New car dealers play a significant role in driving the economy at the local and provincial level, and the Association provided a submission to the BC Standing Committee on Finance’s pre-budget consultations last week with three specific recommendations that will help consumers, the economy, and the environment.
According to a study by MNP LLP entitled The Economic Impacts of Members of the New Car Dealers Association of BC, our sector generates $15.6 billion in retail activity each year and $260 million of direct tax revenue and $610 million of total tax revenue for all three levels of government – along with an estimated $1.2 billion in total tax revenue to all levels of government when factoring in the federal and provincial sales taxes paid by consumers on purchases of new cars. New car dealers represented 17% of total retail sales in BC in 2021. On the employment front, the study finds the new car dealers are responsible for almost 27,000 full time equivalent (FTEs) of family supporting jobs in BC, including 18,000 FTEs at the direct level – in the 55 communities where new car dealers operate.
As part of our submission, we highlighted three issues that are of primary concern:
- The BC Luxury Tax on vehicles kicks in at a $55,000 purchase price but hasn’t been adjusted for inflation for many years. As a result, many standard vehicles of today, are captured by the tax, including vans and larger SUVs that families rely on to shuttle their children around – and pickup trucks that are required by many businesses, and individuals, such as those who live and work in resource communities. This presents another layer of taxation on BC residents who already face considerable cost of living challenges.
The NCDA is recommending the Luxury Tax threshold be raised and eliminated over time because of the present impact and the fact that the average price of a new vehicle in Canada reached over $54,000 in May, only slightly below the present luxury tax threshold. Its time to fix this.
Further compounding the issue is the pending introduction of a federal luxury tax in September that will create a double-tax for consumers, while also putting BC companies and family-supporting jobs at risk.
- The BC automobile sector faces a critical labour shortage, with industry projecting the need for 20,000 workers over the next decade. The NCDA currently works with the Industry Training Authority (soon to be SkilledTradesBC), WorkBC and other labour agencies, recommending that continued funding to support apprentice and jobs training programs are critical to the industry and consumers.
- The NCDA is also recommending an ongoing funding commitment to support the CleanBC Go Electric vehicle purchase rebate program along with key investments in critical charging infrastructure where people live, work and play. The NCDA is proud to administer the rebate program on behalf of the provincial government, through which BC has taken a leadership role in zero emission vehicle (ZEV) adoption in North America. Despite the pandemic and supply chain issues, more than 18,000 rebate transactions were processed last year. Today, there are more than 70,000 ZEVs travelling our highways and in the first quarter of 2022, more than 17% of new vehicle sales were ZEVs.
This BC government has proven to be a valuable partner and our submission is focused on building on areas in which we have enjoyed collective success, while also ensuring we are identifying areas that require attention because of their impact on consumers and the economy.
Our members want to be part of the solution by keeping the economy moving in the right direction. Our recommendations will help encourage consumer spending, job growth, ZEV adoption, while supporting skills-training which is central to future success for our sector, the broader economy, but also in the lives of a new generation of young people who are exploring career opportunities.
Blair Qualey is President and CEO of the New Car Dealers Association of BC. You can email him at [email protected].