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IATA: Soaring Ontario Fuel Tax Will Hurt Provinces Jobs, Economy

Travel News Asia Videos Podcasts Latest Travel News Asia Monday, 5 May 2014
 

IATA has expressed its shock and disappointment over the Ontario governments proposal to more than double the Provinces aviation fuel tax.

The fuel tax already costs Ontario travelers and shippers over C$60 million annually. When fully implemented, the increase from C2.7 cents per liter to C6.7 cents per liter will add more than C$100 million per year to the cost of air transport in the province.

At a time when the government is proposing to spend some $2.5 billion to attract businesses to Ontario, why make air connectivity more expensive? Businesses depend on cost-efficient air connections. So the proposal runs at cross-purposes to the initiative to attract new investment by making the province less competitive, said Tony Tyler, IATA Director General and CEO. If implemented, this tax hike could literally drive travelers and shippers away from Ontarios airports. Aviation is intensely competitive and air travelers and businesses have options to spend their dollars elsewhere, using nearby airports.

According to the Hotel Association of Canadas Annual Travel Survey, already 17% of Canadian travelers crossed the border for less expensive tickets last year. For Ontario, the figure was 23%.

Dollars and jobs are flowing south, away from Ontario, and this tax increase will only hasten the exodus, said Tyler.

Aviation in Canada contributes C$42.3 billion or 2.8% of GDP and supports some 550,000 jobs including the benefits of aviation-supported tourism.

Toronto Pearson is Canadas busiest airport. Air travelers there are paying a heavy price for the governments short-sightedness. Ontario should follow the example of British Columbia, which eliminated its provincial fuel tax, a step that helped Vancouver International Airport consolidate and strengthen its position as a leading transpacific gateway, said Tyler.

Taxing fuel for international flights (including trans-border flights) violates longstanding international agreements including the Chicago Convention.

This tax hike is just wrong and must not be implemented. It makes no economic sense because it will be a blow to Ontarios competitiveness at a time when job creation is a priority. Flouting ICAO standards and agreements sets a very bad precedent at a time when the Canadian government is calling on other governments to follow ICAOs leadership in key areas such as the environment. And adding insult to injury for the travelers and shippers who will be affected, none of the planned increase is fuel tax will be invested in aviation, said Tyler.

See also: Air Canada Opposes Proposed Ontario Budget Increases to Aviation Fuel Taxes

IATA, Canada, Ontario, Fuel, Tax

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