Finance Committee on Nov. 9th, 2006

[Christopher Jones]

The United States doesn't, simply because it doesn't have a value-added tax at the national level. I can understand how our government might have looked across the border, not seen one, and concluded we didn't need one, but then again, they don't have a GST. Essentially most of the major OECD countries that are significant travel destinations have one.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Boughen?

[Kevin Boughen]

Just to clarify that, 100% of OECD countries with a consumption tax have a rebate program. No country has ever revoked a rebate program with a consumption tax. If Canada were to do it, it would be the only OECD country that is charging a consumption tax on a product that's not being consumed in the country, and it would be actually penalizing a tourist for carrying the product home with them on their plane as opposed to paying Federal Express to deliver it. If they pay Federal Express to deliver it, they don't pay the GST, if they carry it home, they pay the GST.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Do any of the provinces provide a rebate program?

[Kevin Boughen]

Ontario.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Ontario does?

[Kevin Boughen]

And all harmonized sales—

[John McKay, Liberal, Scarborough—Guildwood, ON]

I stand to be corrected, but I don't think Ontario is providing a similar revocation of the program.

[Kevin Boughen]

I haven't seen any cancellation of the Ontario program, but I would think that the HST would fall into this category, which in effect is a provincial consumption tax.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Presumably it creates some confusion between those provinces that have HST and the others.

In terms of your fall-off in revenue, Mr. Pollard, your elasticity number is interesting. Your argument is that you're in effect losing $109 million in order to be able to save $78 million.

I just wanted to test that number with Mr. Fritsche from the Conference Board of Canada. What is your reaction to his numbers?

[Alex Fritsche]

I don't know the assumptions that Tony used when he calculated his numbers. We've looked at the issue to try to see what the potential impact could be, and to be perfectly honest, we haven't been able to come up with a conclusive answer. It's our contention, as Judy mentioned earlier, that if you're trying to do a cost-benefit analysis, it sure helps to know what the cost is. As an independent party, we don't have an idea right now of what the potential cost would be.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Presumably there will be an impact on provincial revenues as well. If in fact the anticipated impact is to depress tourism, it's going to have an impact there as well, which is not in your $109 million figure. Is that correct?

[Anthony Pollard]

That's correct.

If I could just follow up on that, I've been working with Jim Daman in the Department of Finance. These figures that I use, by the way--this isn't mathematics by Pollard, this is Pannell Kerr Forster Consulting that developed these for us, an internationally recognized accounting firm. Jim Daman, in the Department of Finance, with whom I was working on these numbers, has not disputed them.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. McKay.

We'll move to four-minute rounds now, beginning with Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

I'll be very quick then. Thank you for coming this morning.

From my side of the table, we're cutting one half of 1% of the budget. There's lots of pain across the country. If I was to tell the truth, everybody who came in front of us said spend more money, we'll make more money. We heard that from absolutely everybody. You're not unique in that sense.

I have some sympathy for you. I was on the tourism board for the city of Burlington for a number of years and have some familiarity with the business. Can you tell me what the separation is in terms of percentage between conventions, tour groups, and so on that are external to Canada to internal? Do we know what the difference is?

[Anthony Pollard]

30%.

[Mike Wallace, Conservative, Burlington, ON]

30% is external, so 70% don't get a GST rebate at all?

[Anthony Pollard]

That's correct.

[Mike Wallace, Conservative, Burlington, ON]

That's correct. Okay.

The other thing that really surprised me is that my colleague from the other side of the bench, who was the minister at one time, talked about how his department, which he was responsible for briefly, told him that there were issues with this rebate and that it was something we may have had to cancel. Could any of you tell me whether you were consulted on that or not?

[Anthony Pollard]

No.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Pollard, you talked about... I told you that you would like my question. You also told us that--and let's use real numbers, not the inflationary numbers, just in case they're not exactly right--it was $25 million over the last little while for that crown corporation. Were you consulted on that?

[Anthony Pollard]

Yes.

[Mike Wallace, Conservative, Burlington, ON]

You were consulted. What was your position on that?

[Anthony Pollard]

We need to enhance the funding for the Canadian Tourism Commission.