Luxury Taxes on RVs

Preserving capital is a rallying cry when thinking about our retirement years. We’ve done well but the shift into retirement means a bit more focus on the expense side.

I’m not concerned about the expenses we can control. I am more concerned about the expenses that we do not control. And most of those expenses are influenced by government either in the form of taxes or monetary policy.

With monetary policy, the Bank of Canada loves to devalue the Canadian currency when the economy is bumpy although some pundits like to draw a close linkage between the value of CAD and the price of oil.

With the recent battle over trade with the U.S., CAD has fallen.

Since February, CAD has gone from a high of .82 against the USD to a low of .75.

With various fees, it means that $1,000 CAD gets us about 715 USD. We lose about 28 percent due to currency valuation compared to parity. Thankfully, costs and taxes are somewhat lower in the U.S. however, whenever CAD falls below about .88, we pay a premium.

We will be paying more in real terms for our trip south. Those currency expenses I cannot control.

I came across this article in Australia. The Queensland government is putting a two-percent tax on vehicles worth more than $100,000 and weighing less than 4.5 tonnes. This impacts people who might want to purchase mid-range motorhomes in retirement.

In British Columbia, Canada, we have such a luxury tax on vehicles. Being Canadians, though, we like bigger taxes then those issued by the Queensland government. We get them to kick in at a lower price — $55k is a luxury car in British Columbia — and make them really bite when the price of the vehicle gets up there. $125k will net an 8% luxury tax. $150k will net a 13% luxury tax. Ouch!

From the British Columbia government:

Luxury surtax applies to passenger vehicles when the value for tax exceeds:

$55,000 to $55,999.99 — 7% PST plus 1% Luxury tax
$56,000 to $56,999.99 — 7% PST plus 2% Luxury tax
$57,000 to $124,999.99 — 7% PST plus 3% Luxury tax
$125,000 to $149,999.99 — 7% PST plus 8% Luxury tax (effective April 1, 2018)
$150,000 and over — 7% PST plus 13% Luxury Tax (effective April 1, 2018)

Reading the tax material further, I find that seniors wishing to purchase an RV in retirement in British Columbia will not be impacted by this luxury surtax:

For tax purposes, a passenger vehicle is defined as a motor vehicle designed primarily as a means of transport for individuals. For example, trucks and vans larger than three-quarter ton, camperized vans, motor homes, buses and motorcycles with engines of 250 cc or less are not passenger vehicles.

In Ontario, the province where I live, the NDP party, running on a platform that included high taxes, wanted to introduce a similar vehicle luxury tax to British Columbia. They did not indicate a percentage, only that, if elected, they would put a surcharge on all vehicles over $100,000. I suspect that all vehicles would also include RVs.

Fortunately, the NDP was not elected. Voters in Ontario were tired of 15 plus years of tax and spend government.

Taxes. Another expense that I cannot control.

Taxes and monetary policy will, no doubt, continue to impact our finances during our retirement years.

A 13% luxury tax on our motorcoach would have been a significant financial challenge. Bad enough that we had to battle with the dealer on hedging our currency risk — we had our coach custom built and CAD was volatile during the 9 months from when we placed our order until we received our motorhome.

We were able to fix the price on order as opposed to on delivery.

CAD did fall further during that time so we wound up not losing money due to currency fluctuation.

GMC Motorhomes

I came across the ad at this website. Someone had purchased an old GMC Motorhome and had attempted to restore it. Unfortunately, the website that carried the story of their renovation is no longer active. The post which began the story, ends with this somewhat tragic observation:

The next few months would be challenging as we struggled with the reality of what lies ahead, and the costs of keeping a dormant RV around a dense city. The story will continue in my next post…

Sadly, the story never continued. Or at least I couldn’t find the ending to the story anywhere online. A failed renovation attempt?

The coach pictured above is a 1973 model produced by GM’s Truck and Coach Division. It was a 26-foot model powered by a 455 cubic inch, 7.5 Litre V8 engine with a three-speed automatic transmission. Front-wheel drive, with a gross vehicle weight rating of 12,500 pounds for the 26-footer.

