Thank you, Mr. Chair.
The Tourism Industry Association of Canada represents 400 members and approximately 200,000 tourism-related businesses in Canada, of which 80% are small- or medium-sized enterprises. We contribute about $26 billion to the GDP of this country annually. We employ in the tourism sector directly 625,000 people. In total about 1.6 million people, or 10% of Canada's workforce, work in tourism-related businesses.
I'll say a brief word about the coalition, because we're here in that capacity today. It makes up 14 national business and industry associations on both sides of the border, and this is a substantial part of the Canadian economy.
To jump to the quick, the implications of the cancellation of the existing program are pretty clear: the loss of a substantial portion of volume convention, package tour group accommodation, and trade show business; the loss of related spending on retail, meals, entertainment, and other ancillary items--for example, business services--by both convention delegates and foreign visitors.
We also believe that Canada will lose business in the international convention market, as the 6% premium will render us too expensive. A convention planner facing a choice between Toronto and Las Vegas will be more tempted to go to Las Vegas. We also know that tourists will opt for other tour packages to other destinations, as Canada will lose its competitive edge.
This comes on top of a number of challenges that have faced the industry in recent time. The Canadian currency appreciation has made us about 20% less competitive as a destination in the last year. The increase in fuel prices of the spring and early summer was certainly a disincentive to travel, and that's been reflected in the number of visitors to Canada from the U.S. Also, the uncertainty occasioned by the WHTI has confused quite a few U.S. travellers as to what the appropriate documentation is. Finally, I think Canadian domestic air travel costs continue to be somewhat higher than they are in the U.S., so those are also a disincentive.
So in a nutshell, essentially what's happened is that between 2000 and 2005 Canada has sustained a 28% reduction in visitors from the United States. That's substantial. If you look at cross-border drive-ups, same-day visits, they're down by 41%. There's been a substantial impact on border towns in this country. The communities of Niagara, Windsor, and Victoria, B.C., are all dependent on tourism. Our travel deficit--in other words, the amount Canadians spend versus what Americans spend in Canada--is now minus $5.5 billion. In other words, we're spending more in the U.S. Canada has slipped down in the world rankings of tourist arrivals from seventh in 2002 to twelfth in 2005.
To reiterate the point that Tony made, we're here to be constructive today. We accept that the existing program was administratively burdensome and was characterized by fairly high overhead costs. We would like to try to work out an accommodation here.
As a result, we've prepared a proposal that would see the private operation of the program. We've only had time to prepare this in English, given the short notice of this meeting. I've sent it out to the clerk. We'll translate it and get it to you guys as soon as possible, but you do have it in English.
I think it's imperative that we retain the existing exemption for group package tours, conventions, and trade show businesses, as these earn Canada substantial revenue in the international markets.
We also believe--and I want to make this clear--that Canada should continue to offer a rebate to individual foreign guests as this incents substantial spending by these visitors. Canada would be alone amongst major OECD tourist destinations in not offering a value-added tax type of rebate to visitors. We think that's not a distinction we want to have.
We think this program can be operated successfully at no operational cost to government, as our proposal lays out. As I say, we'll let you read this document at your leisure, and we'll be happy to chat about it with you.
Thank you.