Taxes Are Killing Canada's Travel Sector Says Industry Coalition

by Mike Godfrey, Tax-News.com, Washington

02 April 2003

Canada's travel industry is being undermined by a series of punitive taxes and surcharges says a coalition of industry leaders.

The warning came at a news conference in which Tony Pollard, president of the Hotel Association of Canada, along with other influential members of the industry, accused the federal government of creating the "perfect storm for aviation disaster."

The alliance, known collectively as the Travel Industry Cost Coalition is made up from leading members of the Tourism Association of Canada, the Hotel Association of Canada, the Canadian Airports Council, the Association of Canadian Travel Agencies and the Air Transport Association of Canada.

Its mission, according to CEO of the Tourism Association of Canada, Randy Williams, is to reduce the burden of taxation and costs that are passed on to the travelling public as a result of government levies. The drop in demand for air travel has already forced some domestic routes to be cut back or axed, Williams revealed.

The coalition points to the $240 million in airline rents that the government collects annually as one of the most serious hindrances to the aviation sector, and claims that these rents have risen 500% in the last ten years.

Though Finance Minister John Manley cut Air Traveller Security Tax from $24 to $14 per round trip last month, the travel lobby group still argues that the rate compares unfavourably with other countries. The United States for example imposes a $7.56 levy per passenger, while even the ultra security conscious Israelis only impose a $12.42 per passenger levy.

The coalition also saw scope for a reduction in aviation fuel tax, which nets the government between $70 million and $90 million per year.

The industry's appeal has particular poignancy at present given the backdrop of the Air Canada crisis. The carrier is said to be in $12.9 billion of debt and losing $3.9 million per day. It has come to light that the federal government has passed on the opportunity of offering the airline a rescue package on condition that it files for bankruptcy protection. This is likely to antagonise the travel industry still further.

Recommended