A proposed legislation aiming to scrap the provincial sales tax on used vehicles faced a setback in the legislative assembly as Prince Edward Island’s finance minister raised concerns about its legality. As a result, Islanders will continue to be charged a 15 per cent sales tax when buying a used vehicle, whether from a dealership or through a private sale.
Green Party Leader Matt MacFarlane introduced the bill with the intention of easing financial burdens on residents. He argued that once a vehicle is sold for the first time, it should not be subject to additional taxes. MacFarlane emphasized the increasing cost of living, especially for rural Islanders, where owning a car is considered essential rather than a luxury.
However, Finance Minister Jill Burridge cast doubt on the province’s authority to amend the Retail Sales Act to implement such a change. In P.E.I., the sales tax on used cars purchased at dealerships is divided—10 per cent for the province and 5 per cent for the federal government under the harmonized sales tax system. In private sales, the province collects the full 15 per cent tax.
Burridge pointed out that while Alberta has eliminated its tax on used vehicles, the province’s tax system differs as it does not have a combined provincial and federal sales tax like P.E.I.
Despite efforts by the Green Party caucus to demonstrate a potential tax exemption clause in P.E.I.’s regulations, the bill did not advance due to jurisdictional concerns and the federal Excise Tax Act’s influence. Disappointed with the outcome, MacFarlane expressed his frustration over the missed opportunity to provide tax relief to Islanders, highlighting the significant savings that could have been realized if the government had supported the proposed exemption.