Not many were built. Just under 13,000 units were manufactured between 1973 and 1978. I have read that somewhere between 8,000 to 9,000 of these motorhomes are still running. There is even a group, GMCers, telling the world all about the GMC motorhome.

I’ve seen the GMC motorhome in a couple of movies: Twister and Stripes. I’ve never seen one in the field.

You could take a GMC motorhome and really bring it up to date by working with Creative Mobile Interiors. I have no idea how much it cost them to renovate this 1977 GMC motorhome. The coach looks amazing inside and out.

I suspect the purists would prefer to remain true to the original model and have it look like this one:

Trade Wars Are So Much Fun

I caught this on CNBC:

Thor Industries’ warning about rising tariff-related costs in its third-quarter earnings report sent shares plunging to 2018 lows, but CEO Bob Martin told CNBC on Thursday that the company is finding ways to blunt the impact.

“We thought it’d be minimal,” the CEO admitted in a “Mad Money” interview with Jim Cramer. “Today, they’re still kind of all over the board and we’re just finding ways to kind of counteract them whenever we can.”

For Thor, the United States’ largest recreational vehicle manufacturer, that means cutting raw costs and “de-contenting,” or taking certain ancillary products and features out of its higher end RVs.

Thor’s stock has been under pressure since the Trump administration enacted steel and aluminum tariffs in May, which hike Thor’s costs by stymieing cheap imports.

That is an interesting word, isn’t it?

De-contenting.

De-contenting means that you pay the same price, or sometimes more, for less.

This might not be the best time to purchase a new higher end RV from Thor.

Of course, trade wars hurt on both sides.

The Canadian dollar has slid below 76 cents which will make our first winter south in retirement considerably more expensive.

Hopefully the politicians and the bureaucrats in Canada and the U.S. come to a reasonable compromise.

More RVs That Float. Really.

When I had posted that Winnebago had purchased Chris Craft, a boating company, I tossed out a joke that Winnebago was about to make RVs that float.

Turns out that somebody has already done that.

There’s something just not right about a floating RV.

Hot Skin

I’m part of the Newmar Motorhome and Fifth Wheel Owners Facebook group and I came across this post:

Purchased our 2010 Ventana DP new we love it HOWEVER, we have developed a little problem I could use some help on. Each time we touch counters, sink, appliances (anything) we get a shock which in some cases is visible to the naked eye. Problem started a couple of months ago and am quite uncomfortable with the issue. Suggestions to why and possible solutions would be appreciated.

From there, I came across the term “Hot Skin”. This problem occurs when you get a shock by touching surfaces on your RV. The condition can cause a very dangerous and life-threatening electrical shock:

The reason we don’t notice this Hot-Skin condition until it’s too late is that an RV is basically a big metal frame sitting on rubber tires. And those tires act as electrical insulators just like the rubber surrounding the metal wire of your extension cord. That means that the skin of your RV can be electrically charged with 30, 60 or even 120 Volts with no visual indication of the problem until you complete the connection to the earth with your hand. Then because your own body provides a low resistance path to earth […], current will flow through you to the ground. How much current is really the subject of another article, but if your hands and feet are wet your body becomes a 1,000-Ohm resistor connected from your hand on the doorknob to your feet on the ground. This will allow over 100 mA (milliamperes) of electrical current to flow through your heart. Tests have shown that as little as 10 mA to 20 mA of a 60-Hz current (what comes out of your electrical outlet) can cause your heart to go into fibrillation (essentially a heart attack). So you can easily get 10 times the current needed to kill yourself from a 120-volt outlet.

This story highlights the tragic death of a young boy, Landyn Keener, only 3 years old, killed when he left the family’s RV.

Hot Skin is fairly common. Children and pets are particularly vulnerable to hot skin electrocution.

How does Hot Skin occur?

A Hot Skin condition can be caused by plugging into power that is not properly grounded or where the power has the polarity reversed. It can also be caused by wiring problems within the RV itself.

The important takeaway for me? Get a digital voltmeter or a non-contact voltage tester and check the coach every time we connect to power.