Evidence of meeting #10 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was interest.
A recording is available from Parliament.
12:35 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
Your answer raises this question: the revenue collected with those increases will not go into a fund specifically dedicated to passenger safety but into the Consolidated Revenue Fund?
12:35 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
Correct. These are revenues that are collected. It's the air travel security charge. The revenue is collected by the carriers and it then goes into the CRF, the consolidated revenue fund.
12:35 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
Indeed. As we were told a long time ago, a buck is a buck is a buck. Everything is put into the system and then money is withdrawn to pay for expenditures. So, the revenue from the fee is not explicitly linked to safety expenditures. At the end of the day, it is virtual.
12:35 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
There's a process in place. There's normal reporting in terms of how security is financed and the link between revenues from the ATSC and the security expenditures. It's normally reported. It's been reported in past budgets. There is an audit process by the Auditor General that reports on how those revenues are used and the link between the revenues and the expenditures.
April 22nd, 2010 / 12:35 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Thank you to all the witnesses.
I would like to continue with you, Mr. Achadinha. The fee increase which is about 53% is based on the user-pay principle. It is really based on the users paying the cost, that is to say by air passengers only.
12:35 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
Correct. The air travel security charge is levied on air travellers. It's collected by the carriers, and the air travellers are the people who principally benefit. Those are the people who get the direct benefit from the enhanced travel. Therefore, the principle is that the air travellers pay for the cost of the air travel security system.
12:35 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Did you submit those questions to various groups of persons or organizations in order to consult them before charging those new fees?
12:35 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
On the increases in the charge, there have been discussions I believe between Transport Canada and the security agencies regarding new security measures and what's required. A lot of the security measures are international in context. In order to fly into a foreign airports, those airports require some sort of clearing, and there are agreements before they will allow you in. So they require some sort of screening, some level of screening, before they'll allow you to land. For example, after certain events, there is an increase in the level of screening and of the expectations of the screening that will be done on foreign flights going into some countries. So you have to provide that level of screening in order to enter into those other countries.
12:35 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Have any other countries also had to raise their fees for airport safety? If so, how were those increases received in those countries?
12:35 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
I'm not familiar with how well it was received. I know there is a proposal in place right now in the U.S. to increase the level of the charge for security.
12:35 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Do you know if there are any other countries, in the European Union for example...
12:35 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
I'm not familiar if there have been any changes. I know there are security fees. It's difficult to compare security charges in Canada versus those elsewhere, because they are often lumped together with different fees. There's a customs fee. They are all together in one fee, so it's really difficult to compare them. A lot of them are for the air travel system in terms of all of these other things, such as clearances, which are sometimes all packaged together as one fee in other countries. So it's difficult to compare them. It's not apples and apples; it's apples and oranges.
12:40 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
All right. Thank you.
12:40 p.m.
Conservative
12:40 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Thank you, Mr. Chair.
I know this is a new tax, so it's a projection. Has there been any projection as to what the cost will be? A tax is a tax, and we never seem to see taxes go down. Is this going to be temporary? Has there been a budget made up to make sure that we're going to be spending this revenue on security? What's happened in the past, if we were to compare revenues versus expenses for air security charges?
12:40 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
The announcement made on February 25 basically indicated that there would be an additional $1.5 billion provided for enhancing the air travel security system. The commitment is that these new revenues that will be derived from the increase in the charge will roughly offset that amount over five years.
12:40 p.m.
Liberal
12:40 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
The intent is that it has to be in line. There has to be a balance.
12:40 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
What's happened in the past? There is an amount right now being charged.
12:40 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
I believe that if you look at the budget of 2008-09, it was indicated that cumulative revenues and expenses for the air travel security system were roughly offset. Up to that point in time, it was roughly equal. It was in balance.
12:40 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
Much of what I was going to ask about this has been answered, but I think it's worth noting your point that this is a principle that the user, the beneficiary, of this particular service should pay for this service. That's getting to be a real hallmark, a trend, of the government. If you're cutting taxes here, you're raising service fees on the other hand. Ultimately, you're still paying more.
The system can't be viewed as a dedicated tax if it still goes into general revenues. It still goes into the same pool. You say there is an accounting at the end. The Auditor General may find that the amount submitted is roughly the amount spent on that service, but there is no obligation. The government can spend that money on whatever they want, really. And that's what concerns Canadians, I think.
A 52% increase is actually massive, even if it's a relatively small amount of money. Is this strictly to pay for the new body-scan machines, or was this service operating at a loss already, and if so, by how much? In other words, were we breaking even prior to Mr. Baird announcing the new body-scan machines?
