New taxes will be applied to luxury jets, yachts, and automobiles
August 9th, 2022 – Canada is imposing a new tax on luxury jets, yachts, and cars in a move to combat climate change and greenhouse gas emissions.
Effective September 1st, 2022, the Select Luxury Items Tax Act will target high-emitting individuals such as celebrities and high net worth individuals who have been criticized for their role in contributing to global warming.
The tax is expected to generate $163 million CAD in 2023-2024 based on projections by Canada’s Parliamentary Budget Officer (PBO). The revenue will be used to fund green initiatives such as electric vehicle charging stations and public transit.
Critics of the measure argue that it unfairly targets those who can afford to pay for luxury items, and that it will do little to combat climate change. However, supporters argue that the tax is a necessary step in reducing emissions and combating global warming.
Who has to pay Canada’s new luxury tax?
The new luxury tax will target vehicles and aircraft priced above $100,000 CAD ($77,534 USD) and yachts/boats carrying a price of more than $250,000 CAD ($193,836 USD).
The tax will be calculated at 10 percent of the full retail value of the vehicle, aircraft or vessel, or at 20 percent of the value above the threshold.
The new levy will only apply to new aircraft and vehicles purchased by consumers for personal use, and will apply retrospectively to most sales and sales agreements made after January 1st, 2022.
Spotlight on celebrity jet travel
As the push for action to combat climate change continues to grow stronger, many celebrities have found their personal travel habits thrust into the spotlight as part of the discussion.
Elon Musk found himself at center of a twitter account, @ElonJet, designed to track the movements of his private jet, with Musk offering the 19 year old owner of the account $5,000 to delete it.
It’s no secret that private jets create massive carbon footprints, creating emissions per kilometer that are significantly higher than any other form of transportation.
For example, the Cessna Citation XLS is one of the more popular midsize jets on the market, and burns an average of 189 gallons (857 liters) of jet fuel per hour.
A flight from Miami, FL to New York, NY on this plane takes around 2 hours and 45 minutes, requiring approximately 2,350 liters of fuel.
The UK’s Department for Business, Energy and Industrial Strategy (BEIS) states that 2.52 kilograms of carbon dioxide is emitted for every liter of aviation fuel burned. Therefore, this flight would produce around 5.9 metric tons of CO2. However, this number is then multiplied by 1.9 to reflect the effect of non-CO2 emissions released by planes at high altitude.
After calculating them together, the total emissions for this flight ends up at around 11.3 metric tons of CO2 equivalent. If this flight carried 4 passengers, each passenger would be responsible for 2.8 metric tons.
Compare these numbers with your average American who commutes to and from work by car just under one hour each day, which equals about metric 3.2 tons of CO2 annually.
Although this type of effort garners attention in mainstream media due to the high profile nature of the travelers these new taxes target, it’s unclear what meaningful impacts will be achieved.
“My feeling is that while I would prefer Taylor Swift make more responsible transportation decisions, shouting at celebrities on the internet is not in my personal top 10 list of policy levers,” said NASA climate scientist Kate Marvel in an article by Axios.
Still, a 2021 report by Oxfam found the richest 1% accounting for 15% of global carbon emissions in 2015, and a recent analysis by The Yard shows celebrities emitting carbon at more than 480 times the rate of your average citizen. These reports, together with Canada’s new luxury tax, show that the spotlight won’t be going away anytime soon.