Graham Hugill bought a used truck from his neighbour in 150 Mile House for $35,000 and was shocked when he went to insure it when the agent told him he would have to pay an additional $5,669.80 in provincial sales tax to have that vehicle registered.
The NDP provincial government introduced a new policy which took effect Oct. 1 which states that provincial tax for any car sold in a private sale or imported from beyond the B.C. border will be determined by that vehicle’s Canadian Black Book value. Before the new law took effect, the 12 per cent PST on a private vehicle purchase was based on the actual purchase price.
In Hugill’s case, the book value of the truck is $47,240, $12,240 higher than what he actually paid for it. It doesn’t matter what the purchase price is, the government will collect its 12 per cent on whatever the higher value is on each vehicle. So for Hugill, instead of paying $4,200 in tax, he will have to pay $5,669.80, a difference of $1,468.80.
The seller had originally listed the 2015 Ford F-350 crew cab pickup for $42,000 or best offer and he dropped it to $38,000. The truck has 230,000 kilometres on it and came with additional air bags and winter tires, which Hugill did not need, and the owner agreed to sell it to him for $35,000.
Hugill, who requires the truck for his business, went to his bank to get a draft for $30,000 and took the other $5,000 out of his business account and paid for the vehicle on Monday. Still dumbfounded by the new tax policy, he hasn’t registered it yet.
“It’s double-jeopardy,” said the 60-year-old Hugill. “The taxes have already been paid on that vehicle and the guy who sold it to me was the second owner so he also paid the tax on it. Now they’re taking more tax from me.
“They’re stealing from us with this latest tax grab and I don’t think enough people in B.C. realize what they’re doing. it’s theft. I want to get a petition going to put a stop to it. The government works for us, we don’t work for them. We shouldn’t let them get away with it. It’s time for the people of B.C. to stand up to this government. When are they going to stop taking and taking from us."
Hugill has started an online petition.
The new rules do not apply if the vehicle is bought from a licenced motor vehicle dealer, nor do they apply to vehicles modified for disabled passengers. The higher book-price tax also will not apply on vehicles obtained where a trade-in was applied to the purchase price of the vehicle on a dealer’s lot.
The PST rate for passenger vehicles purchased in a private sale or received as a taxable gift ranges from 12 per cent (vehicles less than $55,000) to 20 per cent (vehicles $150,000 or over).
For passenger vehicles bought from a GST registered dealer, received as a gift from a GST registrant, imported into Canada or leased, the PST ranges from seven per cent ($55,000 or less) to 20 per cent (more than $150,000)
More details about the new rates are on the ICBC website.
A purchaser who believes the vehicle is not worth book value because it needs repairs or is otherwise damaged or deficient can obtain an appraisal from a licenced motor dealer and present a completed form to an ICBC agent, which would reduce the tax. Vehicle appraisals cost between $150 and $350 and must be filed within 30 days of the purchase.
The cost of used vehicles climbed significantly during the pandemic when supply-chain issues resulted in microchip shortages and reduced production of new vehicles, and used prices remain high.
BC Liberal Finance Critic Peter Milobar introduced legislation in a private member’s bill on Oct. 31 to make used-car purchases more affordable. The Provincial Sales Tax (Used Passenger Vehicles) Amendment Act, 2022 would provide purchasers a PST exemption on any used vehicle that costs less than $20,000 and has at least 6,000 kilometres on the odometer. It would provide up to $2,400 in tax relief to especially help middle- and low-income wage earners in the province already hit with skyrocketing costs for food, gas and accommodations.
Prince George-Valemount MLA Shirley Bond says the government has ignored the bill and has given no indication it will change its used car taxation policy to reflect the harsh economic realities many people are now facing.
“We are very opposed to the move that the government made to tax a used car purchase on book value rather than what you paid for it,” said Bond. ”As a time when life is particularly unaffordable, adding additional taxes to a vehicle that’s already been taxed once or twice already isn’t appropriate.
“This is a government that promised life would be more affordable, that was their big election promise over and over again. Instead, they’re taxing British Columbians on a used vehicle purchase, so if you manage to make a good deal, you are now being penalized for that and having to pay the book value.”
Bond pointed to the MNP Consumer Debt Index, which estimates 42 per cent of British Columbians are less than $200 away from insolvency at the end of each month.
“If you add a tax like this on top of inflation and all of the challenges people are facing, it just shows you how out of touch they are with the struggles that British Columbians are facing,” said Bond. “This is our NDP government looking a revenue source and that is taxpayers’ pockets.”