TORONTO SUN - LILLEY: Trouble at Flair Airlines exposes Trudeau government's massive incompetence
The Trudeau government let more than $67 million in GST go uncollected from a start-up airlines over the past several years.
Now the red-faced government is looking to sweep the matter under the rug, claiming privacy concerns.
In November, the Federal Court in Ottawa ordered all “real properties and immovables” of Flair Airlines be seized and sold to recoup $67,174,123 in back taxes. When the story broke in January, the company tried to dismiss concerns about the payments as relating to import duties, except airplanes aren’t subject to import duties.
There is however a requirement to pay 5% GST at time of import, something Flair appears not to have done as they brought 20 Boeing 737 MAX aircraft over the past several years. The amount owed by Flair matches the GST due on the aircraft but neither the government nor Flair is willing to say much.
On Feb. 20, that writ of seizure was quietly rescinded after the government and Flair came to an agreement on paying back the money. The agreement comes after months of high-powered lobbying of several ministries and the prime minister’s office by Liberal insiders.
“We don’t comment on client matters,” wrote Andrew Steele, of Strategy Corp, when asked about the 48 meetings he had with government about Flair, including four with the PMO.
Flair didn’t respond directly to questions about how they were able to import the planes without paying the GST, but they did maintain they are in full compliance with the law.
“Regarding the amount in question, Flair refrains from commenting on the specifics of tax credits or their utilization. We maintain rigorous compliance with Canadian tax regulations and regularly seek professional advice to ensure adherence to all legal requirements,” Flair’s Chief Financial Officer Joseph Lee said in a statement to the Sun via email.
That may be technically true now given that Flair has obviously entered into a repayment agreement with the Canada Revenue Agency, but something was clearly amiss last fall when the order to seize and sell the airline’s property to recoup the money was issued.
Courts are not in the habit of giving the government the power to seize the assets of a company and liquidate them without a valid legal reason. As for repaying a sum that large, it’s not clear how Flair will be able to do so since there is good reason to believe the company is struggling.
Last March, four of Flair’s planes were seized by the company that was leasing them to the airline – the reason given, non-payment. At the time, Flair launched legal action and claimed the demand for payment was “baseless.” While the court will decide who is right, the dispute raises questions about Flair.