Used electric-battery cars in BC to be exempt from PST starting this week

As the newest measure to encourage more BC drivers to switch to electric-battery vehicles, the provincial government is removing the provincial sales tax (PST) from the growing segment of car sales that are from used zero-emission vehicles.

The exemption on PST applies to both zero-emission vehicles sold by car dealers and the private sales of such used vehicles that have been driven for at least 6,000 km.

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This new policy begins on February 23, 2022, but it does have an end date after five years, expiring on February 22, 2027.

Additionally, the provincial government has increased its passenger vehicle surtax threshold for zero-emission vehicles from $55,000 to $75,000. This is intended to address the greater acquisition cost of an electric-battery vehicle compared to a conventional gas vehicle, which is generally cheaper.

According to the provincial government, zero-emission vehicle ownership is currently greatest among households with annual incomes of over $150,000, given the higher initial cost of buying an electric-battery vehicle.

As part of BC’s 2022 budget, the new taxation policies for zero-emission vehicles will reduce the provincial government’s potential PST revenues from such sales by $2 million in the 2021/2022 fiscal year, which is about to end, and $21 million in 2022/2023 and by $29 million in 2023/2024.

Changes to the passenger vehicle surtax threshold for zero-emission vehicles will also drop potential PST revenues by $12 million in 2022/2023 and $15 million in 2023/2024.

Based on the most recent statistics, 9.4% of BC’s new car sales in 2020 were electric-battery models, which is a level that is increasing at a faster pace than originally forecaste. In response, in October 2021, the provincial government created more ambitious targets, with 100% zero-emission vehicle sales now set to begin in 2035 instead of 2040. The federal government has also set a 2035 target.

The 2022 budget also outlines a range of other climate action-related policies, including exempting the PST from heat pump systems, which are electric and can heat or cool buildings or water by moving heat between indoor and outdoor spaces.

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• 100% electric vehicles by 2035, carbon tax hike in BC's revised climate plan
• Expect "pent-up demand" to buy electric cars over the coming years: BC Hydro
• 9.4% of BC's new car sales in 2020 were electric models
• Federal government to ban sale of new gas cars in 2035
• City of Vancouver considering requiring energy-efficient heating for existing houses