Buying a ModelS/X is about to become MUCH more expensive!

[McFlurri]

Come January 1st 2022, the federal government will be imposing an additional 10% tax on vehicles with a price tag over $100,000.

GST on top of luxury tax for pricey cars, boats, planes: Gov't

The Department of Finance says GST will be charged on top of a new federal luxury tax on six-figure vehicles, boats and planes.

torontosun.com

 

[ecarfan]

That may have some impact on S/X sales, but I expect it to be minimal.

I am not opposed to such a tax. Reading that article, this part caught my eye, quote:

———————-
“I’ve got an airplane and I’m called the rich guy,” Michael Wilton, president of Flight Simple Aircraft Sales of Calgary, said May 20 at the Commons finance committee.

“We don’t think that’s fair. This is a lot different than the guy who whips down to his local Ferrari dealership,” said Wilton, who told MPs he drives a pick-up truck to work and lives in a modest home. I am by no means rich. My clients are pretty normal people. They’re farmers, they’re ranchers, they’re business people, they own a small shop.”

“Most general aviation pilots and owners are not the ultra-rich, not even close. They are the regular folks, your neighbours, my neighbours, the people who enjoy a hobby that happens to be incredibly expensive.
————————

Hmm…so if one has a “hobby” that is “incredibly expensive” you are just “regular folk”? I think not.

So in Michael Wilton’s opinion, it is apparently okay to add 10% to the price of a Model S but not okay if someone buys a private plane for personal use.

 

[jjgg]

Let's see if Tesla will sell Model S and X in Canada priced at $99,999 with no software installed, and price the software at $70,000.

 

[McFlurri]

That may have some impact on S/X sales, but I expect it to be minimal.

I am not opposed to such a tax. Reading that article, this part caught my eye, quote:

———————-
“I’ve got an airplane and I’m called the rich guy,” Michael Wilton, president of Flight Simple Aircraft Sales of Calgary, said May 20 at the Commons finance committee.

“We don’t think that’s fair. This is a lot different than the guy who whips down to his local Ferrari dealership,” said Wilton, who told MPs he drives a pick-up truck to work and lives in a modest home. I am by no means rich. My clients are pretty normal people. They’re farmers, they’re ranchers, they’re business people, they own a small shop.”

“Most general aviation pilots and owners are not the ultra-rich, not even close. They are the regular folks, your neighbours, my neighbours, the people who enjoy a hobby that happens to be incredibly expensive.
————————

Hmm…so if one has a “hobby” that is “incredibly expensive” you are just “regular folk”? I think not.

So in Michael Wilton’s opinion, it is apparently okay to add 10% to the price of a Model S but not okay if someone buys a private plane for personal use.

I came to the exact same conclusion as you.

 

[CaptainKirk]

Let's see if Tesla will sell Model S and X in Canada priced at $99,999 with no software installed, and price the software at $70,000.

Sorry, what you proposed is already taken into account. This Luxury Tax thing is just another layer of unnecessary layer of bureaucracy. Luxury Tax Link on government website . It clearly specifies that if you buy a good that is under the luxury tax but then you add modifications that push it over, you have to self-report and then pay the tax. Your modifications will be registered and knowing the government, they'll probably penalize you as well. I would suggest everyone read the technical document and not to take things at face value.

This is insanity! Without getting too political I understand the why the government think its needed given that there's a massive fiscal deficit, but I have hard time seeing this implementation be anything but costly. I think the government incorrectly assumes that the rates of sales of luxury items will continue despite this tax and then adds on a 10% tax to assume tax revenue. There is price sensitivity, and I am fairly certain that this scheme will bring in less money than they've outlined. Not to mention they didn't index anything to inflation, so eventually, more cars move into the luxury goods category lets say 20 years down the line.

I'm also sick of all these pay your fair share because you have nicer things. I work hard, save up, and I feel like I get penalized all the time while others spend like drunken sailors. I do well and I consider myself upper middle class, but I'm hardly living an extravagant life of luxury. The simplest thing the government can do to make tax revenue is just to add more income tax brackets above the current ones. It's easy to do, you can reassess the brackets yearly, and it doesn't cost anything extra to implement. Instead, we get another added tax that's poorly thought out because it sounds good, but will be extremely hard to remove once it's enacted. Remember the income tax? That was implemented to help pay for the costs of fighting World War 2. All we get is a hollowing out of the middle class while the ultra-rich puppet masters laugh away.

/end rant

 

[jjgg]

Sorry, what you proposed is already taken into account. This Luxury Tax thing is just another layer of unnecessary layer of bureaucracy. Luxury Tax Link on government website . It clearly specifies that if you buy a good that is under the luxury tax but then you add modifications that push it over, you have to self-report and then pay the tax. Your modifications will be registered and knowing the government, they'll probably penalize you as well. I would suggest everyone read the technical document and not to take things at face value.

This is insanity! Without getting too political I understand the why the government think its needed given that there's a massive fiscal deficit, but I have hard time seeing this implementation be anything but costly. I think the government incorrectly assumes that the rates of sales of luxury items will continue despite this tax and then adds on a 10% tax to assume tax revenue. There is price sensitivity, and I am fairly certain that this scheme will bring in less money than they've outlined. Not to mention they didn't index anything to inflation, so eventually, more cars move into the luxury goods category lets say 20 years down the line.

I'm also sick of all these pay your fair share because you have nicer things. I work hard, save up, and I feel like I get penalized all the time while others spend like drunken sailors. I do well and I consider myself upper middle class, but I'm hardly living an extravagant life of luxury. The simplest thing the government can do to make tax revenue is just to add more income tax brackets above the current ones. It's easy to do, you can reassess the brackets yearly, and it doesn't cost anything extra to implement. Instead, we get another added tax that's poorly thought out because it sounds good, but will be extremely hard to remove once it's enacted. Remember the income tax? That was implemented to help pay for the costs of fighting World War 2. All we get is a hollowing out of the middle class while the ultra-rich puppet masters laugh away.

/end rant

It is debatable if installing software is a modification, if the product was designed to allow for end users to install softwares of their choice.

Or, software become subscription-based by the car's design. In this case, there will be no modification at all. It becomes operating cost, like paying for gas to drive your car.

 

[CaptainKirk]

It’s not debatable. The technical document uses the example of a software package as an option when making a purchase. I think Tesla is successful enough that the government is already rubbing their greedy palms for more juicy tax revenue.

 

[jjgg]

It’s not debatable. The technical document uses the example of a software package as an option when making a purchase. I think Tesla is successful enough that the government is already rubbing their greedy palms for more juicy tax revenue.

That document itself is "for consultation" therefore everything in that proposal is technically debatable. But of course the government is not motivated to debate this. The real purpose is probably to somewhat offset their failed attempts to tax those who can file income below the poverty line but live in multi-million-dollar properties driving half-million-dollar cars.

Actually, after skimming through the document, I think this attempt will fail again: "leases of select goods would not be considered deliveries of select goods under the Luxury Tax regime".