Whether at the Village des Valeurs or in a small neighborhood thrift store, we pay GST and QST on the second-hand goods we buy. IKEA, which also sells second-hand products, considers these taxes to be “a problem” and calls on the government to change the rules of the game.
The Swedish self-assembled furniture giant has turned into an anti-tax campaigner.
He even posted a petition online on the change.org website. “We want the federal and provincial governments to consider eliminating the tax on second-hand items across Canada. » So far, more than 1,300 people have signed it.
IKEA says its goal is to help Canadians make circular purchases at a lower cost.
The retailer hopes other businesses with similar concerns will join the movement to end “double taxation.” In reality, it is sometimes triple or even quadruple. Nothing prevents a property from being resold many times, which each time generates new revenue for the State.
Another part of the campaign is being deployed in IKEA stores in Ontario where the TASM, that is to say the “tax on second-hand items”, is now reimbursed.
You are not misinformed: this tax does not exist.
It is an invention to draw customers’ attention to the fact that second-hand products are taxed. Concretely, Ontario customers pay HST (the harmonized sales tax which combines the GST and the provincial sales tax) of 13%. And they are then entitled to reimbursement of the TASM… of 13%. In short, it cancels out.
IKEA explained to me that it had chosen to test its formula in Ontario to maximize its impact. This province is its largest market in the country. “It was a logical choice,” spokesperson Lisa Huie wrote to me. Additionally, Ontario’s use of the HST provided a simple way to raise awareness about this confusing tax issue. » It is expected that TASM reimbursement will one day be extended to other provinces.
It’s hard to know how confused consumers are about taxes and frustrated about paying them. But it is clear that the lack of uniformity between businesses raises many questions. Do Renaissance stores charge sales tax? No. The Village of Values? Yes. The rules differ depending on the status of the businesses.
In Quebec, charities do not have to collect GST or QST, unlike for-profit businesses. The owner of a thrift store once told me that she included taxes in her prices to give the impression to her customers that they weren’t paying them, because she was tired of the questions about it.
Of course, IKEA’s campaign, as sincere as it may be, turns out to be a marketing coup which allows it to recall that its stores have been offering, since 2019, second-hand furniture that it buys from its customers. But it is also an opportunity to think about the measures that could be put in place to encourage more responsible consumption.
IKEA’s idea may be worth thinking about. But we still need to know whether the abolition of taxes would have a real influence on sales of low-value items such as clothing and toys. Who goes without $7 jeans because of the $1.05 tax? Nobody, when the alternative is new jeans for $80.
PHOTO MARTIN CHAMBERLAND, LA PRESSE ARCHIVES
Who goes without $7 jeans because of the $1.05 tax? Nobody, when the alternative is new jeans for $80.
On vehicles, it’s a different story. Abolishing the tax would certainly have an impact on demand, but the government would deprive itself of substantial revenues when it needs to increase them. In 2022, no less than 130,000 vehicles were sold for $1, a strategy to avoid taxes. The rules will be tightened. Starting next year, it will be prohibited to sell a vehicle less than 15 years old for a single loonie, which should bring in 255 million in taxes after 5 years.
Inflation, rising costs of living and climate change have already propelled the popularity of second-hand shopping. Another phenomenon has broken down barriers: young people are no longer embarrassed to wear second-hand clothes, this is well seen. You just have to look at the number of millennials who rummage through thrift stores on Saint-Denis Street in Montreal to be convinced.
The numbers speak for themselves. Renaissance sales jumped 21% last year to $77 million. It is not for nothing that retailers like Souris Mini, H & M and SAIL have sniffed out a good deal and are giving themselves the appearance of a thrift store with their platforms for selling second-hand products. At IKEA, the popularity of its “Resell Them” program jumped 36% last year.
There are other ways than abolishing taxes to encourage greener consumption. My favorite: France’s “repair bonuses”, both for household appliances and clothing and shoes. Replacing a worn heel tip automatically entitles you to a discount of 7 euros ($10). The shoemaker is reimbursed by a fund supplied by the companies which market the clothes and shoes.
The great merit of this idea is that it is as good for the planet as it is for the economy.
Consult a text on France’s repair bonus