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


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’.




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.




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.




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?



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

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.




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.



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
  Candadian Taxpayers Federation web site
  Mar. 18, 2002. 01:00 AM Air fee too high Toronto Star