Thank you once again, Mr. Chair.
Once again, I'm going to discuss the luxury tax that would apply to aircraft used for personal purposes.
We realize the tax applies to sales made in Canada, not to sales of aircraft for export. However, the tax is designed in such a way that the manufacturer pays the tax on all aircraft, including those that are exported, and is reimbursed once they've been exported. It's all done on a quarterly basis, as we were reminded during the technical briefing.
However, industry representatives tell us the quarterly basis is a problem because, in actual fact, an aircraft sold to a person outside Canada may remain in Canada for several additional months to be modified as the purchaser wishes and therefore may be in the country far more than three months longer.
For the primary manufacturer that exports these aircraft, the exported portion represents a very high percentage of its production, approximately 90%. That therefore reduces the manufacturer's cash flow because it's required to pay the luxury tax on every aircraft produced, whereas a very small portion of its production is sold in Canada or to Canadians. That causes a liquidity problem.
In real terms, as a result of months of waiting, this may represent hundreds of millions of dollars that have to be advanced because that's how the tax is designed.
My question is for the Department of Finance representatives.
Was this problem considered, and what solutions were proposed?