Federal 10% luxury tax on Models S and X

[N.Y.R.]

I can afford a $50,000 tax on my model S. Does that mean it's responsible for government to levy that tax...just because I can?

What a horrible attitude.

What an incredibly stupid example and equally arrogant horrible attitude. A $100,000 car is the definition of an excessive luxury purchase. It doesn't matter if you have $100,000 in the bank or $1,000,000, the effect of the purchase does not change the fact that no one "needs" a $100,000 car and there are options to gain the same utilitarian value of that $100,000 car in other, more reasonably priced options.

You can buy a $1000 watch or a $1 watch - they both do the same thing, tell the time. Applying a tax to the $1000 watch does not change the utility of the watch, it is still a watch that tells the time. As such, an excessive spend on something that does not offer additional utility at that higher price can easily be taxed because you have options to get the same utility at a lower price. Moreover, there are tons of research done on luxury taxes to show they have little to no impact on buying a product - this is because the utility of the luxury good does NOT decrease because of the tax, it's actually born proven that luxury taxes make very little difference because of the social impacts and status derived from owning a luxury item outweigh the tax for the buyer.

Luxury taxes accomplish a very simple thing - they quickly reduce deficits without any adverse effects to the utility gained by the product. Canada has a massive deficit. That is why a tax is being levied. It really is as simple as that, you have to be a moron to not understand why a new tax is being applied. It's why Bulgaria has a luxury tax. It's why Norway taxes oil-powered cars. It's why the US applied a luxury tax in the 90s on boats over $100,000, cars over $30,000, aircraft over $250,000, and furs and jewelry over $10,000 - it's because they were in the middle of a federal deficit crisis and needed to bring it down quickly.

Again - I REPEAT - If you can afford a $125,000 car, you can afford the tax. If the tax offends you and makes you not buy something, good, that meant you were not buying within your means.

 

[gaspimp]

What an incredibly stupid example and equally arrogant horrible attitude. A $100,000 car is the definition of an excessive luxury purchase. It doesn't matter if you have $100,000 in the bank or $1,000,000, the effect of the purchase does not change the fact that no one "needs" a $100,000 car and there are options to gain the same utilitarian value of that $100,000 car in other, more reasonably priced options.

You can buy a $1000 watch or a $1 watch - they both do the same thing, tell the time. Applying a tax to the $1000 watch does not change the utility of the watch, it is still a watch that tells the time. As such, an excessive spend on something that does not offer additional utility at that higher price can easily be taxed because you have options to get the same utility at a lower price. Moreover, there are tons of research done on luxury taxes to show they have little to no impact on buying a product - this is because the utility of the luxury good does NOT decrease because of the tax, it's actually born proven that luxury taxes make very little difference because of the social impacts and status derived from owning a luxury item outweigh the tax for the buyer.

Luxury taxes accomplish a very simple thing - they quickly reduce deficits without any adverse effects to the utility gained by the product. Canada has a massive deficit. That is why a tax is being levied. It really is as simple as that, you have to be a moron to not understand why a new tax is being applied. It's why Bulgaria has a luxury tax. It's why Norway taxes oil-powered cars. It's why the US applied a luxury tax in the 90s on boats over $100,000, cars over $30,000, aircraft over $250,000, and furs and jewelry over $10,000 - it's because they were in the middle of a federal deficit crisis and needed to bring it down quickly.

Again - I REPEAT - If you can afford a $125,000 car, you can afford the tax. If the tax offends you and makes you not buy something, good, that meant you were not buying within your means.

Do you really want to live in a country where the government decides what qualifies as a luxury purchase? What if someone has a $100,000 house and a $200,000 car? That's not so unreasonable in a very rural area if exotic cars are their passion. Are we going to tax people 10% of their $1,000,000 houses when it's a "luxury"? Surely they could move to a lower cost of living area - living in a city is a luxury of course. This is a slippery slope argument. Let people spend their money however they want.

Today's government over-reach may not impact you, but perhaps tomorrow's government that you disagree with will use the same overreach as precedence to screw you instead. Maybe it's best if government screws nobody?

Also, Canada's deficit would be even worse if it wasn't for the wealthy. People earning 180k+ pay a hugely disproportionate share of taxes in this country - 56%!!!, despite being a tiny percentage of the population. Maybe we should stop giving away so much free stuff to people who contribute little to society instead of sticking our hands in the pockets of high achievers time and time again.

 

[bijan]

People earning 180k+ pay a hugely disproportionate share of taxes in this country - 56%!!!,

Where did you get this statistic? It seems unusually high as the tax rate for such people is only twice or triple the tax rate for average Canadians and there are 20 times more of those average people.

