Mr. Speaker, I am pleased to speak on behalf of my constituents in the riding of Abitibi, and the residents of all remote ridings, concerning Bill C-32. This bill to amend the Excise Tax Act, the Excise Act and the Income Tax Act essentially contains amendments to taxes on tobacco products and, in sections 2, 3 and 4, amendments to the air transportation tax.
It is particularly in reference to these airline ticket taxes that I would like to address the House for a few minutes, in order to show that the government has not achieved its objectives and that, in addition, regions outside the network of major population centres will be penalized.
In order to judge this new rate structure, I will take a few minutes to compare the present and proposed tax rates. The present rate consists of a basic tax of $10-as the parliamentary secretary mentioned-on each ticket, plus 7 per cent of the price of the ticket, to a maximum of $40. The new structure would feature a basic tax of $6, plus 7 per cent on the price of the ticket, to a maximum of $50 for expensive tickets.
To justify this new structure, the government cites the following objectives: first, to increase the amount of money recovered-which seems fair and legitimate-for air transportation facilities and services provided by Transport Canada; and second, to reduce the tax burden on short-haul flights to small localities. We, in remote areas of the country, are those small localities. We are directly affected, and we do not understand why the second objective could not be achieved.
This new rate structure does not achieve the targeted objectives, in particular reducing the tax burden on flights to small localities-mostly to remote areas of the country. Obviously, the new rate structure will make it possible to collect much more money to cover Transport Canada's costs. As the member for Témiscamingue put it, $24 million more will be collected in the first year and $44 million more in subsequent years.
This money will come primarily from the increase in the maximum tax from $40 to $50, notwithstanding the loss of revenue from having lowered the basic tax to $6 from $10. This meets the government's first objective to increase the recovery of the cost of facilities. Of course the government has another reason for introducing this new rate, and that is why we will focus mainly on the second objective, which is to reduce the tax burden on short-haul flights.
However, this objective has not been met. In fact, air transportation to remote areas has been adversely affected since deregulation, since the full cost is now being borne by these areas. The price of a ticket to some destinations has gone up considerably in recent years. For instance, Montreal-Rimouski costs $552 plus tax. Ottawa-Montreal-Val-d'Or, a flight I take every week, costs me more than $550 plus tax.
The reason is, of course, that there is less demand for these flights, and to make a profit, carriers have to raise their rates, as opposed to busier routes like Montreal-Toronto, where a regular ticket will cost around $400 for about the same distance. The new tax rate is based on the price and does not take traffic or distance into account. The government assumes there is a perfect correlation between price and distance, which is not the case. The price is based on two factors: distance and traffic.
This means that the government is wrong if it thinks that charging less tax on cheap tickets will benefit air transportation to remote areas. This policy will tend to benefit short-haul, high-volume flights like Montreal-Toronto, used constantly by business people, and charter flights.
Remote areas are already facing service cuts due to the present policy of privatizing air services. For the sake of fairness, people in the regions should be offered the same service as people in large urban centres. Regional air traffic control, firefighting services and weather forecasting will be mostly phased out or administered from the large urban centres.
Air services are vital to people in the north, and here I am referring to the Cree and the Inuit for whom air transportation often provide their sole access to basic services such as food, health care and postal services. In many regions, especially in the North, tourism is the only way they can develop their economy and become independent in the future.
With this new tax rate, travel will become even more expensive for foreign tourists, for the French and all the Europeans who come to see the vast expanses of our country, because of the already high cost of a regular ticket, which I mentioned earlier. This cost factor will prevent people in the North from developing their economy.
Here are a few examples of fares for these regions. If you want to go from Montreal to Iqaluit, in the Inuit territory, you may have to pay between $800 and $1,100, even more if you want to go to La Grande 2 or Saluit, and this is only one way. The return fare would be $1,100 to $1,600. Certainly, all these flights would be subject to the maximum tax of $50.
You could tell me that given the small number of flights it would not affect very many people. As I said, for Iqaluit there were 4,700 passengers in 1992, the last year for which data are available. By comparison, there were 86,900 passengers for Val-d'Or in 1992. For an area like Waskaganish, where air transport is the only thing available, 11,400 passengers. These people will have to pay increased fares.
I would like to tell the parliamentary secretary that it might have been possible-he said that they favour short distances-to add $4 or $5 to the Montreal to Toronto fare, and the Department of Transport would have collected as much money without penalizing people who depend on air transportation.
I would like to conclude that for people in my riding or any remote riding in Canada, clauses 2, 3 and 4, which may look innocuous, will mean an extra $10 per trip on the average. If you add this to all the other difficulties in remote areas, it becomes very difficult to control the tools of development. The government is siphoning more and more.
The motion presented by the Bloc Quebecois would delete clauses 2, 3 and 4 of Bill C-32, and maintain the status quo instead of hitting remote areas.