Four days after the NDP formed government in B.C., the Liberal opposition went on the attack over ICBC.
It’s the duty of the loyal opposition to scrutinize the governing party but such a rush to question is over the top.
After 16 long years in government, the B.C. Liberals should have a better knowledge of the financial situation of ICBC than the incoming party.
In fact, it is the B.C. Liberal party that is responsible for the mess.
Treating ICBC as an automatic teller machine is a widely known reason but there are other political decisions contributing to the present deficit.
The recent move to cut off luxury vehicle insurance coverage and give it to private issuers is one example.
The B.C. Liberals cited expensive repair costs as the cause but it is, in fact, due to collusion with the private sector. It was a betrayal of public interest.
The prime objective of doing business is to make profit. If insuring luxury vehicle is a money-losing business, who would take it?
The truth might very well just be the opposite.
The B.C. Liberals removed a profitable part of ICBC and gave it to private insurers. That would certainly impact the financial well-being of the ICBC.
Even if repairing these luxury vehicles is more costly, ICBC could simply increase the rate for those driving a Lamborghini or a Ferrari.
If we look further, the B.C. Liberals got into power in 2001 with the mandate to privatize ICBC but their appointed CEO decided not to, following a “core services review” of the Crown corporation in 2003.
The Socred government opened up the “optional” portion (pay-for repairs) to private businesses, leaving basic insurance coverage for injuries to ICBC.
The profit from private businesses selling optional auto insurance is actually a cut from ICBC. If the profit and surplus were left with the Crown corporation, its financial status would be much healthier.
The B.C, Liberals have raised the thresholds of the province’s luxury vehicle surtax many times, resulting in lost revenue.
The New Car Dealers Association is the third largest political donor to the B.C. Liberal party, with more than $1.3 million contributed since 2005. This doesn’t look like a coincidence.
In order to generate new revenue, B.C. can bring in a super-luxury vehicle surtax. Currently, there is a three percent luxury surtax for vehicle valued over $57,000.
The province could add two levels at $80,000 and $120,000 for super-luxury vehicles and bring in considerable tax revenue.
The progressive aspect of our personal income tax could also be applied to vehicle purchases.
For 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.
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.
The current three percent luxury surtax is insignificant.
If a resident wants to sell his or her used vehicle directly without going through an auto dealer, the provincial sales tax is 12 percent. That is a higher provincial tax than purchasing a Ferrari from a car dealer where the provincial tax is 10 percent.
According to ICBC, B.C. has about 3,000 vehicles valued at more than $150,000; that is a 30 percent increase from three years ago.
In 2016, about 500 luxury vehicles valued at more than $150,000 were sold in B.C. The listed price for a McLaren 675LT is almost $750,000.
In 2014, B.C. sold 69 percent more super-luxury vehicles per capita than the national average.
There are ways to strengthen the financial well-being of ICBC without drastically raising insurance premiums of general ratepayers.More