Ontario Dealer Groups Applaud HST Announcement

By Joe Overby, Staff Writer
November 20, 2009

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TORONTO, Ontario — Aiming to create a "level playing field" in the province's used-vehicle market, the Ontario Ministry of Finance crafted legislation earlier this week for a Harmonized Sales Tax that essentially mandates that private-party used-car transactions include the same sales tax rate as dealer sales.

As it stands, there is an 8-percent sales tax on private-party transactions, but a 13-percent tax for used-car sales at dealerships.

When it takes effect on July 1, the HST would make it 13 percent across the board.

Several dealer groups in the province have voiced their support for this legislation, including the Used Car Dealers Association of Ontario, which argued that the HST should slow down curbsiders.

Because they will be levied the same 13-percent tax as licensed dealers for used sales, curbsiders are likely to lose their "tax advantage," as their ability to promote "NO GST" will be cut off, UCDA officials argued. The taxes will be collected via license offices, they explained.

"This should have a serious effect on curbsider sales, the bane of dealers," Bob Beattie, executive director of UCDA, told Auto Remarketing Canada. "It's been a long time coming. We've been after the government for years."

In fact, UCDA said it wrote to the Minister of Finance six years ago, arguing the "unfairness" of how the Goods and Services Tax was only applied used-car sales for dealers.

UCDA urged the Minister to cooperate with the federal government so that the taxes could be harmonized, similar to what the three Atlantic provinces had accomplished in 1996.

So after years of lobbying efforts, with Monday's announcement, "Ontario dealers can hardly wait," officials noted.

Echoing UCDA's sentiment, leaders of other dealer organizations applauded the government's decision.

"The current situation has been putting automobile dealers at a competitive disadvantage, and the minister's decision will bring fairness and consistency to the used vehicle marketplace," stated Geoff Wilkinson, executive director of the Ontario Auto Dealers Association.

The OADA also noted that this legislation is also likely to dampen curbsiding.

"This initiative is a positive move from a consumer protection standpoint, as well. More than 25 percent of classified ads may be posted by curbsiders," Wilkinson stated. "When a consumer buys a vehicle from a private seller there may be little recourse if they discover the vehicle has been misrepresented"

Ronald Loveys, president of the Toronto Auto Dealers Association, added: "We have been lobbying for this change for a long time and applaud the minister for listening to our concerns.

"This is a very positive move for the automobile marketplace and for consumers. We support the minister and his government on this decision 100 percent," he continued. "It was the right thing to do."

AR Canada