If this is really the case I'd expect it to be due to people making many many millions or even billions in capital gains and not just a 180k+ salary.

Ignore, Edit1 and Edit2, I matched the wrong statistic.
Edit: I found a possible source, but you're wrong:
"The gap between the share of personal income taxes paid and income earned by the top 1 percent has also been increasing over time. In 1997, the top 1 percent earned 8.9 percent of total income and paid 14.0 percent of personal income taxes—a difference of 56.9 percent. "

So the top 1% earn 8.9 percent of income and paid 14% of taxes. So the difference between those two number is 56% not that they pay 56% of all taxes, they actually only pay 14%. Not at all what you claimed:

Edit2: They report that that share has increased over time, at least until 2017:
"By 2017, that difference had increased so that the share of income taxes paid by the top 1 percent is 67.1 percent higher than the share of income earned"
That's an increase for the rich due to the new top brackets getting bumped but not to the levels you claimed.

Found it:
https://www.fraserinstitute.org/sit...uring-the-distribution-of-taxes-in-canada.pdf
Edit3: According to the same report the top 20% (I think it's something like 186k+) earn %49.1 of income and pay %55.9 of taxes (the share for income taxes is higher at 64.4%, but overall is lower since income tax is the most "progressive" tax). That is probably what you were referring to, but again that is not quite "hugely disproportionate" that's only 14% more than their share of income, even with a flat/uniform tax rate they'd be paying %49.1 of taxes.

 

[pcons]

I'm settling in with some popcorn for this one...

There are many arguments that can/will/have been made. I'll say (without trying to sound like bragging like others...) I'm fortunate enough to have worked hard, AND been lucky to catch some breaks here and there to be in a very sound financial place. That doesn't mean I work harder than everyone making less than me (as a couple posters have said earlier....), or that everyone making less than me are getting 'freebies and handouts'. That kind of elitist crap is sickening. I had luck swing a bit my way, that opened the door to hard work and success. Lets not pretend you are any different....unless of course you got it from mommy and daddy and are pretending to have 'worked hard' because subconsciously you know you didn't actually 'earn it'....sounds like someone is projecting a bit there, eh?

I had both academic and athletic scholarships in university, but still required so called 'handouts' like OSAP to afford attending university and grad school. If I didn't go to university/grad school I wouldn't have been exposed to all the mentors that put me on the career path I'm on. I've helped many 'underprivileged' kids follow a similar path through coaching and mentoring. But I also know there are many others that are capable, but just didn't have that door opened for them. So spare us the 'poor people take handouts' crap. It just shows how out of touch you are by thinking that (specifically not calling out the person who alluded to that in an attempt to somewhat keep things civil here)....Oh, and btw: there are more ways to 'contribute to society' outside of giving people money . Making statements like that make you seem like a really, really shallow person who knows nothing of actual 'society'.

By the logic of the couple posters I'm referencing above, I guess:

- Daycare workers don't work hard, because that profession is underpaid, despite caring for our best resource: our kids
- Teachers don't work hard, because they get 'summers off'...ignore the fact that they are charged with educating the next generation
- People working in long term care or palliative facilities (and take care of our parents, or us in our final stages of life) are also not hard workers....because they don't get paid tonnes of money

- But one thing is for sure: a 14 year old streaming on youtube is 'working harder' than all of the above simply because they 'make more money'...right? (not hating on youtubers, or gamers...just pointing out your horrible attempts at generalizations...)

My mother worked for 22k/year for her whole life and supplemented my education by working weddings at a banquet hall with me 3 nights/week to make ends meet. Maybe I'm biased, but I doubt anyone reading this post has 'worked harder' than she has, so please spare me the 'I earn more because I work harder than you'....

No system is perfect, but there is a GIANT divide between the 'rich' and most of the workforce. As others have said (including me earlier), people want what they want. This luxury tax is not likely to dissuade people from buying what they want. It will certainly be frustrating to have to 'pay more' for the luxury item. But like someone else said above: you do have the option of not buying such an expensive car.

Edit: And I'd love to hear about a single person living in this country who lives in a $100,000 house, yet drives a $200,000 car. That's such a ridiculous argument you just embarrass yourself by saying it. You do know that building materials cost money, so even in a rural area you can't make a mansion for 100k, even if land and labor to build such a house are free? I can't believe I even have to rebut those points directly, but apparently I do...

Ok, rant over....lets bring on the hate I'm sure to ensue from the 'elite' by posting my thoughts and experiences on this....

 

[ChrisOtt]

I think people should be able to spend their hard earned money how they see fit, tax people more at the source and less at the point of sale if you must.

