Re: Tax on private automobile sales in B.C.
This was initially proposed in February 2022 to the people of B.C. to combat the supposed lack of tax of collected on private sales,
As an example, previously a vehicle was purchased for $1,500. The transfer form states $500 was paid for the vehicle. Tax was collected on the $500. The province now charges black book value at 12 per cent.
B.C. Finance Minister Selina Robertson has stated: “We are following what other provinces are doing.” The only other province I could find that does this is Manitoba, but why is there tax on private automobile sales?
Manitoba has an eight per cent provincial retail sales tax (PST) that applies to all used car purchases and is either paid to the dealer or, if you buy privately, to Autopac, the province's motor vehicle insurer. (Add the five per cent GST when buying from a dealer.)
With that said, I recently purchased a used vehicle for less than market value. After making the deal, the owner and myself attended an insurance office in Kamloops to finalize the sale. After the e-transfer was completed, so was the paperwork, and this is where the problem starts.
Upon the start of registering the purchased vehicle, I was informed that my tax amount would be based on $11,000. The insurance agent informed me that this was black book price, which BC states is 12 per cent taxable amount.
I opted not to register my purchase at that point and purchased a non-registered TOP (Temporary Operation Permit) to get it home from Kamloops to Salmon Arm. This was on Oct 22.
I reached out to ICBC's head office in North Vancouver to inquire on the recent changes that were first announced in February 2022. I called the head office several times and each time I was given different information as to the "book value".
I also reached out to several insurance offices and was again given conflicting information. One office I called said my purchase was valued between $8,300 and $10,700.
Another could not find my purchase on the black book site and said just come in, pay tax on the purchase price. The last office I reached said the black book values my purchase at $13,500 based on the VIN assuming it was in pristine condition.
The books do not take into account inflation rates, geographic location or vehicle condition.
I decided to search the Canadian Black Book myself and found my purchase was valued at $3,660.00 - $4,120.00
In Canada we have four books for estimated value of used vehicles: Kelly Blue Book, Canadian Black Book, Edmunds Book and Canadian Red Book.
I was told I can have an appraisal done at my cost ($150-$350) and submit it to ICBC but, if the appraisal is higher than book-stated value, I pay on the higher value.
The truck I bought was advertised for $3,000 obo. I bought the truck for $2,100 after negotiating the price, knowing I would have to do some repairs. Most are now done at a cost of approximately $1,800.
I bought this truck because my previous vehicle was needing repairs which would have cost more money than purchasing a used vehicle. This truck fit my budget.
For the past two years we have been locked down, lost jobs, lost livelihoods and struggled with the cost of living. During this time there were many vehicles given back to banks or sold to pay bills.
Private sales are the way to go as we get back on our feet.
This new tax law is a slap in the face. With an already struggling working class, overinflated gas prices, increased food costs and living expenses the LAST thing we need is an unjust tax on all private vehicle buyers.
The few that cheat the system is where the focus should be, not on every private buyer. ICBC made $2.1 billion in 2021 during the pandemic. It is a monopoly insurance provider and has been since being founded by the Liberal government in 1974.
To rectify and make tax on used cars more acceptable they should look at other options.
Have a minimum sale price. Any vehicle sold in BC for less than $1,500 will require a provincial inspection at the buyer’s expense prior to registering. Have these private sales verified at an insurance office. Audit suspected false car sale prices. If sold for less than market value an appraisal is to be done and brought to an insurance office at the time of registration and offer additional insurance to cover appraisal value . These small simple steps will help combat private sales tax fraud.
The average annual prices for insurance (by province) are:
British Columbia - average cost $1,832 per year, provided by government-operated insurance group, and is extremely limited to private coverage.
Ontario - average cost $1,528 per year, provided by privately-owned insurance companies.
Alberta - $1,316 per year, provided by privately-owned insurance companies.
Saskatchewan - average cost $1,233 per year, provided by government-operated insurance group.
Newfoundland and Labrador - average cost $1,168 per year, provided by privately-owned car insurance companies.
Manitoba -cost of $1,140 per year, provided by government-operated insurance group, no private Insurance options.
Nova Scotia - average cost $891 per year provided by privately-owned insurance companies, no government-provided car insurance.
New Brunswick - average cost $876 per year provided by privately-owned insurance companies.
Prince Edward Island - average cost $861.
Quebec - average cost $717 per year, making it the cheapest province on the list. Insurance is provided by a government operated organization, but drivers can also mix this coverage with privately-offered insurance.
As you can see, there is a vast difference between the provinces at the opposite ends of the list. The average price of car coverage in Quebec is less than half of the average cost in British Columbia, which has the highest taxes, highest insurance rates, highest rents and one of the highest costs of living in the country.
There is no absolute guaranteed solution to this problem but overtaxing 3.5 million drivers is not the right way to do it (3.5 million drivers, including yourself, will at one time buy a private vehicle).
I think of the new drivers buying their first car only to get it home and not be able to register or insure it, the student that is struggling with a part-time job, full-time studies and can only afford the $1,200 car that ICBC says is worth $5000, or a single parent with a part time job who needs transportation but again can't afford the book value tax on a private sale.
My truck that I bought in October now sits in my driveway unregistered and uninsured because of this new tax law. I now call it my ICBC $11,000 paperweight.
After all, the BC government has already received both GST and PST on the original sale of the vehicle. They are receiving tax again on each private sale.
With this new tax, I can see more uninsured vehicles on our roads.
This action by the finance minister at a time we are just getting back onto our feet is not a solution to the problem. It will compound the problem. It is unjust unethical action on the people of BC. It needs to be removed and reviewed or even put out to the people of BC so we are part of the solution.