Good morning, Mr. Chairman and members of the committee.
My name is Kim Furlong, and I am the Director of Federal Government Relations at the Retail Council of Canada.
The Retail Council of Canada represents over 40,000 storefronts from coast to coast and is the voice of retail in this country.
I would like to thank you for the opportunity to speak to you today about the elimination of the GST visitor rebate program and the impact it will have on the retail sector. Since the September 25 decision, we have surveyed our small, medium, and large members and have found two trends.
Members who understand the program well have adopted it in their sales promotion techniques. They are successful users and want to see the program preserved.
The other trend is that a number of our members only had a peripheral understanding of how the program works and are ambivalent about its efficiencies. This trend I believe can be explained by the level of visitors these members interact with. The members who would be most strongly impacted by this cut are the merchants located near convention centres, in airport terminals, and near land borders. Our duty-free members have suffered this year already with changes to the security measures relating to carry-on liquids. The elimination of the VRP would add to an already very difficult year.
In addition to points of exits and convention centres, merchants located in small tourist destination areas such as the Niagara Peninsula, Stratford, Lake Louise, Whistler, Jasper, Banff, and North Hatley, and in large urban centres such as Vancouver, Calgary, Toronto, Montreal, and Halifax, which attract a good number of visitors to Canada every year, would be impacted as well.
Our high ticket item merchants have also commented on the cut of the GST visitor rebate program. Many of these members advertise this program successfully and have found that the 6% advantage has had an impact on sales. From the tour planner who sells Canada as a destination because of a 6% competitive advantage, to the hotel chain that in turn also offers a discount to visitors, these people eventually will walk into our merchants' shops and are often keen to spend because they are on vacation. The use of the 6% additional rebate on an item is often enough to make the sale.
The bottom line is that the many industries represented at the table today are interconnected and work together to fuel the Canadian economy. The health of Canada's tourism industry is important to the retail sector because retailers benefit from the inflow of visitors to Canada every year.
The tourism industry is already facing many challenges, as you all know--gas prices, the Canadian dollar, the western hemisphere travel initiative. Eliminating the VRP is simply adding to the hardship of this industry. The VRP is important to our industry but equally as important is the ability of convention centres and tour operators to waive the GST so they offer more competitive products to our visitors.
Our coalition has met several times with Minister Flaherty's office and his officials since the decision to cut the VRP was announced. These conversations were valuable to both sides, I believe. We, as a group, were able to bring a perspective that this cut is larger than a simple program cut, and we have gained an understanding of the inefficiencies of the current model and its cost to the government.
As you will hear in the subsequent presentation by Christopher Jones of the Tourism Industry Association of Canada, the industry has come together and is ready to offer an alternative to a government-run VRP. The Retail Council of Canada supports a pay-per-use program where the user and not the taxpayer assumes the cost of the program. Our members have been very clear that they would like to see a streamlined and efficient process without adding any burden to doing business, and I believe that the alternative that has been designed by the VRP coalition achieves that objective.
I will end my presentation here. Please feel free to ask your questions in English or French. Thank you.