British Columbia

B.C. used car buyers furious over provincial tax changes that have them paying more

A new rule means people buying cars in private sales are paying taxes on the list value of used cars, as opposed to the actual sales cost.

Government says regulation change brings B.C. in line with other provinces

Graham Hugill of 150 Mile House, B.C., stands in front of the 2015 Ford F-30 pickup truck he bought in a private transaction. Hugill has started a petition to protest changes to how the provincial government determines how much PST buyers must pay. (Graham Hugill)

Instead of driving the 2008 Dodge Ram pickup truck he purchased in a private sale last month, Chris Lethbridge has it parked, uninsured, at his home in Salmon Arm, B.C.

If the truck gets damaged or stolen, he knows he won't be able to file an insurance claim. Nonetheless, there it sits with no financial protection on it and no additional kilometres rolling on the odometer.

"It's an $11,000 paperweight sitting in my driveway," Lethbridge told CBC's Daybreak South. "And I'm not the only one in the province who's dealing with this."

On Oct. 1, a new provincial regulation around the sale of private vehicles came into effect.

Instead of paying 12 per cent provincial sales tax (PST) on the actual sale price of a vehicle at the time of purchase, buyers must now pay PST at the time of registration — with the tax based on the vehicle's average wholesale value in the Canadian Black Book valuation guide.

That has Lethbridge, and others like him, upset and calling for action.

Lethbridge says he paid $2,100 for his Dodge Ram in a private sale. But when he went to register the vehicle, he was told by the insurance agent it had a Canadian Black Book value of $11,000, and he had to pay PST on that amount.

"I was a little bit dumbfounded," Lethbridge said.

Chris Lethbridge of Salmon Arm, B.C., bought a 2008 Dodge Ram in a private transaction in October and is upset with the provincial government's new rules for paying PST on such purchases. (Chris Lethbridge)

Lethbridge said he obtained a temporary operating permit so he could drive the truck from nearby Kamloops, where he made the purchase, back to Salmon Arm.

With the truck now gathering dust, Lethbridge says he has been trying to find a satisfactory resolution to his situation.

"There has to be a light at the end of the tunnel. There has to be."

Changes bring B.C. in line with other provinces, says government

The provincial government says it made the change to prevent buyers from understating the vehicle purchase price in private transactions and then paying PST on those lower numbers. That loophole, it said, could create an annual PST revenue shortfall of close to $30 million.

Buyers who want to dispute the list value can hire a qualified appraiser to assess their vehicle's value and present the appraisal to the Insurance Corporation of B.C. (ICBC), the provincial auto insurer, at the time of registration.

The guidelines state that if the appraised value and the price paid are both less than the average wholesale value in the Canadian Black Book guide, the amount of PST due is calculated on the greater of the price paid and the appraised value of the vehicle.

Paying for an appraisal, however,  is the responsibility of the buyer.

In an emailed statement to CBC, Finance Minister Selina Robinson says the change brings B.C. "in line with how most other provinces are already administering sales taxes on these vehicles."

Robinson also pointed out the appraisal option available to buyers.

Online petition calls for change

Graham Hugill is also upset with the new regulation.

The resident of 150 Mile House in the B.C. Interior said he bought a 2015 Ford F-350 truck for $35,000 in a private sale. He said he had all the paperwork with him when he went to register the vehicle and was told he had to pay PST based on a Canadian Black Book value of $47,240.

"It's theft, basically, from me," Hugill said.

As is the case with Lethbridge, Hugill has the truck sitting at home, unregistered.

In protest of the new regulation, Hugill has started an online petition. As of Thursday afternoon, it had close to 7,000 signatures.

"I started the petition, because I'm a 60-year-old man, and now I'm getting tired of being taxed to death."

ABOUT THE AUTHOR

Jason Peters is a journalist based in Prince George, B.C., on the territory of the Lheidli T'enneh. He can be reached at jason.peters@cbc.ca.

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