Thank you, Mr. Chair.
I want to start by thanking my fellow members for making their positions clear on the suite of amendments to this clause.
This is obviously the most problematic clause in Bill C-19. We are talking about a new tax, 170 pages' worth. My party and I support the principle of taxing luxury items. It allows for a better balance of wealth, whereby everyone contributes to public services on the basis of what they can afford. We support that principle.
What industry manufacturers and unions told us, however, is that this tax was poorly thought-out. Since it will probably be adopted, it will have significant consequences. If the amendments are defeated, I sincerely hope that, come the fall, the government will fix the situation and we'll end up with a tax that does not hurt the industries in question or jobs. Obviously, we'll believe it when we see it, as Quebec comedian Yvon Deschamps used to say.
In the case of this tax, it's easier for the government, the state, to tax the manufacturer, when the consumer should be paying the tax. There is a lot of bias in the 170 pages that deal with this tax.
For example, most aircraft subject to the tax are exported, somewhere in the neighbourhood of 90% or 95%. My sense is that laziness is to blame for the way the bill is drafted, in other words, taxing every aircraft that is manufactured and providing for the possibility of a refund afterwards. Department officials told us that this was done on a quarterly basis, but manufacturers told us that aircraft often had to undergo numerous modifications and that it could take six, nine or 12 months before the refund is issued.
Manufacturers are being saddled with an administrative burden. They need cash, but they have to fork out hundreds of millions of dollars upfront, all because the tax is poorly designed. BQ‑6 would make clear that aircraft intended for export are excluded from the tax.
These amendments are meant to make the tax better and fix the problems with it. What members need to understand is that those problems will not be fixed. Industry stakeholders told us about instances where a company purchases an aircraft for business use and entrusts another company with managing the aircraft. That company can, in turn, rent out the aircraft when it's not in use. At the time of sale, the manufacturer must ensure that the aircraft purchased by the company and managed by an air charter company will not be rented out for personal use more than 10% of the time. All of that places a disproportionate burden on manufacturers' shoulders. It's virtually impossible to impose such a thing from the outset.
The amendments would help solve those problems. Lowering the proportion of business use from 90% to 75% would give manufacturers some breathing room and ensure that the tax does indeed target luxury items, instead of crippling the aerospace sector. Essentially, the idea behind the amendments was to make the tax less punitive for the oh-so-important aerospace sector and the other affected sectors.
The intent was not to have wealthy people who buy luxury goods pay less. It was to make the tax work better so that it doesn't unduly hurt manufacturers. At the end of the day, in its current form, the tax hurts manufacturers because it applies to activities that the spirit of the act does not cover. The administrative burden created by this measure is terribly onerous.
I want to stress to committee members that our aerospace sector faces fierce competition from players elsewhere in the world, in particular, Seattle, in the United States, and Toulouse, in France. Every other country has policies to support its aerospace economy. The aerospace sector adds tremendous value to our economy.
Canada is the only country with an aerospace sector of this size not to have a policy that supports the industry, such as through government procurement. On top of that, the government is bringing in a new tax. Industry representatives told us this measure would hurt the sector's reputation. The International Air Transport Association said that it might move. That shows that this is damaging the industry's reputation.
Even if all the problems were fixed in the fall—again, we'll have to see it to believe it, to quote Yvon Deschamps—it would still mean months of uncertainty. Meanwhile, the industry will realize that, if it wants to grow, it should go somewhere other than Canada. After all, the government is sending the message that it does not plan to help the industry. Canada would be the only country in the world not to support its own industry. It's beyond me. All of this is mind-boggling.
I thank my fellow members for expressing themselves so clearly, but if all the amendments being proposed are defeated, the economy and good jobs are going to take a major hit. The message being sent would fuel uncertainty and hurt Canada's credibility when it comes to building and strengthening the domestic aerospace cluster and supporting those jobs.
Thank you, Mr. Chair.