Sask. adding PST to used cars, expects to collect $95M

Asix per cent provincial sales tax will now apply on used vehicles on sale atSaskatchewan auto dealerships.

Finance officials estimate the move will add $95 million to provincial coffers.

For the past decade, the province maintained a provincial sales tax (PST) exemption on light used vehicles, such as cars, trucks and sport-utility vehicles.

"When it first came out we knew they could not sustain this," said Maurice Plemel,the president of Colony Motor Products in Humboldt, Sask.

"They've left huge dollars on the table."

No tax on transactions under $5K or between family members

Officials said they will collect the tax on the difference between the value of a trade-in and a vehicle's total selling price.

On private car sales, the tax will also apply on any sales over $5,000. Buyers will pay the PST when they register the change in ownership.

SaskatchewanFinance Minister Donna Harpauersaid the tax will not apply in cases where family members "gift" cars to each other. That includes spouses, parents, legal guardians, grandparents, grandchildrenand siblings.

Used car dealers not pleased

Used car dealers told CBC they were not consulted about the changes, nor were they notified about them until the provincial budget was released Tuesday.

"The general public is going to end up paying more tax on the same vehicles over and over again," said Sean Jesse, the general manager of Village Auto Sales in Saskatoon.

He said the move won't make a big difference to customers who finance vehicle purchases, but it will hurt cash buyers.

"You'll end up maybe looking at less of a car because you have more tax to pay," he said. "If you're looking at a $40,000 truck a used one that's quite a bit of tax."

Customers are 'going to love it':Plemel

New auto dealers disagreed, saying customers would no longer be "confused".

"They're going to love it," said Plemel, who is also the government relations chair of the Saskatchewan Automobile Dealers' Association.

"Now they can come into a dealer and there is absolutely no manipulation of prices to get a tax advantage," he said.

Harpauersaid she consulted the Saskatchewan AutoDealers' Association before making the change.

The group consists of businesses that sell new vehicles and original equipment manufacturer (OEM) parts. Its website said members already collect over $40 million in provincial sales tax each year.

Dealers say previous tax rules left customers 'confused'

Plemel said explaining PST rules on trade-in allowances to customers has been "very, very difficult."

"Now, Ifyou have a trade, your trade is worth six per cent less, but you pay less tax," he said, insisting the tax would not raise prices for prospective buyers.

Over the past 10 years, Alberta and Saskatchewan were the only provinces that did not charge a provincial sales tax on used vehicles.

Plemelsaid the previous PST exemption created an artificially high value for Saskatchewan vehicles, makingthem harder to sell to out-of-province buyers.

Auto sales in Sask. weakened last year

Dealers who rely strictly on used car sales said the PST change won't help them.

BrettFinellis thepresident and general manager ofO'BriansAutomotive Group, which has two locations in Saskatoon.

"Any future increase of the PST will only further damage the automotive industry, which overall is down in the past year," Finellsaid in an email.

Other used car sales representatives agreed, telling CBCtheir sales in 2017 were weaker than in past years.