I refer to it as a “desperate loose-tongue promise” because this referendum is unusual in light of the years of B.C. Liberal rule, or the way Clark usually governs. While the premier wants to demolish the George Massey Tunnel and replace it with a bridge in Richmond, she did not include this in the transit and transportation referendum. Why? When she wants to spend $10 billion to build Site C, the most expensive and controversial construction project in this province, why did she not consult us by way of a referendum?
Premier Clark’s loose-tongue promise was being treated as the golden rule, whereas the governing party kept a distance from it. When the plebiscite was launched, the transportation minister stressed in the media that the Liberal government was standing on neutral ground, whereas the Opposition teamed up with the mayors to lead a campaign to support the transit and transportation improvement plan. It is indeed intriguing that the governing party abandoned its role to support a government initiative, unless they saw this as a lost cause.
Since there are a lot of discussions on why the referendum has failed, I am going to skip the cause. My interest is in providing a Plan B that could raise funds for transit and transportation improvements and yet would be supported by the public.
My proposition is the government should bring in a super-luxury vehicle surtax.
B.C. has been collecting a surtax on luxury vehicles since the ’90s. The current practice is this: if a vehicle costs over $57,000, the provincial government will charge an extra three percent tax. If we could add a new category for super-luxury vehicles, say set the bar at $80,000, that would fetch considerable new tax revenue.
People might notice nowadays that more and more super-luxury vehicles are rolling down the streets, be they Porsche, Maserati, Bentley, Austin Martin, Ferrari, or the price-unlisted Lamborghini. If you live in Vancouver and Richmond, you can see these cars every day. Sometimes you may even see an N plate hanging in the back of the vehicle.
I once wanted to find out how much a Ferrari or Lamborghini costs in Canada, but I couldn’t find the list prices on the dealers’ websites. All I could find on the web were two 2008 used Lamborghinis and the listed price was over $200,000. Well, if a seven-year-old used car costs over $200K, what do you think a new Lamborghini would cost?
In a capitalist and democratic society, everyone has the freedom to choose and drive the vehicle they like. In an advanced civilized society, the government often has a progressive tax system (i.e. low-income earners pay less while the wealthy pay a higher tax rate). Our income tax system is like that, so tax on vehicles should be like that too.
According to recent consumer studies, B.C.’s sale of luxury vehicles topped the country in 2014; it was 41 percent over the national market-share average. For super-luxury vehicles, B.C. was 69 percent over the national average!
For the wealthy folks from China and Hong Kong, driving a super-luxury vehicle in Canada is a bargain. In Hong Kong, when the government collects a first-time registration tax on new vehicles, the tax for the first HK$150,000 (i.e. around $24,000 Canadian) is 40 percent, then 75 percent for HK$200,000, and for a vehicle valued over HK$500,000 (around $80,000 Canadian), the tax rate is 115 percent. In China, driving those super-luxury vehicles is even more expensive.
So that is why there are these super-luxury vehicles on the streets of Greater Vancouver. Not only are the owners wealthy, it’s a real bargain for them here in Canada.
In B.C., a 12 percent sales tax plus three percent luxury vehicle surtax means there is still quite a bit of room to move up. If the province implements a five to eight percent super-luxury vehicle surtax, the revenue collected should be able to cover the 0.5 percent sales tax that was rejected.
If merely collecting a surtax on purchases is not sustainable enough, the government could consider adding a super-luxury vehicle surcharge to auto insurance. Then there would be more funds for public transportation.
For the general public, the super-luxury vehicle surtax has no effect on their wallets. To those who can afford it, the extra tax is merely small change and it’s still a great bargain to drive these magnificent automobiles. Perhaps their extra financial contribution to our public transit system could earn them some respect.