B.C. is changing its sales tax rules to prevent tax avoidance by people selling used vehicles privately, and extending the seven-per-cent provincial sales tax to already heavily-taxed cigarettes.
The tax change for used vehicle sales was included in Tuesday’s provincial budget, and takes effect on Oct. 1. At that time, tax will apply to either the reported purchase price or the average wholesale price of that type and year of vehicle, whichever is greater.
“This approach would align B.C.’s treatment of private vehicle sales with the majority of other provinces and is intended to address tax avoidance arising from the underreporting of the price of motor vehicles from private sales,” says the detailed budget released Feb. 22. “The measure will not apply for motor vehicles involved in a trade-in.”
The document adds that “Individuals involved in private vehicle transactions are more likely to be low to medium income, living in a rural area, and male.”
In question period at the B.C. legislature Wednesday, Finance Minister Selina Robinson was asked about the measure. “It’s not a new tax, it’s closing a loophole,” Robinson said.
The budget also removes PST from used zero-emission vehicles, sold privately or by a dealer, if they have been driven for 6,000 km or more. That exemption is in effect as of Feb. 23.
Sales tax is added to cigarettes and other tobacco products effective July 1. That’s on top of provincial tobacco taxes set at 32.5 cents per cigarette, $6.50 per pack of 20, and 65 cents per gram for loose tobacco.