The PST on private sales of used cars, boats and airplanes goes up to 12 per cent on July 1. (CBC)

The provincial government may be fuelling the black market with a tax increase on private sales of cars, boats and airplanes that comes into effect July 1, the B.C. NDP says.

The B.C. government already charges the seven-per-cent provincial sales tax (PST) on private vehicle sales and had planned to keep it there, according to its September 2009 budget.

Sales of used vehicles, boats and aircraft by dealers will rise to 12 per cent when the new harmonized sales tax (HST) — which combines the PST and the five-per-cent federal goods and services tax (GST) — goes into effect July 1.

'The minister didn't want to put that front and centre'— B.C. NDP finance critic Bruce Ralston

But the B.C. government now plans to raise the PST on private sales of automobiles, boats and cars to 12 per cent the same day as the HST goes into effect.

Charging a higher tax on sales of used cars by private individuals will level the playing field, B.C. Finance Minister Colin Hansen said.

"The tax that's applied to the sale of used vehicles will be the same, whether you purchase it from a used car dealer or whether you purchase it from a private individual," Hansen said.

Extra revenue

Over the next two years, the government expects to generate about $120 million in extra revenue from the increased tax.

The opposition claimed the government tried to fly the tax increase under the public radar in the March 2 budget by mentioning it on page 80 of the budget document.

"The minister didn't want to put that front and centre, given his claim that the HST isn't a tax grab from British Columbians," said NDP finance critic Bruce Ralston.

The higher tax will hit those who cannot afford to buy new cars and that could fuel the black market in vehicles, Ralston said.

Hansen said he never made any secret of his plan to raise the tax, noting that he mentioned the plan in his budget speech in the legislature.

The opposition and the news media only picked up on the tax change on Thursday, Hansen said.