Quebec sales tax going up

The provincial sales tax in Quebec is rising to 9.5 per cent, effective as of Jan 1.
Car dealers in Montreal said customers have been eager to pick up new purchases before the Jan. 1 tax increase. (CBC)

Shoppers have only a few days left to make their purchases before Quebec’s provincial sales tax jumps to 9.5 per cent on Jan. 1.

The one per cent increase may not end up being felt significantly by consumers on everyday purchases, but on big items like cars, it can mean hundreds or thousands of dollars.

"Customers are obviously anxious to pick it up before Dec. 31, so they can save that famous one per cent, " said Sebastian Bourgeois, a salesperson at a Montreal BMW dealership.

"I don’t think it’s producing more sales, I would say, but it is definitely accelerating the process to pick up a new vehicle."

The tax hike is aimed at balancing the province’s budget by 2014.

Carlos Leitao, chief economist for Laurentian Bank, said the small tax hike is a good way for the government to get there.

"I think they are on track to accomplishing that," he said.

The increase will also affect some exchanges at retail stores. If you trade in an item for the same value, you don’t have to pay the extra one per cent, according to Revenue Quebec.

However if you exchange an item for something of a higher value after Jan. 1, the 9.5 per cent sales tax will apply to the difference.

Revenue Quebec said that is the same rule that was applied when tax rates changed in 1994, 1998 and 2011.

Quebec will now have the third highest provincial sales tax in the country.

The government of Nova Scotia collects 10 per cent and P.E.I. collects 10.5 per cent.