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During the summer in B.C., it's not unusual to see a parade of Bentleys, Lamborghinis or Ferraris cruising around.
However, if you’re planning on joining the luxury car crowd, now is the time.
As of April 1, B.C. residents are to expect a 5% tax increase on vehicles valued from $125,000 to $149,000 and a 10% tax increase on vehicles valued at $150,000 and up.
In translation that new luxury car you have been contemplating will be 5-10% more expensive in about two weeks’ time. If you’re in the market for a new car, it could be worthwhile to seal the deal as soon as possible.
Exactly how much is a 5-10% increase in price on a luxury vehicle? Consider some of the following price changes in vehicles subject to the tax increase.
2018 Mercedes-AMG S65 Cabriolet
This convertible sports car from Mercedes-Benz Canada is listed online for $277,600 MSRP. While some people may be thinking that this car costs as much as a home in some parts of the province, others may be thinking that it would make a great summer ride. This car falls under the most expensive tax bracket in B.C. Buyers can be expected to pay an expected $27,760 extra (not including other taxes) after April 1.
2017 BMW M6 Cabriolet
If the S65 is a tad over your budget, perhaps the BMW M6 Cabriolet is a more affordable option. This vehicle is listed online for $132, 300, falling into the lower luxury tax bracket in BC. After April 1st, the tax on this car will increase to $19, 845 from $13, 230 (not including other taxes).
Lexus LC 500 Automatic
If you’re not in the mood to increase your contribution to the Provincial Government but still wish to purchase a luxury vehicle, then the Lexus LC 500 could be a viable option. Listed at an MRSP of $102,100, the price of this vehicle falls below the new threshold, meaning you would not see an increase in price in two weeks’ time.
The increased luxury car tax is hitting a market that was already suffering from the ICBC high-value car insurance rate increases in 2017.
More and more people are pushed from the luxury car market and into less expensive models as the secondary costs of owning an expensive vehicle continue to soar.
Only time will tell the true elasticity of demand for luxury vehicles in B.C.
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