A brand new tax on SUVs and pickup vehicles would penalize working Canadians

The federal government is serious about helping to transform the automobile industry in Canada in an effort to achieve its zero-emission targets.

As part of those efforts in reducing Canada’s greenhouse-gas emissions, the government’s mandatory target is for all new light-duty car and passenger truck sales to be zero-emission by 2035.

There’s no doubt government and industry are banking on an electric future. Auto manufacturers — with funding from the provincial and federal governments — have recently announced massive investments to secure electric vehicle and battery production, including:

  • $5 billion for a new battery plant in Windsor, by Stellantis and LG Energy Solution;
  • $2 billion to retool GM’s Oshawa and Ingersoll operations;
  • $1.4 billion to retool Honda’s Alliston plant.

The transition to electric is happening, with the money to back it up. According to an analysis by news agency Reuters, car companies around the world are investing $515 billion (U.S.) in electric vehicles and batteries. To put that into perspective, that investment is larger than the economies of Finland and the Czech Republic combined.

However, a submission by the federal government’s Net-Zero Advisory Body has raised the possibility of another vehicle tax on working Canadians.

Specifically, the report recommends that the government “broaden Canada’s existing Green Levy (Excise Tax) for Fuel Inefficient Vehicles to include additional (internal combustion engine) vehicle types, such as pickup trucks.”

While the federal government and the Minister for the Environment, Steven Guilbeault, have recently stated that they have no intention of implementing this recommendation, it remains important to point out how this or any other additional tax would impact and penalize Canadians who buy SUVs and pickups, many of whom use these vehicles to earn a living.

Any additional taxes would be misguided, unfair and would hit Canadians where it hurts the most — in their pocketbooks. According to Statistics Canada, 18.5 per cent of household income is already spent on transportation; Canadians can’t afford to spend more.

Canadians are already reeling from escalating cost of living increases. Gas prices are near record highs with no end in sight, inflation is at a 30-year high, and interest rates are rising, which will make buying and operating a vehicle costlier.

There is already a tax applied to large SUVs and passenger vans that use more than 13 litres of fuel per 100 kilometres, and any additional taxes would put vehicle ownership further out of reach for many Canadians.

Aside from the unfairness of potentially applying an unnecessary additional tax specifically on pickups, consumers don’t have the option of buying EV pickups at the present time. The newest EV pickups only went on sale in 2021, and although several new models will be unveiled in 2022 and 2023, the supply of these vehicles is extremely limited.

In 2021, Kelley Blue Book reported that 40 per cent of pickup buyers are considering an electric model. The EV market will grow steadily in accordance with the number of models that become available in the next decade.

According to Statistics Canada, electric vehicle sales increased from 54,000 units in 2020 to 86,000 in 2021 — a 60 per cent increase. That accounts for 3.5 per cent of all vehicle registrations and will continue to increase.

On behalf of the Trillium Automobile Dealers Association’s 1,100 member dealers, we strongly urge the federal government to reject any additional taxes on SUVs and pickups.

Michael Eatson is president of the Trillium Automobile Dealers Association and is president of Peterborough Volkswagen. This column represents the views and values of the TADA. Write to [email protected] or go to tada.ca. For information about automotive trends and careers, visit carsandjobs.com.