Rarely is a minority government so brazen as to table a budget that includes both tax hikes and an increased deficit. But the Liberal budget that triggered the current provincial election did just that. The government proposed dozens of tax increases and spending measures that will likely be debated throughout the current election. One major tax hike, however, has yet to be noticed.
Kathleen Wynne's budget proposed a new tax that will increase the average price of an overseas trip for a family of four by hundreds of dollars. This 148 per cent hike on aviation fuel tax, from 2.7 to 6.7 cents per litre, comes at a time when other jurisdictions like British Columbia have eliminated this tax altogether.
Flying in Canada is already obscenely expensive, thanks to a host of taxes, fees, charges, rents, and regulations imposed by both the federal and provincial governments. The "no frills" flying frenzy that swept Europe, the U.S. and even Asian markets with budget fares over the last decade passed right over Canada.
According to a World Economic Forum report, Canada ranked 136 out of 140 countries in terms of ticket taxes and airport charges. Likewise, a report prepared for the Senate Standing Committee on Transportation and Communications states that Toronto's Pearson airport is the most expensive airport in the world at which to land a plane.
Consider an Ontario family flying to visit their snowbird grandparents in Orlando, Florida. A typical ticket price from Pearson would be $208 per person or about $830 for a family of four. If that family was to cross the border and fly from Buffalo, ticket prices drop to $144 per person, totalling $576. That is 44 per cent less. You may think that the price is cheaper because U.S. airlines are more competitive and drive down the price for consumers. But that is not the case from a small airport like Buffalo. The base ticket price from Buffalo is $124 compared to $118 from Toronto. The Toronto traveller pays nearly 450 per cent more taxes.
And this is before the aviation fuel tax is more than doubled, as proposed in the Liberal budget.
Canadian travellers already get dinged with an NAV Canada Surcharge, Canadian Airport Improvement Fee, CATSA Security Charges, U.S. taxes and fees, plus Canadian excise taxes. Canadians also pay the highest security fees in the world, by a significant margin.
Even the management agreements of Canadian airports mean higher prices for fliers. Airports pay rent to the federal government based on a long-term lease agreement, so the more money an airport brings in, the more they must pay back to the government. Toronto Pearson, Montreal, and Vancouver airports each are forced to pay 12 per cent of gross revenues in a scheme that more resembles a tax than rent. No wonder Canadian airports struggle to establish themselves as major global hubs, let alone compete with small airports south of the border.
American airports use this to their advantage. Buffalo airport's website has a dedicated tab on its landing page for Canadian travellers, boasting of lower prices and warning that "if you fly from Toronto Pearson to the U.S. you can expect government-imposed charges of up to $200 per roundtrip ticket."
Buffalo is not unique in this pitch. Plattsburgh N.Y. already calls itself "Montreal's U.S. airport," and some travel sites refer to Bellingham, Washington's airport as the "Bellingham-Vancouver Airport."
Canadians are tired of being ripped off and paying more than our American neighbours. Given that 75 per cent of our population lives within a 90-minute drive of the U.S. border, many Canadians already cross the border to buy everything from clothes, to dairy, to alcohol and even gas for their cars. This trend is no different when it comes to air travel, as an estimated five million Canadians choose to fly from the U.S. rather than their local Canadian airport.
Hiking jet fuel taxes will simply worsen this trend.
The Wynne Liberals are ignoring the fact that Toronto is already the most expensive city for air travel by slapping another tax increase on already over-taxed travellers. Kathleen Wynne has opted for a tax hike in the face of overwhelming evidence that the high cost of travel is a problem for Ontario families saving for a vacation in the dead of winter or trying to visit relatives overseas.
Unfortunately for Kathleen Wynne and the Ontario Liberals, this is just one on a long list of policies that will drive jobs and economic activity out of the province. But it's time that the proposed jet fuel tax hike gets the attention it deserves.
CTF's new report Failure to Launch: How Ontario is Being Held Down by Bad Aviation Policy can be found here: http://www.taxpayer.com/presentations/failure-to-launch--how-ontario-is-being-held-down-by-bad-aviation-policies-19178
*This piece appeared in the Thursday, May 15 edition of the National Post.