 

[pcons]

I think people should be able to spend their hard earned money how they see fit, tax people more at the source and less at the point of sale if you must.

Respectfully disagree. If I am in the highest tax bracket, but am happy with a 99k model 3 vs a 150k model x why tax at the source? Or better yet, what if I live in Toronto and take public transportation and don't own a car/rent cars when needed? Why increase my taxes so someone who wants a 100k car doesn't pay luxury tax?

That is the point of the luxury tax IMHO: those who want the luxury pay the extra for that specific item without 'penalizing' those who can 'live' without the extravagance. My PhD supervisor and his wife have a combined household income north of 1M/ year....they don't own a car.

 

[bijan]

I can agree with the sentiment that sometimes we pay more taxes and have nothing to show for it. But in my case moving from Quebec with slightly higher taxes to Ontario with slightly lower taxes a lot of services that I benefitted from are not available here. University tuition especially in Engineering, Law and Medicine are much higher in Ontario. Car insurance is several times less expensive in Quebec due to no fault liability insurance run by the government, and child care is a fraction of the price in Quebec. They also already have pharmacare.

The increase in auto insurance when I moved to Ontario was enough to sour the benefit of Ontario's lower taxes. I went from $300 a year to $2000 a year for the same car, since I lived in high risk Markham (my car was worth a few thousand, so that made it even more painful), and made it so that it made no sense to get a second car, since my wife drove so little and that would be another $2000 a year.

Maternity benefits are higher in Quebec, and that would have been much appreciated as I just had a kid. And next year when he's in daycare the lower daycare costs would have benefitted me. So if the extra taxes are used for social programs it can benefit even higher income people, so you feel like you are getting something at least.

 

[sakimano]

That is the point of the luxury tax IMHO: those who want the luxury pay the extra for that specific item without 'penalizing' those who can 'live' without the extravagance. My PhD supervisor and his wife have a combined household income north of 1M/ year....they don't own a car.

Careful, you're kind of arguing for user taxes. Shall we discuss healthcare costs? A significant portion of my paycheque goes to pay for healthcare of other people in Ontario every year (assuming we all cost an average dollar amount for health care annually). In fact by early January, my healthcare costs for the year are looked after and for the rest of the year, the portion of my income tax that pays for healthcare is for people other than me. A couple dozen of them. Is that fair? I get that universal healthcare does not equal luxury tax on a car however there's a point where you question what you're getting for your tax dollars, especially when we see abhorrent government waste at all levels.

 

[pcons]

Careful, you're kind of arguing for user taxes. Shall we discuss healthcare costs? A significant portion of my paycheque goes to pay for healthcare of other people in Ontario every year (assuming we all cost an average dollar amount for health care annually). In fact by early January, my healthcare costs for the year are looked after and for the rest of the year, the portion of my income tax that pays for healthcare is for people other than me. A couple dozen of them. Is that fair? I get that universal healthcare does not equal luxury tax on a car however there's a point where you question what you're getting for your tax dollars, especially when we see abhorrent government waste at all levels.

I can't deny there is a lot of waste in the government. I'm with you on that one.

But the healthcare argument is more black and white in my book. That's something most in the world consider a basic service everyone should be entitled to regardless of financial status. You may have used your 'share' of healthcare by early January, but that's because you didn't get a major sickness/needed surgery. If everyone was healthy all the time there would be no issue, wouldn't there?

I wish my taxes were less, and like you I pay probably 2-3x more in taxes than most make in the year....but I also don't want to pay 40k to have my child born, or worse yet 100k's if I or a family member need major surgery or get cancer. If that happened, thankfully I could afford the bill. But what about those that can't?

Having healthcare when you need it is hardly a luxury, while my point above was not everyone even needs a car. The two can't be equated. We 'think' we need cars, when in fact many people (not all) could and do get by without one. A luxury car is another level above that and 100% a 'want' not a 'need'.

I get there is a lot of grey area in where one draws the line on individual item taxation vs wholesale. I'm not trying to suggest otherwise. There is a slippery slope with just about any situation, but on the topic of the 100k+ car: it's already at the bottom of the hill

 

[BEPA400]

Careful, you're kind of arguing for user taxes. Shall we discuss healthcare costs?

You may if you want, but it has nothing whatsoever to do with the discussion. Healthcare user costs vs luxury tax? You really equate those? That’s rhetorical, of course you don’t. You think a government working to increase taxes on luxury goods is also likely to implement a user pay health care system? Apples and bananas my friend.

Maybe a more relevant comparable would be inheritance taxes... bring them on!

