Mr. Speaker, I would like to thank my hon. colleague from North Okanagan—Shuswap for raising this question of the luxury tax this evening in adjournment debate. As we all know, taxes help pay for the government programs and services that all Canadians depend upon, and they provide a social safety net on which all Canadians can rely. The usefulness of this social safety net was very obvious during the pandemic.
While many Canadians have sacrificed a lot to keep our economy going through the pandemic, we also know that some of the wealthiest have done quite well. We believe that it is only fair to ask those who can afford to buy luxury goods to contribute a little bit more. That is why the government followed through on its commitment to introduce a tax on select luxury goods in budget 2021.
Our government proposed in budget 2021 the introduction of a tax on the sale of new luxury cars and aircraft with a retail price of over $100,000 and on new boats over $250,000. It is estimated that by this measure we will increase federal revenues by $654 million over five years starting in 2021-22. I would like to reassure my colleagues that the luxury tax only applies to boats above a quarter of a million dollars and has an effective rate less than 10% for boats less than $500,000.
I think we should also all be mindful that the $250,000 price threshold is 3.3 times the median household income in Canada before taxes. We also have seen recent reports the demand for luxury goods is strong and has continued throughout the pandemic. We are definitely not targeting middle-class Canadians with this measure. We are simply asking those who can buy these luxury goods to make an additional contribution.
I understand that my hon. colleague is concerned that the luxury tax will negatively impact the tourism industry in his region. However, I would like to reassure him that families that are renting or chartering new houseboats in the Shuswap region would only bear a very small portion of this tax, as it would be spread out over all the charters over the useful life of the houseboat.
Finally, the government is not implementing this new tax alone or blindly. Canadians have been consulted about it, and the draft legislative proposals were released in March of this year. Subject to parliamentary approval, this tax would come into effect on September 1, 2022.
I look forward to following up with my hon. colleague if he has any further questions or comments.