What issue catches fire after a budget can be unpredictable.
That said, Sask. Party strategists should have known full well how combustible their used car tax would be. After all, they campaigned on removing it in 2007.
In the Sask. Party’s 2007 election pamphlet entitled Securing the Future: New Ideas for Saskatchewan, the centrepiece of the Sask. Party’s “new ideas” checklist — which included a $20,000 tuition rebate for grads, lower drug costs for young families, lower property taxes and more nurses and doctors — was the item “No PST on Used Cars.”
Under “benefits” in the 2007 backgrounder paper, the then Sask. Party opposition noted there were “approximately 100,000 vehicles sold in the province” and that “assuming an average taxable sales amount of $9,000 per vehicle,” the Sask. Party plan “will save 100,000 Saskatchewan residents $450, annually.”
The cost to public coffers would be about $45 million a year, but the Sask. Party framed the issue as a matter of “fairness, common sense and reason.”
“Saskatchewan people expect their government to do things that make sense, and taxing the same car over and over every time it is sold just doesn’t make sense,” then opposition leader Brad Wall said in an Oct. 16, 2007 press release.
“A Saskatchewan Party government is committed to fairness and common sense in our tax system and will eliminate this form of double taxation.”
Well, fast-forward to today and Premier Scott Moe’s Sask. Party government is reversing that $45-million annual saving and turning it into a $95-million cost to the public still reeling from the billion-dollar tax-hike hammering it took in last year’s budget.
It was the height of political hypocrisy, and the reaction of people buying used cars and those selling them was one of justifiable outrage. “We’re just going back in time; so we’re paying two taxes on vehicles where tax hasn’t been paid,” Sean Jesse, general manager of Saskatoon’s Village Auto Sales, told the StarPhoenix’s Thia James.
Truer words about this year’s budget have now been spoken — something that even the Sask. Party can’t dispute because “tax on tax” are the Sask. Party’s own words of more than a decade ago. (Remember, then finance minister Rod Gantefoer stated in 2007: “We made a promise to the people of Saskatchewan. We are keeping that promise.”)
This budget initiative last Wednesday means the now-six-per-cent PST (again, you will recall they raised it from five per cent last year) applies to the private or dealer sale of any used registered vehicle worth more than $5,000.
The only ones happy with the move are those selling new cars (coincidentally, business types who are well-connected to a couple of current cabinet ministers), who stand to profit at this new disincentive to buy a second-hand car.
But while the Saskatchewan Automobile Dealers’ Association views this a matter as one of “fairness,” it would seem unlikely anyone would agree that it should be government dictating the sales value of a product they are selling.
Alas, not only is the Sask. Party breaking its 2007 election promise (a promise second only to its balanced-budget legislation), but it’s also defying whatever philosophical principle a conservative-minded government should hold by allowing government to dictate terms of a private commercial transaction.
The application of the PST on used vehicles will be determined by either the “red book” value or the purchase price — whatever is higher, according to the Finance Ministry.
In other words, we now have government deciding if a private sale was fair or not — something that would have caused Brad Wall and the old Sask. Party to go apoplectic had the NDP government ever had such audacity.
Sure, there would likely have been a lot of cars on Kijiji for $4,999.99 had the Sask. Party simply made $5,ooo the cutoff, rather than using the red book value.
But let’s make no mistake, all this has been the of the Sask. Party’s own making.
And let us also understand this is the kind of problem a government gets into when it abandons both its promises and principles.
Mandryk is the political columnist for the Regina Leader-Post.
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