New luxury yacht tax in Canada

[kent_island_sailor]

I worked in the biz when that happened. Thanks Mr. Bush for signking that one in (not).  30,000 jobs in NJ alone. Multpiple longstanding US boatbuilders went bankrupt and were then bought up by foreign interests. That's where all the Italian and other yards came into the U.S. yacht biz.

The revenue hit to many shops in Annapolis was something like 60-75%

 

[kent_island_sailor]

Oh yeah, we best stick with soaking the working poor. 

It's what we know best. 

(Much of the above is Reich Wing mythology every bit as implausible as the 

assertion that Barney Frank caused the 2008 melt-down.) 

You do not have a clue WTF you are talking about. I was in the business back then and it resulted in the layoff of 3/4s of the blue collar working people at our shop and many others. The rich people got along regardless, the working class were the ones that got a royal screwing. That tax hardly even collected anything, people bought used boats or registered them in the Caymans or just kept their boats. It was a money LOSER for the government and put many a working man out on the street.

 

[robalex117]

The US has ya beat six ways from Sunday. 

We lose an est. $ ONE TRILLION per year to tax cheats. 

I agree.  I think we should change our tax system to be split between a flat tax and a vat tax.  So if before the income tax collected $100 via income, you would collect $50 via flat tax and $50 via a vat.  That would keep everybody paying especially the cash economy.  Rates would need to be set to be revenue neutral.  Certain incomes lets say under $40,000 would be except from the flat income tax.  

 

[Ease the sheet.]

You do not have a clue WTF you are talking about. I was in the business back then and it resulted in the layoff of 3/4s of the blue collar working people at our shop and many others. The rich people got along regardless, the working class were the ones that got a royal screwing. That tax hardly even collected anything, people bought used boats or registered them in the Caymans or just kept their boats. It was a money LOSER for the government and put many a working man out on the street.

Maybe taxing income is more progressive than taxing consumption?

 

[fastyacht]

Maybe taxing income is more progressive than taxing consumption?

The advantage is its effect on economic interaction is essentially neutral.

Suddenly taxing one type of consumption over another is fundamentally NOT about tax revenue it is punishment. Yet the morons on the political class fuck it up over and over and misunferstand who is veing punished.

Tarriffs very much same dynamic (with some signif diffs too ... Realpolitik)

 

[fastyacht]

What is especially egregious about luxury tax is that it ALWAYS punishes the snot out of small businesses that are actually home grown. Every time they happen the big Internationalists (both the commies as well as the capitalists) say, "YES!"

 

[Sail4beer]

Our luxury tax had the luxury of destroying many New Jersey Boat builders for sure. I was supposed to learn the trade at the exact time they all shut down. It sucked.

 

[fastyacht]

Our luxury tax had the luxury of destroying many New Jersey Boat builders for sure. I was supposed to learn the trade at the exact time they all shut down. It sucked.

I went off and built little racing dinghies.

Note that Genmar and Brunswick were unaffected...fucking pols only listen to major corporate.

Palmer Johnson, Burger, Bertram, Egg Harbor, Trojan, the list of US companies adversely affected and or ultimately bought by foreign interests is long.

It had a profound ever lasting effect. This is what politicians do...fuck it up at taxpayer expense.

 

[Sail4beer]

Yep, and here I get to be surrounded by a dearth of opportunity in the marine trade as a result. Silverton and Luhrs are just 2 of the local builders who let their workforce go in the 90’s. Somehow Henriques survived and built many sport fishing boats.  
If something is too good to be true, politicians will tax it until it fails. Now I’m stuck repairing boats instead of building them :angry:

 

[fastyacht]

All politicians r or b are pieces of mouldering dogshit.

In voting it is best to think about which shit smells worse and sticks to your soles more.

Make no mistake though: either way you are going to be into the shit.

 

[fastyacht]

Bush ended his political career on it.

Politicos have zero forethought. Reaction of owners was, "this tax will not last. I will wait to buy my new boat."

So that was that...

