Without the fee increases, Passport Canada would not be able to maintain current operations, let alone offer security-enhanced travel documents, the agency says.
New regulations posted this week confirm the cost of a five-year passport will increase to $120 from $87.
And starting in July 2013, a 10-year passport will also be offered at a cost of $160.
By March 2014, Passport Canada will also charge an additional $45 to replace a passport that's lost or stolen, something that's currently free. Approximately 55,000 Canadian passports are reported lost or stolen annually, the agency said.
As well, anyone ordering or wanting to receive their passport outside of Canada will see fees nearly double.
The agency said it's currently losing nearly $5 every time it issues a passport, and has been financing its deficit by using previously accumulated surpluses that will run out next year. Passport fees in Canada have not increased for nearly a decade, the agency noted.
"Passport Canada is quickly reaching a point where not only will new advancements such as the ePassport be impossible, but the organization's ability to maintain current operations and deliver its mandate will be jeopardized," the agency said in a statement posted on the Canada Gazette website.
"Passport Canada must secure a fee increase to introduce the 10-year ePassport, keep pace with technological advancements and maintain its current level of service for Canadians."
Foreign Affairs Minister John Baird announced in October that Canada would adopt new passports that include chip technology and watermark images designed to prevent fraud.
The ePassport looks like a regular passport booklet, but contains an electronic chip that holds all of the personal information listed on the second page of the document.
The chip — already being used in dozens of other countries — can be read by border authorities to confirm the passport is valid.
Canada is the only G8 country that doesn't currently issue ePassports to the general public, although it has been issuing chip-enhanced diplomatic and special passports since 2009.
The new passports will also contain watermarks depicting iconic images from Canadian history.
Canadians ordering passports from outside the country will see the biggest jump in fees. It will cost $190 to apply for, or receive, the five-year document in another country, up from $97. The fee will be $260 for the 10-year version requested under the same circumstances.
The cost of a child's passport is also going up to $57, an increase of $20, if ordered domestically. It'll cost $100 if the child's application is processed outside Canada.
The increases may be too much of a burden for seniors or low-income Canadians, Passport Canada acknowledged in the regulations.
"Consultations have demonstrated that some segments of the Canadian population may be more sensitive to an increase in passport fees," the agency said in its cost-benefit analysis.
The solution suggested? Alternative travel documents, or none at all.
"Canadians unsatisfied with the passport fee increase may also choose an alternative travel document, such as a NEXUS card," the agency said.
"Or (they may) decide not to travel."
The NEXUS card can only be used as valid identification for travel between Canada and the United States.
It currently costs American citizens US$110 to renew a passport in the United States, or US$135 for a new one.
In the United Kingdom, an adult passport will set back residents there the equivalent of about $117.
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