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The Canadian government’s luxury tax on new recreational boats valued above $250,000 could negatively impact boat sales by as much as $32.7 to $102.9 million, a new report says. The tax went into effect Sept. 1, 2022

The National Marine Manufacturers Association Canada in 2021 released a report by Mintz and O’Riordan that concluded the tax would lead to $90.5 million in reduced vessel sales and the loss of 896 jobs with the potential for 3,670 lost jobs in the sector.

An economic analysis that was conducted by Jack Mintz, Ph.D. in conjunction with Fred O’Riordan at EY Canada, found that “the tax will collect little revenue while threatening middle-class jobs.”

The Canadian Department of Finance did its own study on the economic impacts of the luxury tax. In a statement, the department said, “The study predicts a severe drop in sales revenue and hundreds of job losses from the federal luxury tax on new boats, airplanes and cars.”

“We’re not surprised by the findings of the finance study,” NMMA Canada interim executive director Jim Wieglosz said in the statement. “It lines up with what we’ve been hearing from marine businesses across Canada, who have reported millions of dollars in sales losses and dozens of jobs destroyed. That’s just barely half a year after the tax was introduced.”

The government study findings include:

· The direct recreational boating sector will sustain 30% to 44% of job losses, which translates to between 70 and 220 full-time jobs, while making up 21% of luxury tax revenues.

· New boat sales losses will amount to between $33 million and $103 million or 1.84% to 5.81% of total domestic sales.

· When factoring in direct and indirect economic impacts, the boating industry could see GDP losses between $17.6 million and $55 million and job losses between 127 and 410.

· Canada’s Parliamentary Budget Officer also put out a costing note that estimated $2.9 billion in lost sales over five years because of the tax. The boating industry could take up to 75% of that hit. Through an ongoing survey by Canada’s Marine Trade associations, the latest data shows $277 million in lost sales and more than 100 job losses.