London area MP proposes eliminating GST on used vehicles

London area MP proposes eliminating GST on used vehicles

Opposition says measure would save buyers about $1,835 on average used car purchase

The federal Conservatives say they want to eliminate the GST on used vehicle purchases, arguing the move would make car ownership more affordable for Canadians facing rising costs.

Elgin-St. Thomas-London South MP Andrew Lawton, along with Conservative Leader Pierre Poilievre, announced plans on Saturday to remove the five per cent federal sales tax on used vehicles.

Lawton said the bill is aimed at addressing a rise in used vehicle prices and helping Canadians who rely on cars for work, school and family obligations.

"The price of used cars in Canada has nearly doubled in just seven years," Lawton said in an interview with Afternoon Drive host Matt Allen. "For a lot of people, certainly in southwestern Ontario, having a vehicle is a necessity, not a luxury."

Lawton has introduced the proposal as a private member's bill, known as the Used Car Tax Cut Act.

The Conservatives say the measure would save buyers about $1,835 on the average used vehicle purchased through a dealership, based on an average used-car price of $36,700.

Lawton said the proposal would particularly benefit younger buyers, families and residents of rural communities where public transit options are limited.

"A lot of these are young people getting their first car, a single parent buying a minivan," he said. "We really want to make sure it's targeted to the people who need the help the most."

He argued vehicles are often the second-largest purchase Canadians make after buying a home.

"If you want to look at a way that you can draw a direct line between someone's pocketbook and what is, for most people, a pretty necessary expenditure, a vehicle is the way to go," Lawton said.

The Conservatives say the policy would cost the federal government about $900 million annually in forgone tax revenue. Asked how a Conservative government would offset the lost tax revenue, Lawton pointed to the party's "dollar-for-dollar" spending rule, which requires proposed tax cuts to be matched by spending reductions.

He said the party would fund the measure by cancelling the federal government's planned high-speed rail project between Quebec City and Toronto.

"We think the money is better in Canadians' pockets, especially middle-class Canadians that need to buy used cars, than in the pockets of government consultants," Lawton said.

Statistics Canada began including used vehicle prices in the Consumer Price Index in 2022 amid sharp increases in the sector. As of March 2026, the average cost of a used vehicle in Canada was $36,713.

The Conservatives argue the proposal would treat used vehicles similarly to resale homes, which are not subject to GST, and some categories of farm equipment that are already zero-rated under the Excise Tax Act. The policy would cost the federal government about $900 million annually in forgone tax revenue.

The announcement is part of a broader Conservative affordability platform that also includes removing the GST on new vehicles manufactured in Canada and eliminating federal taxes on gasoline through the end of the year.