Second-hand, double taxed: the silent government scam in online reselling
Selling niche products in a smaller area can be challenging, testing one's patience and often requiring a compromise on price. This is precisely what led me to turn to eBay to sell my MacBook Pro 14" M1 Max. I got this MacBook from a friend who runs a small tech business. Post-pandemic, he faced tough decisions, including laying off a developer and selling their work computer - the very MacBook I bought.
When he mentioned he had a MacBook Pro for sale, I immediately jumped at the opportunity. After a string of frustrating experiences with Intel laptops, I was keen to give Apple Silicon another shot, even though I already had one provided by work. But here's the thing about me – I'm a serial tech buyer, always chasing the next best thing, yet never quite sure what I actually need. 🤦😬
Listing the MacBook on eBay seemed like a straightforward choice, especially considering where I live. You see, in my neck of the woods, selling high-end tech is a bit of a challenge. Want to sell a snowblower or a snowmobile? It'll be gone in seconds! 🤣 But a top-tier laptop? That's a different story.
I had paid $2,300 for the MacBook, taxes included, and decided to list it for $2,500 on eBay. However, after crunching the numbers on an eBay fees calculator, it looked like I'd end up with around $2,100 or even less. Yep, despite selling it for more than I paid, I was still looking at a loss. This is the price you pay for not being careful with tech purchases out of 'need.' I didn't really need it, knew I wasn't the biggest fan of MacOS, but the lure of great hardware overcame my reservations. Turns out, I'm never quite satisfied with any electronic device I own. Story of my life.
Then, the twist with eBay's tax charges. A potential buyer reached out, inquiring about the laptop and asking for additional photos, which I provided. They then asked about my best price, and I explained the eBay fees situation. During our conversation, they mentioned something unexpected - eBay was charging taxes on the sale. They even sent me a screenshot showing the tax. This left me speechless and infuriated.
I dug into this and realized that, in 2020, the government had passed a law requiring platforms like eBay to collect taxes through their new GST/HST for digital economy businesses, effective July 1, 2021. According to eBay's "Paying tax on eBay purchases" page, they were collecting Canadian sales taxes (GST/HST/QST/ PST) from Canada-based buyers on behalf of sellers, irrespective of registration status, effective July 1, 2022.
This revelation was a shocker. I understand the need for foreign businesses selling in Canada to pay taxes, but applying the same rule to individuals selling used items seemed excessive. This policy not only hit the wallet but also sent the wrong message. We're trying to promote sustainability, encouraging reuse and recycling, and yet here we were, being penalized for participating in the second-hand market.
The GST/HST for digital economy businesses affects cross-border digital products and services and the supply of qualifying goods in Canada. But the issue is with platforms like Etsy, eBay, etc., which are considered distribution platform operators. They control or set the essential elements of the transaction, thus falling under the category requiring them to charge taxes. This doesn't apply to platforms like Facebook Marketplace or Kijiji, as they don't control the transaction elements.
This situation is frustrating and, in my opinion, an intellectual shortcut that harms the second-hand market. How is it fair for governments to charge taxes on used goods already taxed when bought new? Why should consumers pay more to reuse something, pushing them towards new purchases or, worse, discarding perfectly good items?
In the end, while tax laws need to evolve, they must also be fair and balanced. Policies should encourage, not hinder, the spirit of reuse and recycling. We should be fostering, not penalizing, those who opt for second-hand goods.
This entire experience with eBay and its tax policy was an eye-opener, making me question whether our digital economy is truly in sync with our environmental goals.
What's your take on this? Have you had similar experiences with selling second-hand items online? Feel free to share your stories and thoughts in the comments below.