Thank you for your question, Mr. St-Cyr.
When the GST was first brought in around 1990-1991, the government acknowledged the anomaly I referred to. It was then that the government introduced the national input tax credit. From then on, when a car dealer purchased a used car, the dealership could claim a credit, which on paper reduced the total cost of the vehicle. This practice aimed to balance out the market value of the car when resold, and the sales made by individuals, who at the time were not obliged to charge GST on the sale of a car. By having the possibility of claiming input tax credits, dealers were able to balance out, to a certain degree but not completely, the market value of the vehicle, which allowed them to compete with private sellers.
When GST regulations were revised a few years later, the input tax credit was completely eliminated, which gave rise to the situation we now find ourselves in today. You are referring to the unfortunate situation in which people are taking advantage of businesses by claiming to be licensed dealers, when an actual fact, the sales are between individuals, and are private, GST exempt transactions. As such, they are able to benefit from a 6% advantage, as compared to legitimate car dealerships that charge the GST.
As I said earlier to Mr. DelMastro, we are talking about bootleggers. These are people who operate from street corners or basements. The consumer is not protected, because he or she may be purchasing a car that is in poor condition, that has not been inspected, etc.