I cannot say it strongly enough: fucking with consumption side taxes does more harm than good. I am not even sure tobacco tax worked. Think about it: gubmint came to depend on that revenue!!!!!

 

[Caliente]

Sadly at this point the US government is not funding its expenditures with taxes, rather with an artificial economy based on zero percent interest rates and printing money. Covid has been at best a fortuitous excuse for the printing which was going to happen anyway and also served to dramatically slow the velocity of money. 

Taxation is now just being used for social engineering as the debt cycle ends. It is a sad thing to see the nature of government seems to be the abuse of power and management of resources. Realize also that printing money is a form of "silent" taxation that steals wealth primarily from the middle and lower class through the debauchment of the currency. This statement is based on what Keynes himself said of excessive "stimulus." 

The Canadian announcement of this luxury tax is just Kabuki theater. 

 

[fastyacht]

All Fiat Currencies End Badly.

I vote for large stone currency.

 

[basketcase]

Optics.
Because we as a people vote emotionally, rather than logically, everything becomes about appearances, rather than substance.
Along with that we get absolutely nothing accomplished, but we look damn good doing it.

The Luxury Tax in the US, which if I recall correctly was anything over $100K, absolutely crushed the marine industry in North America.

fify.

 i was working for a Canadian builder at the time. we only barely made it through because we were building a good, unique yacht.

 

[Parma]

easy way to get around it - buy a used boat (if you can find one these days).  Or as mentioned, the superyacht crowd will just keep the boat offshore.  Folks already do that now - they have a beater on the lakes and keep something nice down south or in Florida.  

I don't think that's the way it works. I think the tax is on the object (plane, boat, car or whatever) regardless of the age of the object. If it's in Canada it will get taxed. If the owner is a foreign corporation there will be a "use tax" which becomes due a certain amount of time after when the object first entered Canada.

What will be interesting will be the "one time only" aspect of the tax: will dealers (of planes, boats cars or whatever) get to defer the tax until the object is sold or will they be immediately taxed on their existing inventory. I think that maybe this is what "Eastern Motors" was referring to above  when he alluded to the concept of buyers becoming dealers and thereby deferring the tax but that would be predicated upon a tax deferment option being included in the legislation.

Are there any Canadian airlines, cruise lines or F1/NASCAR teams?

 

[El Borracho]

"Jack up the gas cap. Replace the car." I wonder if clever yachties can buy some derelict and do a restoration ... in carbon ... 20 feet longer ...

 

[steele]

In my state in US there is a yearly excise tax on boats, so you pay sales tax up front, then every year after. This is separate from licensing fees, which are steep. The local government is now proposing to double the yearly tax on all boats, even boats on trailers that also have to pay a yearly road tax. There is no similar tax on RVs or other luxury vehicles. We have a robust marine industry that employs a lot of individuals. As the costs of boats go up, less people will keep them, this is true of any consumer product. Not only will the local economy struggle, but I suspect the loss tax revenue from sales etc could result in a net loss for the tax collector.

 

[SailingTips.Ca]

The government just announced a new tax of 20% of the retail price of a yacht over and above $250,000.  So anyone buying a $1 million yacht will pay an extra $150,000.    Thankfully, it's not something I'll ever have to worry about.

For further context, I believe it was part of the federal budget presented to the House of Commons yesterday.

It still needs to be voted on and hasn't actually passed yet. 

 

[Rain Man]

The upside is that there's no yacht building industry left in Canada to be affected by this - the last time they applied this strategy killed them all off.

Dare I say it:  if this is how to kill a manufacturing industry, maybe a 100% tax should be applied to gunz?

 

[AJ Oliver]

Article below about the 1990ish luxury tax - 

there was a recession at that time as well . . 

Hmmm, if the tax wrecked the boating industry, why did it not also wreck the fur, car, and jewelry industries ?? 

One reason governments wind up taxing luxury goods is that the rich are so good at hiding income 

Further on the relationship between the luxury tax and the decline of the boating industry: correlation is not causation. 

https://www.sun-sentinel.com/news/fl-xpm-1992-07-07-9202180334-story.html