Canada wants taxes on top of aviation user fees

June 30, 2008

U.S. pilots who have flown in Canada are now being told they have to pay taxes on the Nav Canada user fees they’ve already paid, retroactively, going back five years.

“We have always opposed user fees, and this latest insult shows just how flawed and inefficient the system is,” said AOPA President Phil Boyer. “How much is Nav Canada now going to spend to attempt to track down the pilot of the aircraft to collect this tax? A simple fuel tax makes so much more sense.”

AOPA is asking Nav Canada to waive the tax collection for U.S. aircraft operators.

Nav Canada is a private corporation that the Canadian government had spun off to run the air navigation and control system. It’s supposed to run like a business, charging fees for flight briefings, access to navigation aids, and air traffic control services.

But this “business” didn’t realize that it was supposed to collect “goods and services tax” at the time it sold its service to the pilot. Then the Canada Revenue Agency (their version of IRS) audited the books and told Nav Canada it was obligated for the taxes it should have collected.

Now a regular “business” would likely have to pay for this mistake out of its own pocket. Not Nav Canada. It’s attempting to track down every aircraft that’s flown in its airspace in the last five years and retroactively collect the tax from the aircraft owner. (Five years because of the statute of limitations. Nav Canada hasn’t collected the tax since it formed in 1999.)

“Chasing after customers who have paid for services in full is poor business practice,” said Boyer. “This burden shouldn’t be placed on the backs of pilots who rightfully believed that they had completely fulfilled their financial obligations to Nav Canada.”

Boyer said that the logistical effort necessary to collect the service tax on air traffic service charges was “an excellent example of how fee for service or privatized air traffic control systems are flawed. The expenses incurred by Nav Canada just to collect revenues are much higher than the truly minor cost of collecting revenues through a fuel tax.”

“And the very idea of a tax on top of a fee. AOPA will continue to fight to make sure the United States never tries to go down that airway,” Boyer vowed.