Thank you, Mr. Chair.
Good afternoon, everyone. It's a real pleasure to be here on behalf of the Aerospace Industries Association of Canada. Our members represent over 95% of aerospace activity in Canada, covering the civil, defence and space sectors.
I'm especially happy to see that David Chartrand is also appearing today. David and I have worked closely on the significant concerns we both have regarding the select luxury items tax act, specifically the negative impact it will have on the industry and the workers.
Despite perhaps being well intentioned, the tax as currently drafted will penalize manufacturers and Canadian workers. To be clear, this is a tax on manufacturing, and forcing manufacturers to pay this substantial tax will render Canadian manufacturers less competitive and directly translate into lost business and lost jobs. In fact, the industry estimates losses of over 1,000 Canadian jobs and potentially up to $1 billion in lost revenue to companies across the country.
This tax will affect not only large companies. It will have an impact on companies of all sizes in all regions throughout the Canadian supply chain. We are told that some manufacturers are already experiencing order cancellations due to this potential tax. This tax would put our industry at a significant disadvantage compared to international competitors, and it comes at a time when they're still recovering from the COVID-19 pandemic, during which 30,000 workers lost their jobs.
Lessons can be learned from other countries that introduced such a tax only to ultimately repeal it because of the significant damage it caused to their domestic manufacturing sectors. This was seen in the U.S. in the early nineties, where a similar tax was introduced only to be repealed two years later.
While political marketing of a luxury tax may sound good from a political perspective, the reality for those of us in the industry is the complete opposite. Rather, I would encourage members of this committee to focus on the economics and on how we can protect and grow the jobs here in Canada and support an industry trying to recover. This tax does the opposite.
We have been asking the government to conduct all the necessary economic analysis to ensure that this legislation will not have a detrimental impact on the industry in Canada and our employees from coast to coast. It is our understanding that no review was completed with respect to this tax. Therefore, we're asking that aircraft be removed from this legislation.
If the government is determined to forge ahead despite the negative impacts, it should be open to amendments to soften the impacts on the industry. The Deputy Prime Minister and Minister of Finance has stated that this legislation may need improvement and says she wants to work with industry to resolve the issues. We have recommendations to help mitigate the impacts, which we've shared with the government.
Let's not crush domestic demand in the manufacture and final assembly of business aircraft, helicopters, turboprops and jets, not to mention the associated supply chain for parts, systems and services, as well as maintenance, repair and operation. The real question is, why put this at risk?
I should say it's a real frustration to our members that in budget 2021—the same budget that first introduced this tax—the government recognized that the industry was hit hard by the pandemic and provided significant funding to the industry to help it recover, and then on the other hand talked about implementing this tax.
This tax will damage the national strength of an industry that is still working toward recovery and making tremendous strides when it comes to green innovation. No other jurisdiction is doing this. Our loss will be a gain to U.S. aerospace and other competitor nations that want what we have. All policy levers should be pulled in the same direction to support the recovery of this strategic sector. That's also why our industry has been calling for a national aerospace strategy. Having a coordinated plan for this industry would avoid this kind of situation.
We need to leverage our strengths, not penalize them. If this tax is implemented as it's currently designed, Canadian businesses and workers will pay the price. There is an opportunity in front of us to get it right.
Thank you very much for your time and your support. I look forward to your questions.