The Saskatchewan Party’s proposal to remove the Provincial Sales Tax from the purchase of used cars and trucks will benefit only a few, and will drive up the tax many people pay for new cars.

“It’s becoming abundantly clear that Brad Wall and the Saskatchewan Party introduced this plan without understanding anything about how taxation works,” Regina Douglas Park NDP candidate Harry Van Mulligen said. “Brad Wall says the tax on vehicles will only be paid once, so that means anybody trading a used car in for a new vehicle will now pay PST on the full cost of the new vehicle, not just the difference.”

Under the current system, a person trading in a used car worth $10,000 for a new car worth $20,000 pays PST on the $10,000 difference between the trade-in value and the purchase price, or $500 in PST. However, under the Sask Party proposal, the buyer would pay the PST on the full $20,000 value of the new vehicle, which would cost them $1,000 in PST.

“Brad Wall says you’re only going to pay the PST once on a vehicle, so paying the tax upfront is the only way the entire value of the PST can be collected. If he now says that you’ll continue to pay the tax only on the difference, then the full value of the PST will never be collected, and this program will cost more than the Sask Party’s $45 million estimate – meaning less money for important social programs that benefit students, seniors and the hardworking families of Saskatchewan.”

Van Mulligen notes that car dealers province-wide have been quick to point out that few consumers will benefit by eliminating the PST on used light vehicles, as many used vehicles sold in Saskatchewan originate from out-of-province. Anybody buying one of these vehicles will pay the PST at the time of purchase.

The Saskatchewan Auto Dealers Association estimates the current in-stock inventory of used vehicles for sale in the province is in excess of $100 million, and at least half of those are either vehicles that were previously leased or that have been imported into the province. That leaves them with about $50 million or more worth of used car inventory that has been devalued by the tax, which will result in a loss to the industry of $2 million to $3 million.

As well, the PST is being eliminated only on the purchase of used cars or trucks, not other classes of vehicles including motorcycles and RVs.

“This will add administrative costs to both government and the dealers as people struggle to keep up with the paperwork,” Van Mulligen said. “If Bill Boyd and the Sask Party can’t even figure this one out – how are they going to deal with the complexity of managing an entire government’s finances?”