Joined: Nov 2011
Posts: 162
why pst on used cars
6/29/2017 at 4:03 PM
Before I offer these thoughts, let me be clear that I am not saying I agree with what the government does, nor that I am an expert. However, my understanding of this is that the government isn't so much taxing the thing, as they are taxing 'economic activity'. Yes, tax was paid on the vehicle when it was new. But 8 years later, when someone else buys it, this is a new transaction in the economy this year. So the government is taxing the transaction - economic activity. It represents trade and money was exchanged. It is part of the total expenditures people made this year. Etc etc. Gov't revenue, via taxes, are meant to be proportional to the size of the economy, represented by purchases in a given year. This is why you will get some rebate when you buy and sell within the same year. Your purchase was in effect partly cancelled by a sale. Ie. your contribution to the economy was only part of the two transactions, because the person who bought your other car has now paid that PST in full. Kind of presumes that you sold the second car because you bought the first.
Of course, the government can't do this for everything anybody ever buys (garage sales and a million other things don't get hit this way). But cars are fairly large single transactions, and the government has a pretty easy way to track them and implement this tax.
Again, not saying I like or agree with it, but I think this is why it happens.