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Proposed 10% Luxury Tax on Recreational Boats

Thank you to Boating Ontario for the information below:

As you know our industry has come through some challenging times in recent months. In Spring 2018, recreational boats were unfortunately caught in the fray of the complicated Canada-U.S. trade war and were listed, along with a multitude of other manufactured products, in the Canadian federal government's counter-measures list in response to the U.S. tariffs. The associated 10% tariff caused significant harm to many of our small businesses across Canada. Overvalued inventory is still sitting on many dealerships lots to eventually be sold at a financial loss due to the launch and subsequent removal of the tariff. While we were able to successfully have the counter-measure dropped, the negative impacts of this move by government still lingers.

Unfortunately, we have seen a new development emerge in the current federal election campaign which we are very concerned by and are closely monitoring. In their newly-announced platform, the Liberal Party of Canada has announced its intention to introduce a "luxury tax" on various consumer products, including boats which are valued at over $100,000.

"To raise new revenue, the Liberals are proposing a 10 per cent "luxury tax" - an additional excise tax on luxury cars, boats and personal aircraft that sell for more than $100,000."

With over 85% of boats sold in Canada being sourced from the USA or Europe and our current weak Canadian dollar, this means a $75,000 boat in the USA would be subject to this new tax should it be implemented. Boats are not luxury items. Thousands of middle-class Canadian families choose fishing boats, pontoon boats, ski/tow boats or others as their preferred recreational sport. These families will be forced to look at alternative sources of recreation as they will refuse to pay another tax so they can boat.

So-called "luxury taxes" have been implemented and repealed in the U.S. in the past. The perceived government tax revenue was severely limited by several issues, namely:
  1. consumers who simply did not buy the boats because they refused to pay the tax,
  2. job losses which brought significant loss in revenue to the tax base,
  3. the tax harmed one industry while benefiting others as consumers spent their money elsewhere.
We have and continue to communicate to government officials that recreational boating in Canada is a $10 billion industry generating over 75,000 jobs and tax revenue of over $860 million annually. In Ontario alone, we are a $4.03 billion industry with 30,000 jobs.

The proposed tax will surely cause job losses at boat factories throughout North America including plants in Canada. We as an industry will be forced to watch our consumers take their dollars to other recreational sports where there is no threat of a luxury tax. Rural job losses at marinas and boat dealerships across the country will follow.

In response to this very troubling suggestion from the Liberal Party of Canada, we encourage members to reach out to incumbent MPs and other candidates in key boating ridings to implore them to push back against this proposed tax.  Boating Ontario is also communicating directly with key individuals on the Liberal Party campaign team, and are conferring with other industry groups that are implicated in the proposed tax.  While the tax itself is a long way from seeing the light of day, we need to be vigilant during the campaign and post-election, communicating to federal politicians and other decision-makers why this proposed tax would be disastrous for our industry and the many jobs and families it supports.

See attached example of the advocacy and outreach that we, and our partners across the country, are doing on your behalf ... CLICK HERE.

If you have any questions or would like to discuss, please contact Glenn Lethbridge, Executive Director Ontario Sailing at 1-888-672-7245 ext. 224 or execdir@ontariosailing.ca.

Club Insurance Survey

Ontario Sailing is currently meeting with large commercial Insurance Brokers for the purposes of setting up a group program for our Clubs.

We will be sending out a survey in the new year that will ask questions around who you are currently insured with (underwriter is the most important item) and some of the insurance coverage packages you have currently.

The details will be held in total confidence and only aggregate totals will be shared so as to be able to market this to an underwriter.  We are hearing some concerns from clubs and brokers that larger than normal rate increases will happen in the new year.

Much of the increase is due to water-born damages to docks and also claims under the Directors and Officers Liability Coverage.

If we can get everyone to fill in the survey, it will greatly help us communicate our clubs' needs to  brokers and underwriters.

In the meantime, please don't hesitate to reach out to Glenn Lethbridge, Executive Director Ontario Sailing at 1-888-672-7245 ext. 224 or execdir@ontariosailing.ca with any questions.