Thank you, Mr. Chairman, and my thanks to the committee for inviting us here again today.
Let me start by introducing the Retail Council of Canada. We are the voice of retail in Canada. Our members operate 40,000 stores in every village, town, and city in our country. In 2005, retailers directly sold $370 billion worth of merchandise. Over 2 million Canadians work directly in retail. Retailers invest almost $8 billion a year. From 2000 to 2004 our members created 165,000 new jobs.
This rapid job growth, in fact, has created some problems for the trade, which is experiencing some challenges in recruiting and retention, especially in western Canada.
I will now turn to our economic outlook. Retailers have posted good results in 2006. According to Statistics Canada, between January and July retail sales increased by 5.4% over the preceding year.
Our report on retail, which was published in September, shows that sales and profit margins are doing well. Consumer behaviour is positive. Our members are optimistic about the fall and holiday season, though they expect a slowdown in growth next year, particularly because of the situation in the U.S.
We achieve these results even though real personal disposable income increased by less than 0.5%t in 2005. That explains why we are focussing on the growth of individual and family disposable income. When Canadians find their personal finances are improving, retail sales and employees in the retail sector benefit.
Mr. Chair, with that to set the stage, I'd now like to turn to our policy advice.
As we have for many years, the Retail Council of Canada is again making the case for tax cuts for individuals. We're probably an unusual business organization, in that we are more focused on our customers than on our own internal bottom lines. We are delighted with the one-point reduction in the GST; that one step increased real personal disposable income by more than the average growth that the average family enjoyed in 2005.
Our submission tracks the effects of federal tax and transfer policies on the real personal disposable income of Canadian households. It shows that over the past 15 years, federal budgets have in fact marginally reduced real disposable incomes, including those of the poorest households in Canada: those earning less than $9,500 a year. In contrast, federal revenues have grown 20 times faster than average PDI. We strongly recommend that the government reduce the growth of federal revenues and return more money to individual Canadians, especially those with low or modest incomes.
Our submission focuses on cuts in personal income tax and on the GST. The RCC recommends that the federal government implement personal income tax cuts and changes in tax credit programs that will provide a boost to the real personal disposable incomes of families earning low and middle incomes. We believe that the greater scope to design a reduction in PIT to assist low- and middle-income Canadians makes this a preferable way to reduce the tax burden.
Although we see greater benefit to Canadians in personal income tax cuts, RCC supports the federal government's commitment to implement the second proposed cut in the GST rate.
Finally, Mr. Chair, I would be remiss if I didn't reiterate our longstanding support for GST harmonization. This committee has heard us talk about this point for almost 20 years now. We will make the case to provincial governments in our pre-budget submissions in those jurisdictions in which it is still relevant. Our support for harmonization comes with one essential caveat: retailers must be permitted to display prices exclusive of tax to accommodate the differing levels of tax across the country.
Those are my opening remarks, Mr. Chair. I'd be glad to answer any questions.