Whereas used vehicle sales are an economical and affordable means of attaining motor vehicle ownership for drivers of all income levels, skills, abilities, and ages, where consideration of the vehicles actual condition, previous use, and costs of functional repairs can be reflected in a final sales price; And whereas the Province has revised how Provincial Sales Tax is calculated on the sale of used vehicles, resulting in a disconnect between the real market value of used vehicles and the estimated values used to determine taxable value, making vehicle ownership increasingly unaffordable for British Columbians while unduly increasing tax revenues for the provincial government: Therefore be it resolved that UBCM lobby the provincial Ministry of Finance to discontinue the use of the Canadian Black Book as a means of determining the taxable value for used vehicles sales, and return to using the actual sale price of the used vehicle being sold when determining Provincial Sales Tax payable.
Ministry of Finance Provincial sales tax PST has always been applied to privately purchased vehicles, including used vehicles. Applying PST to these sales helps prevent the tax system from influencing the marketplace for vehicles for instance, by creating disincentives to purchase from motor vehicle dealers. However, PST does not apply on the sale or transfer of a vehicle in certain circumstances, such as when an individual receives the vehicle as a gift from a related individual. As part of Budget 2022, government announced that, effective October 1, 2022, PST on vehicles purchased in private sales will be based on the greater of the reported purchase price and the average wholesale value of the vehicle according to an industry standard price guide. The Canadian Black Book is used for the purposes of determining the average wholesale value. This change is intended to address tax compliance issues arising from the underreporting of the purchase price of privately purchased vehicles. The average wholesale value of a vehicle is less than its fair market value to a consumer and should be less than the reported purchase price in most circumstances. Vehicles sold at a private sale in BC are much more likely to have a declared purchase price that is significantly less than the average wholesale value. This is not a new issue, with the Province making administrative changes over time to address tax compliance on private vehicle sales starting in 2014. These changes did not materially reduce the occurrence of underreporting purchase prices for vehicles, and as a result this further change was needed. We acknowledge there are situations where a vehicles value would be less than the wholesale value due to its mileage or need for repairs. To account for this, individuals can reduce the tax payable by obtaining an appraisal. If the appraised value is less than the average wholesale value, PST will be payable on the greater of the reported purchase price and the appraised value. The appraisal form can be provided to the Insurance Corporation of British Columbia when the vehicle is registered or submitted to the government with a refund request up to 30 days after the vehicle is registered. These changes from Budget 2022 bring the Province into line with what most other provinces are already doing to address the intentional underreporting of sale prices, which is estimated to represent more than 30 million each year.