It appears the provincial government wants to curb the purchase of luxury vehicles to help mitigate ICBC’s massive projected losses for the foreseeable future.
In its first budget today, the BC NDP announced new provincial sales tax (PST) rates on high-end vehicles effective April 1, 2018.
This means passenger vehicles with a purchase price of between $125,000 and $149,999 will see an increased PST from 10% to 15%. For vehicles that have a price greater than $150,000, the PST is now even higher at 20% from 10%.
With these tax rates, a 2017 Ferrari 488 GTB priced at $409,995 would cost you an additional $81,999 in PST in a few weeks from now.
There are also new rates in place for private sales, with vehicles priced from $125,000 to $149,999 now facing a 15% PST – up from 12%. And private sales of vehicles priced over $150,000 will see a PST increase from 12% to 20%.
All of these increases apply to both new and used passenger vehicles.
The rising number of luxury cars on BC roads is a contributing factor to the public insurer’s troubled finances. According to ICBC, there are more high-end vehicles in Metro Vancouver than any other urban region in North America.
For instance, the cost to fix a Ferrari or a Lamborghini after a crash could result in a six-figure bill for ICBC, even though the premiums paid by the car owner are not sufficient to cover the insurer’s repair costs.
The hassle of insuring luxury cars was such a problem the previous provincial government wanted to hand off ICBC’s high-end vehicle insurance business to the private sector.
ICBC is forecast to see a $1.3 billion loss for the current fiscal year, followed by consecutive losses of $1.1 billion for 2018-19, $800 million for 2019-20, and $900 million for $2020-21.