Minister of Transportation and Infrastructure John Baird speaks at the Ottawa Airport on Feb. 25, 2010.Pawel Dwulit/The Canadian Press
It's not a tax, the Harper government says, but you still have to pay it.
Ottawa is slapping higher security fees on airline travellers a week before the 2010 federal budget - yet insists Conservatives are staying true to their pledge not to raise taxes.
Transport Minister John Baird said Canada had to act quickly in bringing in full-body scanners and extra security staff to address heightened American concerns regarding air safety. Airports around the world are beefing up anti-terrorism measures following a December incident that saw a Nigerian man attempt to light an explosive aboard a plane landing in Detroit.
The government describes the new charges as "user fees," rather than taxes. Some current government members once attacked the very item as an "air tax" while in opposition, but Mr. Baird dismissed such language Thursday.
"Tax rates in Canada are now the lowest they've been in 50 years," he said. "Our government has been about cutting income taxes, about cutting the Goods and Services Tax, about cutting capital taxes and corporate taxes to make Canada's economy strong, and that will continue."
The new fees, which require parliamentary approval, will increase by $2.58 to $8.91 each way depending on the destination, on top of the current charges that range from $4.90 to $17 a passenger each way. The minister said the Canadian Air Transport Security Authority will receive $1.5-billion in new money over five years as part of the security expansion.
These extra costs come as the Conservative government faces a $56-billion deficit due to stimulus spending and a sharp decline in government revenues. Finance Minister Jim Flaherty, who will unveil the 2010 budget next week, has repeatedly insisted his government can erase the deficit over time without raising taxes.
Parliamentary Budget Officer Kevin Page has challenged Mr. Flaherty's plan, warning the government must increase revenues in addition to curbing spending to balance the books.
Mr. Baird said, "We have to take every reasonable measure to keep Canadians safe," arguing the cost must be borne by the actual users. "This will pay for a long list of measures, including new personnel and new technology."
He said the Canadian Air Transport Security Authority will be subjected to a full review of its structure and spending practices.
While some passengers at the Ottawa airport said they were prepared to accept the tradeoff between higher fees and extra security, others were clearly annoyed.
"From a consumer point of view, obviously I don't agree with that," said Luke Hatfield, who was heading home to Saint John. "It's just one more tax. How much more tax can they give us?"
That view was reflected in the reaction of Liberal and NDP MPs, but it remains to be seen how they will handle the issue in a House of Commons vote when Parliament resumes.
This is not the first time the government has been accused of playing with words on its tax-freezing pledge. The 2009 budget boasts of a two-year freeze in employment-insurance premiums, describing it as a $4.5-billion measure "to reduce payroll taxes."
But the government is mum on the fact that its longer-term projections call for those premiums to rise sharply during the 2011-14 period. Economist Dale Orr has described this measure as a "whopping" $13-billion payroll tax.
The security charge was first announced in 2001, and now generates annual revenues of more than $350-million. Government figures indicate the new fees will rise to $722-million a year by 2014-15.
Some travellers are already driving to airports in U.S. cities to avoid Canada's higher airport fees and added security hassle. The Transport Minister dismissed concerns the added fees could encourage this trend and scare away business. "I'm not sure somebody's going to go all the way to Buffalo to save $2.50," he said.
George Petsikas, president of the National Airlines Council of Canada, said Thursday the security fees will be rising an average of 52 per cent, "so it's regrettable that air travellers are being asked to pay more."
The council represents WestJet, Air Transat, Air Canada and Air Canada Jazz. "Increasing costs for travellers never helps stimulate traffic," Mr. Petsikas said.