Canada’s luxury tax proposal could hit top-end EVs

If Justin Trudeau’s Liberals introduce a 10% ‘luxury’ tax on cars, boats and aircraft exceeding C$100,000 it would hit the higher end EVs and could slow their adoption and development.

The Liberals’ proposal during the last federal election is intended to get the wealthiest Canadians to pay a bit more.

The suggestion has angered luxury dealerships across Canada, but some experts are also warning it could negatively impact the EV market.

Several popular EVs, including Tesla and Porsche Taycan models, exceed the tax threshold.

Scotiabank Luxury Auto Sales in Canada report co-author Rebekah Young says Scotiabank is concerned about taxing higher end EVs because it could slow adoption and EV development, the Financial Post reports.

She says a combination of the incentive is needed to get demand going but the cost also needs to come down, adding vehicle dealers and auto manufacturers could suffer from the effects, which may see consumers redirect their purchases outside of Canada or price-planning by manufacturers to come in just under the tax.

Young points to Australia’s luxury car tax, which has been a barrier in trade negotiations with Europe.

BMW Group Canada, Global Automakers of Canada and the Canadian Automobile Dealers Association are also concerned about the proposed luxury tax’s impacts, the Financial Post adds.