New Report Shows Government’s Tax on Aerospace Manufacturers and Workers will Result in Loss of at Least 2,000 Direct Jobs

OTTAWA (ONTARIO), December 8, 2022 – A new report by an independent third party, Professor Jacques Roy, Ph.D., Department of Logistics and Operations Management, HEC Montréal examines the Federal Government’s Select Luxury Items Tax Act and reveals the negative, detrimental impacts on the aerospace industry and its workers. The report clearly shows a change in customer behavior following the introduction of the tax.

Some of the report’s key findings include:

• The luxury tax is counterproductive and will result in lost sales and employment for Canadian aerospace manufacturers, their suppliers and MROs;
• There will be a resulting loss of at least 2,000 direct jobs representing $149 million in lost salaries contributing to $29.9 million yearly in income tax revenues for the federal government, which far exceeds the $9 million a year in expected revenue by the government;
• The tax runs counter to achieving the Government of Canada’s carbon neutrality goal;
• With its 90% threshold on business usage for business jet and helicopters, the luxury tax will be difficult to administer and result in uncertainty and additional lost sales.

“The bottom line is that Canadian workers will build less aircraft and this tax will result in the government losing revenue – not gaining it. It targets manufacturers and workers, the very people who have already been hit the hardest. By penalizing this strategic industry, the Government is also sending the wrong message to our foreign competitors about the value it places on this sector.  

“Such a tax has been tried in other jurisdictions and it failed. The Canadian government should be championing our world-leading, technologically advanced fuel-efficient aircraft, and growing these highly-skilled jobs – not harming the sector with a tax that simply doesn’t add up. Industry is calling on the government to exclude business aircraft and its use from the scope of the tax,” Mike Mueller, President & CEO, AIAC.

The full version of the report can be found at: https://aiac.ca/new-report-the-economic-impact-of-the-select-luxury-items-tax-act-on-the-canadian-aerospace-industry/

About AIAC:

AIAC is the national association representing Canada’s aerospace manufacturing and services sector. As the world’s ninth-largest aerospace industry, Canada’s aerospace sector contributes over $24B to the economy in GDP, exports over 75% of its output, and is ranked #1 in research and development (R&D) among all Canadian manufacturing industries. Canada’s aerospace sector directly and indirectly supports nearly 200,000 jobs in every region of the country. 

For more information:
www.aiac.ca