Select Luxury Items Tax Could Leave Canada’s Aerospace Grounded – Urgent Government Action RequiredNovember 28, 2023
Ottawa, Canada – The Aerospace Industries Association of Canada (AIAC) and the International Association of Machinists and Aerospace Workers (IAMAW) are sounding the alarm on the severe and negative impacts of the Select Luxury Items Tax Act. An updated study conducted by Professor Jacques Roy of HEC Montréal revealed that more than 3,800 jobs are currently at risk across Canada’s aerospace sector, with 19 aircraft orders already cancelled, totaling over 1.5 billion dollars in lost revenue.
The Canadian aerospace sector has long been a source of pride and innovation, as well as a major contributor to our nation’s prosperity and global reputation. This tax, initially intended to target luxury consumer goods, poses a significant threat to industry competitiveness and sustainability, which is crucial for the overall well-being of our economy. To make matters worse, little to no tax revenue has been collected from the industry since the act was introduced over a year ago.
Professor Roy’s study further highlights the gravity of the situation, with more than 3,800 hardworking Canadians across the aerospace sector now at risk of losing their livelihood, leading to potential severe and lasting impacts on their families and communities. Furthermore, the cancellation of 19 aircraft orders so far, valued at over 1.5 billion dollars, sends shockwaves throughout the industry, impacting not only manufacturers but also suppliers, engineers, and countless others who play a role in the aerospace ecosystem.
Mike Mueller, President of the Aerospace Industries Association of Canada, expressed his deep concern: “This Tax is the wrong policy and is negatively impacting our aerospace sector. In reality, this is a tax on manufacturing, that is not only hurting the industry but also detrimental to Canadian jobs and our economy. We urge the government to reconsider this job-killing tax, before it delivers an irreversible blow to manufacturing and employment opportunities across the country.’’
“The aerospace industry was deeply affected by the pandemic, and as the industry undergoes a strong recovery, this tax has set the industry back. Rather than developing legislation that gets at the root of income inequality, the Canadian government has replicated a hugely unsuccessful piece of legislation from the United States that resulted in nothing but deterioration of industry and loss of thousands of jobs. The Canadian economic environment provided important competitive advantages that grew the industry into one that is renowned around the world, the luxury tax undercuts those advantages. Thousands of Canadian workers rely on the viability of this industry, this tax will throw the industry and workers into deep uncertainty, which workers certainly need less of ” stated David Chartrand, Canadian General Vice President of the International Association of Machinists and Aerospace Workers International Association of Machinists and Aerospace Workers
The aerospace ecosystem calls upon the Canadian government to reconsider the implications and take immediate steps to repeal the Select Luxury Items Tax and safeguard the aerospace sector from further harm and protect the livelihoods of thousands of Canadians. We believe that the government’s commitment to economic growth and job creation should take precedence over policies that inadvertently cripple our vital industries.
Our priority is the well-being of our workforce, our communities, and our nation’s economy. We are willing to work closely with government officials to find alternative revenue sources that do not jeopardize our aerospace sector’s future.
AIAC is the national association representing Canada’s aerospace manufacturing and services sector. As the world’s seventh-largest aerospace industry, Canada’s aerospace sector contributes nearly $27B to the economy in GDP, exports 80% of its output and invests heavily in research and development (R&D) – over $683M in 2022 – while supporting nearly 212,000 jobs from coast to coast.
The IAMAW is the world’s largest aerospace union with over 184,000 members in 1,000 collective agreements. Active in the Quebec aerospace industry since 1940, the IAMAW today represents 65% of unionized workers in the sector. Among others, the IAM has members at Bombardier, Airbus, Stelia, Rolls-Royce, Héroux-Devtek, Safran Landing, L3-MAS, AJ-Walter, Air Canada, Air Transat.
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Sr. Manager Communications and Social Media, AIAC