Mr. Speaker, I have a few remarks to make in addition to what I said at the previous readings. These remarks are with regard to the amendments presented by the Bloc, the Official Opposition, on the air transportation tax.
We will be opposing the bill because of the reduction in taxes on tobacco and so on. Basically we support the government in the other aspects of this omnibus bill. We support the government's changes to the air transportation tax. It is moving toward privatization, moving toward user pay, moving toward cost recovery so that this part of the industry does not have to be
supported by government. That is why we oppose the amendments the Bloc is making because it will take away from the direction in which the government is moving.
There is currently a flat fee of $10 plus 7 per cent to a maximum of $40 on all airline tickets purchased in Canada. These fees are part of the Excise Tax Act even though they appear to be closer in function to a user fee than actual taxes. All the revenue is directed toward the Department of Transport which routes the funds to the aviation component of their expenditures. This tax makes up most of the funding for aviation services provided to all Canadian airports whether they are public or private. These services include air traffic controllers, aviation control for take off and landing and air navigation costs.
Current revenues from this tax of nearly $600 million do not fully cover the government cost of aviation which runs at about $870 million. Because of the implementations the government wants to make, this airport tax would come closer to meeting the actual costs of this by the airlines, then we would support that and therefore oppose the amendment.
To reduce the tax burden on short haul, domestic and trans-border flights by decreasing the flat charge per ticket and increasing the maximum fee is one change that was to be made, along with a flat fee decreasing to $6 and the maximum increasing to $50. This is good.
Last, the change would bring an additional $24 million in 1994 and an additional $41 million in 1995. That is a positive move. The burden on the taxpayer would be reduced.
In analysing this, this levy should not be part of a complicated tax system. The funds do not go into general revenue but are spent specifically on aviation. Therefore we should change this into a user fee on a full recovery basis.
We support these changes toward this move to more fully recover the costs that are experienced in this area. However we also acknowledge the difficulties with giving any department both a monopoly on revenues and a monopoly on service delivery. Mechanisms must be in place to ensure cost effective delivery.
Perhaps we should look closer at what the possibilities for privatization of these services are. We could probably even save the government more money if we looked at this whole area of privatization.
We support this change. It makes the air transportation tax move toward a full cost recovery basis. Further moves in this direction should include changing the tax to a user fee administered by the Department of Transport. This would necessitate adequate competition in place to ensure cost effective delivery service.
In summary, we are opposed to the amendments that the Bloc is making. We support the direction in which the government is going. It is not far enough but it is heading in the right direction. We would like to see it consider more privatization of this and more of a user fee cost recovery basis.