 

[Mod_S_Pilot]

Or they could try to thread the needle. Satisfy the NDP (tax the "rich") and appease the Green (exempt the EV's).

Agreed but I already paid over 15%

Honestly it was over 20k tax, not an insignificant amount, but those that can't afford the tax , cant afford an expensive vehicle to begin with.

Also I'm sure when it's all said and done , the ev the average citizen buys will be under 60k and by 2025 same price as gas vehicle approx , or lower .$20-35k

You buy the Porsche , Ferrari or luxury ev, you get taxed. I did, many others too. Juat enjoy your car. Don't like paying taxes ? Then get an accountant firm, don't want to support the country and government, get another country plenty of tax free countries, if you're a citizen of those.....

Juat more fear mongering, eveey8ne should pay no less then I did , 15%

What we really need is home charging lower rate , ie that electricity isn't at the same price as the one for our house, or off peak times BC under it's right wing liberal party never has that for 20 years, under ndp fir 2 yes still doesn't have it

 

[realtycoon]

what if I live in Toronto and take public transportation and don't own a car/rent cars when needed? Why increase my taxes so someone who wants a 100k car doesn't pay luxury tax?

.

Yet, 416 is subsidized by all the 905ers coming in to work in the Downtown, where the commercial properties pay a disproportional share of the property tax. Plus 416 has the residential property taxes.

Also, I don't use public transport, but my taxes are subsidizing the build out of the transport that you use.

Oh and don't get me going on the bike lanes, cyclists should be licensed and taxed ASAP to pay for their lanes.

 

[bwalter]

What we really need is home charging lower rate , ie that electricity isn't at the same price as the one for our house, or off peak times BC under it's right wing liberal party never has that for 20 years, under ndp fir 2 yes still doesn't have it

There's isn't much need for an off peak time because our electricity comes mostly from hydro. I suppose it might help even the load on the grid if that becomes an issue. It would be fair to use the "farm" rate for EV charging. It's a flat rate that falls between the step 1 and step 2 raters. Of course that would require a separate meter. Or maybe off peak rate should max out at the farm rate rather than step 2.

I think there definitely should be some incentive to shape out charging habits. For now I just charge as soon as I get home, because I have no incentive to schedule my charging for later. In fact, if they run the "PeakSaver" trial I participated in the past couple years again this winter, I'll have an incentive to charge as soon as I get home so I get a larger reward for shifting my usage (compared to the average of the previous few days) on particularly cold days.

FYI, this is the PeakSaver program I'm talking about, but it seems they are only doing it in a few targeted areas: Peak saver trial

 

[sakimano]

But the healthcare argument is more black and white in my book. That's something most in the world consider a basic service everyone should be entitled to regardless of financial status. You may have used your 'share' of healthcare by early January, but that's because you didn't get a major sickness/needed surgery. If everyone was healthy all the time there would be no issue, wouldn't there?

I wish my taxes were less, and like you I pay probably 2-3x more in taxes than most make in the year....but I also don't want to pay 40k to have my child born, or worse yet 100k's if I or a family member need major surgery or get cancer. If that happened, thankfully I could afford the bill. But what about those that can't?

The total cost of the system divided by the number of users is about $6,000 a head. That's what I meant. Sure you may be higher one year than another but the average is the average and my point was I'm paying for lots of people who pay little to none towards their healthcare. Sure they may be disadvantaged etc. Hey, maybe they're not.

My point is don't DARE say I don't pay my fair share (NDP and Liberals both said this in the recent elections). Because if I leave, and take my income with me who pays then? The problem with socialism, either mild or strong, is that you eventually run out of other people's money as Thatcher quipped. Same goes for a really aggressive view of the wealthy in tax drunk governments. Those people will leave, taking their tax flows with them.

My other point on health care was that if someone is arguing for a user tax on things like electric cars or gas cars, we should be careful because it turns into a discussion of where you draw the line. What if someone who isn't super fortunate doesn't have kids...yet they're subsidizing those who do with their taxes and property taxes going towards education. There's a systemic benefit to having an educated people...however does some poor bugger with no kids and not a ton of income really get his or her monies worth when they have no children but are kicking in a couple grand a year for it? Better yet why are we paying for religious schools when a good number of us are atheists? I like the user tax system in theory.

There's a good argument for everything...everything except government leaders preaching to me that I don't pay my fair share or that they're making me pay 'a little more' because I don't pay my fair share. The government makes more money than I do for each dollar I earn when I go to work. Think about that. It's crippling.

 

[TrevTremaine]

OILMAN, thanks for making me aware of your thread. If there was a way to delete mine, I would. It should be interesting to see what happens with the tax regardless.