February 25, 2022
The provincial sales tax is making life less affordable in British Columbia and lower-income people are getting hit the hardest.
Charging people 12% to buy a used vehicle is especially unfair.
That’s what happened to a young Alberta man who is trying to work as a driver in Vancouver after his hotel job was destroyed by the COVID-19 mess.
But more on his story in a moment.
First, how much money are we talking about and what gets charged the PST?
The government took in more than $7.4 billion in sales tax in 2020-21. The rates vary based on the items, but the PST is usually charged at 7%. The tax hits most stuff sold in B.C., other than basic food and housing.
There is PST on clothing, home heating fuel, and building supplies. There is PST on shoes, internet bills, and vehicle maintenance. Pet food, appliances, and furniture are all nailed with the PST. Building a house in B.C. costs about $19,000 more because of the PST on everything from concrete in the foundation to shingles on the roof, based on the Urban Development Institute.
The province even charges PST on used items, which hits lower-income people especially hard since they’re often trying to save money by purchasing used goods. Whether you go to a big thrift store such as Value Village or a small charity shop to buy clothes, dishes, and a couch for your home, you’re paying a sales tax on things that were already hit with the PST when they were sold the first time.
The worst example of this unfairness is an old car.
Private sales of used cars carry a PST price tag of 12%.
That means someone saving up $10,000 to buy a 2010 Toyota Corolla would need to cough up an extra $1,200 in the PST when they go to register it with ICBC. What about a used vehicle from a family member as a gift? The government might let you off the hook there, maybe. But, if you’re an industrious guy from Alberta and you’re trying to work in B.C., you’re in for a nasty bill.
That’s what happened to Micah Steinke.
Before the pandemic, Steinke worked as a bellhop at a top hotel chain for about 10 years. It helped pay the bills while he was landing roles as an actor in pricey Vancouver. Then COVID-19 hit and everything went upside down. He wasn’t able to work because the tourists stopped coming and the hotel couldn’t keep him on the payroll. To make rent, Steinke decided to drive for a ride-hailing service, but his car wasn’t nice enough. So, his dad back home in Alberta gave him his own car as a gift. It was about nine years old, but up to snuff for the driving company.
“I want to pay my own way, I want to work hard, and I don’t want to depend on government handouts that are paid for by taxpayers,” Steinke told the Taxpayers Federation in an interview.
Imagine Steinke’s shock when he got a PST bill for nearly $3,000 from the B.C. government. The used car was a gift from a close family member. No money changed hands. What gives?