Imposition of Excise Taxes on fuel Inefficient Vehicles
On Monday, March 19, 2007, the Minister of Finance, the Honourable Jim Flaherty, tabled a Notice of Ways and Means Motion to amend the Excise Tax Act Relating to Excise Taxes. The Motion includes changes to the non-GST/HST portions of the Excise Tax Act (the Act). Under the proposed changes, section 6 of Schedule I to the Act will be amended to impose a new excise tax on certain fuel-inefficient vehicles. This replaces the existing heavy vehicle weight tax, which no longer applies after March 19, 2007. The fuel-inefficient vehicle tax will apply to automobiles (including station wagons, vans, and sports utility vehicles) designed primarily for use as passenger vehicles, but not including pickup trucks, ambulances, and hearses, in accordance with the vehicle’s fuel-efficiency rating. Passenger vans capable of transporting more than eight individuals are excluded from this tax.
Calculation and rates of tax
The excise tax on fuel-inefficient vehicles is calculated on the basis of the weighted average fuel consumption rating as determined in accordance with information published by Natural Resources Canada. For purposes of this tax, the weighted average fuel consumption rating is calculated by combining 55% of the city fuel consumption rating with 45% of the highway fuel consumption rating. Automobiles that have a weighted average fuel consumption rating of 13 or more litres per 100 kilometres will be subject to the excise tax at the following rates:
- at least 13 but less than 14 litres per 100 kilometres, $1,000;
- at least 14 but less than 15 litres per 100 kilometres, $2,000;
- at least 15 but less than 16 litres per 100 kilometres, $3,000; and
- 16 or more litres per 100 kilometres, $4,000.
For more information on this tax click here.
