Thank you, Mr. Chairman and members of Parliament. On behalf of the Canadian Owners and Pilots Association, COPA, I thank you for the opportunity to appear before the committee today.
We are very concerned about the proposed provision of a luxury tax on new aircraft in Bill C-30. The equivalency placed on a $100,000 car to an aircraft of the same value as being a luxury is flawed. While there are hundreds of conventional and hybrid green automotive brands selling below that threshold, there are virtually no available new aircraft or helicopters. There is an abundance of new boats that can be purchased for less than $250,000. A basic single-engine aircraft used for flight training sells today for $500,000. The threshold placed on new personal aircraft is a highly unrealistic one.
Thinking that only the wealthy own private aircraft in Canada is misrepresentative. Among the Canadians who own personal aircraft are medical professionals who travel to remote and northern communities not serviced by commercial charter operators, to service and treat their patients. Small business owners use their personal aircraft in locations that are also not accessible to mainstream operators, ensuring their goods and services are available to all Canadians. Farmers depend on their crop-dusting aircraft as a tool to ensure the successful production of their crops. Personal aircraft are used to transport food, clothing and other essential items to smaller communities hit hard by major storms or events like COVID-19, and also used by flight training schools.
Budget 2021 proposes that the tax apply to all new aircraft suitable for personal use, and that, as a general rule, large aircraft typically used in commercial activities, such as those having a certified maximum carrying capacity of more than 39 passengers, be excluded from the base. These are medium and large aircraft classifications and, therefore, it implies that all small aircraft would be taxed.
Aircraft in Canada are registered with Transport Canada as either private or commercial, regardless of classification. Therefore, the tax would apply to all small private or commercial aircraft.
Who owns these aircraft? In 2021, a little over 100 new aircraft were registered as private and 25 registered as commercial. Of the private, 50% were registered to an individual. The balance are registered to a business, the same small businesses that have been pushed to the brink and beyond, such as farmers for crop-dusting and flight training schools. Of the small commercial aircraft, 63% are crop-dusters, 12% are flight training aircraft used for the training of the next generation of airline pilots, and 25% are air charters used for cargo, bringing medical supplies, food and essential goods to remote and northern regions of Canada.
Who, then, will truly be impacted by this new luxury tax? It will be the air operator who serves Canada's remote and northern regions and contributes to the travel and tourism industry, one of the hardest-hit industries due to COVID; flight training schools; frontline workers accessing remote communities; aircraft manufacturers based in Canada; and farmers.
Operators who purchase new aircraft and pay the tax will pass that cost on to the customer. Flight training schools will charge more for flight training. Farmers will have to charge more for their crops. In the end, it isn't the so-called wealthy Canadian paying, but the middle- to lower-class consumer who will be paying the price for the tax.
This new tax might also have environmental and safety impacts by discouraging the purchase of new aircraft with lower operating costs and greener technology. The more onerous the cost of ownership becomes the less pilots will fly, thus affecting the essential business that our aerodromes and local communities rely on. Our vulnerable airport system has already been experiencing difficulties, especially this past year. The thousands of aerodromes in Canada, many located in remote communities, depend on general aviation.
Based on an economic impact study of general aviation in Canada in 2017, this sector contributes $9.3 billion in economic output nationally and directly accounts for almost 36,000 full-time jobs in communities across the country. The report highlights the benefits that general aviation operations bring to communities and to the Canadian economy. Penalizing this industry with an arbitrary tax will harm the Canadian economy as a whole.
The vast majority who own these new aircraft are not the most affluent Canadians. It will mostly penalize the agriculture industry, educational institutes, remote communities and aircraft manufacturers in Canada. COPA is recommending that the Canadian government re-evaluate the criteria of its proposed new luxury tax and exclude all new aircraft typically suited for personal use from its proposal.
Thank you again for the opportunity to voice our concerns. We remain available to provide additional feedback.