In 2022, the Government of Canada introduced a “luxury tax” on recreational boats valued at over $250,000. This tax is detrimental—and is eliminating good-paying jobs and hurting small businesses, particularly in rural communities. It is having a direct adverse impact on recreational boating sales in Canada, and by extension, the industries and supply chains that support boat ownership and safe operation.

The “luxury tax” will have the opposite effect of its intended purpose. Two independent studies—one by the Parliamentary Budget Officer and another by economist Dr. Jack Mintz—have shown that governments will lose revenue due to decreased sales. This is a direct result of either reduced boat purchases or buyers opting to purchase and keep boats in other jurisdictions.

Independent estimates suggest job losses ranging from 896 full-time jobs at a 2.4% reduction in sales, to 3,670 full-time jobs at a 10% reduction in sales. Many of these jobs vital to small communities, especially in regions reliant on tourism.

Canada must remain competitive in North America. The Government of Canada should seek ways to grow Canadian industries and jobs, particularly in rural Canada, instead of allowing good-paying manufacturing jobs and R&D to move to the U.S.

The U.S. attempted a similar “luxury tax” on boats in 1991, which was later repealed several years later due to declining sales and reduced tax revenue. NMMA Canada will continue advocating for the repeal of this unfair tax.