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December 13, 1996
(Finance)

 

The following statement was issued today by Paul Dicks, Minister of Finance. It was also read in the House of Assembly:

RST on vehicle sales to decrease from 12 per cent to 8 per cent effective midnight December 13

Most consumers considering purchasing a car or truck may be inclined to wait for the rate reduction which will come from tax harmonization in the spring. I am pleased to announce today that we have chosen to lower the provincial sales tax on vehicle sales now to encourage consumers to continue their normal buying habits, rather than delay purchases until April 1, 1997.

Effective midnight tonight, government will reduce the amount of Retail Sales Tax (RST) applied to sales of cars and trucks by registered dealers in the province from 12 per cent to eight per cent. The rate decrease for these automobile sales comes almost four months before the effective tax harmonization date which will see an overall rate reduction for most goods and services from almost 20 per cent to 15 per cent.

To illustrate, on a $20,000 vehicle purchase from a registered dealer, consumers will save $856 with a rate reduction from 12 per cent to eight per cent. This is a significant amount of money which normally may have influenced a consumer to defer a purchase until harmonization is in place. Now, effective tonight, consumers will be able to take advantage of these significant savings.

The sales tax rate reduction will apply only to the purchase of automobiles from registered dealers. Private sales of motor vehicles will continue at 12 per cent until April 1, 1997 since they currently are not subject to the GST. New and existing leased vehicles will not be eligible for the reduced RST rate, however, effective April 1, 1997, these lease payments will be lower as they will be subject to a reduced federal/provincial Harmonized Sales Tax (HST) of 15 per cent.

We have considered whether this reduction should be offered on other categories of goods or services. However, we were not convinced that it was necessary to offer a similar reduction on other goods and services to avoid a substantial shift in consumer spending during the first quarter of 1997.

We are delighted to offer this tax decrease on automobile purchases and view it as positive and constructive for consumers in Newfoundland and Labrador.

1996 12 13 9:15 a.m.

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