It would not be the first time. A measure basically motivated by virtue which results in perverse effects. This is the scenario that takes shape if the law respecting the tax on certain luxury goods is adopted and enters into force in September, as envisaged.
Posted yesterday at 2:00 p.m.
In its current form, the law not only targets the wealthiest Canadians, it also directly attacks our manufacturing companies and their competitiveness. And more particularly in the aeronautics sector, a pillar of the country’s economy and know-how, which employs thousands of workers throughout Quebec.
To better understand, here is what the law provides. The luxury tax for cars and aircraft that sell for more than $100,000 and for yachts that sell for more than $250,000. The rate will vary between 10 and 20%.
Bombardier has already publicly indicated the negative and immediate impacts of this tax, including suspensions and cancellations of orders.
There will be a cascade of repercussions, while Canada will lose, among other things, the activities related to the maintenance of these devices to the benefit of the United States.
In the current context, when aerospace is struggling to get its head above water, we obviously don’t need that. Moreover, it would weaken an important link in the nautical industry chain.
When Canada values foreign builders
Taxing the wealthiest citizens appears attractive. The objective of this tax is certainly laudable, but it misses the mark and shoots our manufacturers in the foot. Quebec manufacturers, such as Princecraft or Bombardier, their suppliers and their networks of dealers who employ thousands of workers in the province, will be at a distinct disadvantage compared to American manufacturers.
Why ? Because their Canadian customers will inevitably turn to American products in order to avoid paying this Canadian tax. There will be a cascade of repercussions, while Canada will lose, among other things, the activities related to the maintenance of these devices to the benefit of the United States.
There are other ways to achieve the objectives of this tax. For example, the 90% threshold for use for business purposes, which is neither reasonable nor compatible with other Canadian tax laws, should be reduced.
Let’s encourage the sale of products made here, not the other way around!
It is incomprehensible that Canada is trying to dissuade Canadians from buying products made here, when we are witnessing a rise in protectionism around the world with initiatives to encourage local purchases.
No, it would not be the first time that a government measure had a pernicious impact. But no one will be able to say this time that he had not been warned.
Time is running out, but there is still time for Ottawa to review its law and protect the manufacturing sector, the true pillar of our economy.