation, a family that owns a minivan must personally pay up to $350 for the evaluation. Even if the family wins the challenge, they will still be paying the desperately needed hundreds of dollars for diapers, food, and gasoline to get their kids to school.

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People who shop around for used items are doing it because they want to save money. About 20% of Canadian households skip meals, so why is the province going after so many people who can’t afford to put food on the table?

Carson Binda is the British Columbia Director of the Taxpayers Federation of Canada.

A letter to the editor provletters@theprovince.com. Editorial page editor is Hardip Johal. hjohal@postmedia.com.