BC Liberals calling for PST cut on used vehicles

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BC Liberals calling for PST cut on used vehicles
WATCH: Most would agree that the cost of living is becoming too high these days, but what's up for debate is how to address it. B.C.’s official opposition is arguing the province should get rid of PST on used car sales for lower end vehicles. As Megan Turcato reports, the idea is getting a mixed reaction in the Okanagan – Nov 1, 2022

Most would agree that the cost of living in B.C. is becoming too high, but what’s up for debate is how to address it.

B.C.’s official opposition is arguing the province should get rid of PST on used car sales for lower-end vehicles.

“As British Columbians face a worsening cost of living crisis people are looking to their leaders for relief,” said Liberal finance critic Peter Milobar in the legislature on Monday as he introduced a private members bill that would eliminate the PST on used vehicles that cost under $20,000.

“As everything from gas to groceries to housing gets more expensive, we must take steps to finally provide real, tangible support to the millions of British Columbians who are struggling to make ends meet,” Milobar said.

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The ideal will likely be appealing to many of those in the market for a used car.

Kim Radbourne in Vernon said she supports the idea because she recently purchased a $5,000 used car and was surprised by the additional cost.

“I think it is a good idea for under $20,000 because really a car that is under $20,000 you are probably getting something that is not very new anymore and coming with its own problems that you will need to fix anyways,” said Radbourne.

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However, associate professor of economics at UBC Okanagan Ross Hickey believes cutting the PST on lower-end used vehicles would not be the best tax policy or do much to address the cost of living.

“It is a drop in the bucket in terms of people’s expenditures. It is only going to affect some people — those who are purchasing a used vehicle — so I don’t think it is a good targeted approach to dealing with cost of living,” said Hickey.

“If we think there is a problem with the cost of living, that costs are getting too high relative to incomes, that is really an income problem. If people need more income, we should try to have policies that address that as opposed to reducing the price of one particular good.”

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What Hickey is happy about is seeing a conversation about the PST back in the public discourse.

But he would like the government go much further than the current BC Liberal proposal and scrap the PST on all goods and services.

“The PST is a retail sales tax, which means that it is a cascading tax — the tax accumulates in the prices of final goods because the inputs of final goods were also taxed by the PST,” explained Hickey.

“A value-added tax (like the GST and our long lost HST) provided retailers with rebates, which allowed prices to decrease as retailers could recover taxes paid on inputs as opposed to passing them on to consumers. A retail sales tax is terrible because it has consumers paying tax on the tax paid by the retailers!”

For its part, the finance ministry is defending its current approach to vehicle taxation and cost of living issues.

“Our government has taken significant steps to reduce costs for drivers, including fixing the old government’s mess at ICBC and lowering car insurance rates. We’re going to continue to reduce costs for people,” Minister of Finance Selina Robinson said in a written statement provided to Global News.


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