Valid Flying Tax Questions Remain Unanswered

Minister of Transport David Collenette and Minister of Finance Paul Martin

Valid Flying Tax Questions Remain Unanswered

Ottawa - Friday, March 22, 2002 - by: Walter Robinson, Federal Director, Canadian Taxpayers Federation

ram
through
The federal Liberals recently shut down debate for the 75th time since taking power in 1993. This time it was to ram through the new Air Travellers Security Charge (ATSC), aka: the ‘flying tax’.

April
Fools
At best, this is a cruel April fool’s joke: at worst, it represents flawed public policy. A one-way ticket for travel within Canada will increase by $12 while the price of a round trip fare will jump by $24. A flight to the U.S. will cost you an additional $12, international jaunts, $24.

CATSA
The flying tax is part of the government’s post-September 11 security agenda. Last December’s Budget indicated the flying tax would raise $2.2 billion over five years with an equivalent amount earmarked for security expenditures to be directed the Canadian Air Transportation Security Authority (CATSA), a new agency.

cost $1B
takes in$3B
But so far, only $1 billion in new equipment acquisitions have been budgeted. And the $2.2 billion estimate was based on flat line passenger volumes. With Air Canada recently reporting a rebound in traffic, industry volumes will surely climb which has led some to predict a tax haul closer to $3 billion.

Undertaker
of
Transport
This blatant cash grab by the Minister of Taxes, Paul Martin, perpetuates flawed federal aviation policy so blame must be equally shared with his cabinet colleague, David Collenette, the Undertaker of Transport, who has presided over the death of several airlines including Greyhound, Royal, Roots, Canadian Airlines, CanJet and Canada 3000.

This tax yields several questions.

Why do we have to pay a tax for bomb detection equipment that is on backorder worldwide and for the CATSA bureaucracy — that by the government’s own admission — will not be in place until the fall? Why does the government insist on appointing CATSA officials through patronage instead of hiring qualified officials in a transparent manner?

Why does Canada need a new federal security authority at all? Why not just set stricter security regulations and standards for airport authorities and airlines and allow market flexibility and discipline (read: big ticket fines) to determine the appropriate funding structure?

Why were no tax impact assessments completed? Why is Ottawa violating Treasury Board guidelines that mandate the completion of impact assessments before new fees are introduced? How will this charge improve competition and encourage growth in Canada’s airline industry?

Why wasn’t the fee set per flight segment (the U.S. model) travelled? Or as a percentage of ticket price or distance travelled? Why not have a phase-in period? Why did the commons Finance Committee, during its limited hearings, reject all these options?

travellers
pay all
In principle, the Candadian Taxpayers Federation supports user fees. But where does Ottawa draw the line between public safety and private benefit? Why will public security costs at airports be borne solely by travellers?

10 times
more
victims
On September 11th, terrorism was directed against the state. So why doesn’t the state play a greater role in its anti-terrorism response? Almost 2,700 citizens tragically lost their lives on the ground on that fateful day with another 265 perishing on the hijacked flights. The point here is not to count the fatalities but to stress that ten times as many people perished who weren’t flying as those who were.

tax
grab
What governance mechanisms will be in place to ensure that all monies raised go directly to aviation security measures? As presently constituted, the flying tax will flow directly into the consolidated revenue fund. It appears to be just another EI surplus fiasco.

ground
the tax
On these questions, the silence from Ministers Martin and Collenette speaks volumes. Travellers, industry stakeholders, and the opposition parties all agree that the flying tax should be grounded.

Walter Robinson
Federal Director

References:

Candadian Taxpayers Federation web site

Mar. 18, 2002. 01:00 AM Air fee too high Toronto Star


	Minister of Transport David Collenette and Minister of Finance Paul Martin

Valid Flying Tax Questions Remain Unanswered

Ottawa - Friday, March 22, 2002 - by: Walter Robinson, Federal Director, Canadian Taxpayers Federation

ram through	The federal Liberals recently shut down debate for the 75th time since taking power in 1993. This time it was to ram through the new Air Travellers Security Charge (ATSC), aka: the ‘flying tax’.

April Fools	At best, this is a cruel April fool’s joke: at worst, it represents flawed public policy. A one-way ticket for travel within Canada will increase by $12 while the price of a round trip fare will jump by $24. A flight to the U.S. will cost you an additional $12, international jaunts, $24.

CATSA	The flying tax is part of the government’s post-September 11 security agenda. Last December’s Budget indicated the flying tax would raise $2.2 billion over five years with an equivalent amount earmarked for security expenditures to be directed the Canadian Air Transportation Security Authority (CATSA), a new agency.

cost $1B takes in$3B	But so far, only $1 billion in new equipment acquisitions have been budgeted. And the $2.2 billion estimate was based on flat line passenger volumes. With Air Canada recently reporting a rebound in traffic, industry volumes will surely climb which has led some to predict a tax haul closer to $3 billion.

Undertaker of Transport	This blatant cash grab by the Minister of Taxes, Paul Martin, perpetuates flawed federal aviation policy so blame must be equally shared with his cabinet colleague, David Collenette, the Undertaker of Transport, who has presided over the death of several airlines including Greyhound, Royal, Roots, Canadian Airlines, CanJet and Canada 3000.

	This tax yields several questions.

	Why do we have to pay a tax for bomb detection equipment that is on backorder worldwide and for the CATSA bureaucracy — that by the government’s own admission — will not be in place until the fall? Why does the government insist on appointing CATSA officials through patronage instead of hiring qualified officials in a transparent manner? Why does Canada need a new federal security authority at all? Why not just set stricter security regulations and standards for airport authorities and airlines and allow market flexibility and discipline (read: big ticket fines) to determine the appropriate funding structure? Why were no tax impact assessments completed? Why is Ottawa violating Treasury Board guidelines that mandate the completion of impact assessments before new fees are introduced? How will this charge improve competition and encourage growth in Canada’s airline industry? Why wasn’t the fee set per flight segment (the U.S. model) travelled? Or as a percentage of ticket price or distance travelled? Why not have a phase-in period? Why did the commons Finance Committee, during its limited hearings, reject all these options?

travellers pay all	In principle, the Candadian Taxpayers Federation supports user fees. But where does Ottawa draw the line between public safety and private benefit? Why will public security costs at airports be borne solely by travellers?

10 times more victims	On September 11th, terrorism was directed against the state. So why doesn’t the state play a greater role in its anti-terrorism response? Almost 2,700 citizens tragically lost their lives on the ground on that fateful day with another 265 perishing on the hijacked flights. The point here is not to count the fatalities but to stress that ten times as many people perished who weren’t flying as those who were.

tax grab	What governance mechanisms will be in place to ensure that all monies raised go directly to aviation security measures? As presently constituted, the flying tax will flow directly into the consolidated revenue fund. It appears to be just another EI surplus fiasco.

ground the tax	On these questions, the silence from Ministers Martin and Collenette speaks volumes. Travellers, industry stakeholders, and the opposition parties all agree that the flying tax should be grounded.

	Walter Robinson Federal Director

References:
	Candadian Taxpayers Federation web site

	Mar. 18, 2002. 01:00 AM Air fee too high Toronto Star