AIAC Refutes Government Report on Canada’s Luxury Tax

 - March 27, 2023, 5:37 PM
The Aerospace Industries Association of Canada estimates that Canada's new luxury tax will lead to the loss of nearly 3,000 jobs in the aviation industry. (Photo: Pratt & Whitney Canada)

The Aerospace Industries Association of Canada (AIAC) is refuting a recent report from Canada’s finance department that projects the new federal luxury tax could lead to between 400 and 870 job losses by aviation, auto, and boat manufacturers. Instead, the AIAC has projected that the tax will lead to the loss of nearly 3,000 jobs in the aviation industry alone.

The 10 percent tax, effective since September 1 last year, is imposed on the sale of new vehicles and aircraft priced at $100,000 and above and on new sea vessels selling for $250,000 or more.

The AIAC also questioned the finance department's assertions of between 10 and 22 lost manufacturing jobs per aircraft sale loss, noting it takes 75 full-time employees to build a single business jet. “If we assume that the sale of 10 airplanes will be lost in 2022, this will translate in the loss of the equivalent of approximately 750 direct jobs in Canada,” according to a recent AAIC report. “The loss of those 750 direct jobs could translate into the loss of 2,850 full-time jobs in Canada, considering the direct, indirect, and induced impacts of these lost jobs in the Canadian economy.”

 AIAC estimates the industry sells an average of five helicopters per year to private individuals who may be impacted by the luxury tax. Last year, the association claimed, “At least four individuals decided not to buy new helicopters as a direct consequence of having to pay an additional 10 percent tax.”