Nfld. & Labrador

Federal tariff should be axed, ferry lobby group says

A national association for ferry operators says Ottawa should get rid of a tariff on new passenger vessels imported into the country.

N.L. taxpayers could be on hook for $25-million levy on 2 new ships

A national association for ferry operators says Ottawa should get rid of a tariff on new passenger vessels imported into the country.

Serge Buy is CEO of the Canadian Ferry Operators Association. (Submitted photo)
As CBC Investigates revealed this week, taxpayers in Newfoundland and Labrador could be on the hook for a federal levy of $25 million when two new ferries are delivered within a year or so.

But Serge Buy, CEO of the Canadian Ferry Operators Association, says the tariff no longer serves a useful purpose.

“We need to rethink this strategy, and the government needs to change the tariff — actually, cancel the tariff — right now,” Buy said.

Buy says the Canadian shipyards the tariff is meant to protect are doing well, as they have received significant support from Ottawa through the federal procurement system.

25-per-cent tariff rate

The 25-per-cent tariff applies to smaller ferries, under 129 metres, imported into the country.

Four years ago, Ottawa rolled back the tariff on bigger ships. But smaller ones still get hit with the duty.

This is the design for a new ferry to service Fogo Island and Change Islands. (CBC)
The Newfoundland and Labrador government is buying two new smaller ferries from Europe, to serve Bell Island and the Fogo Island/Change Islands run.

The total cost is just over $100 million. But unless the province can convince Ottawa to waive the tariff, Newfoundland and Labrador taxpayers will have to pay another $25 million in federal duties when the vessels are delivered.

Buy says that's not fair. 

"Our statement is simple: why would taxpayers of Newfoundland, why would fare-payers who go on ships right now in Newfoundland and Labrador, have to pay extra amount just to support something that doesn't need the support right now," Buy said.

The province has applied to Ottawa to have the tariff waived. Transportation Minister David Brazil told CBC Investigates this week he is confident that will happen.

Buy says he doesn’t know exactly how many waiver requests are successful. “I would think it’s very, very low.”

The association is lobbying to have the tariff removed on all ferries imported into the country.