Saskatchewan Introduces Used Car Sales Tax

Saskatchewan has instituted a six percent sales tax on used cars, an item in the province's latest budget that ends a decade-old policy of not taxing the purchase of pre-owned vehicles, a system the Saskatchewan Auto Dealers Association called a "nightmare."

According to an Automotive News story, the Saskatchewan Auto Dealers Association's members, who include new car dealers and parts manufacturers, "almost unanimously" agree with the change.

But a CBC report indicates that stand-alone used car dealers have a much different opinion of the change. They say the province did not consult them before deciding to implement the tax, and are worried the added costs to consumers will hurt a segment of the car sales industry that had already seen a decline over the past year.

The difference in opinion stems from the inclusion of a trade-in allowance that means only the difference between the value of a vehicle being traded in and the newer one's price will be taxed. That means buyers at franchised used car dealers - those attached to a new car store - stand to benefit more than those who shop at stand-alone used car retailers and who less frequently have an older vehicle to trade.

However, the tax will not be charged on used vehicle sales under $5,000, nor will it apply to cars gifted between family members. Five percent GST will continue to be added on to  used cars bought from all dealers, but not from an individual or family member.

The provincial government estimates the new tax will add up to $95 million in revenue every year.