Thank you, Mr. Chairman, members of the committee.
On behalf of the 50 member companies of the Direct Sellers Association of Canada, which includes such well-known names as Avon, Mary Kay, Amway, and Tupperware, and the 900,000 independent sales contractors and employees across Canada, I want to thank you for the opportunity to participate in this consultation.
Direct selling companies and their independent sales contractors market a wide variety of products directly to the consumer, usually in the consumer's home rather than in a traditional retail establishment or other fixed place of business. In 2008, the Canadian direct selling industry recorded retail sales of $2.2 billion, an increase of 11.5% over the previous five years, and contributed $815 million in total national and local taxes.
The direct selling industry also contributes to community growth and improvement through its charitable donations, with member companies contributing $7.7 million in 2008. Our independent sales contractors' sense of community is reinforced through their generosity to charities, with 91% of our direct sellers making personal contributions to charities that same year.
The direct selling industry provides accessible business opportunities to all Canadians without restrictions with respect to gender, age, education, knowledge, or previous experience. A 2008 socio-economic impact study found that 8% of ISCs were unemployed before starting their direct selling business. One-third of them maintained their businesses as a primary work opportunity or source of income. The balance used direct selling as a source of additional or secondary income, with 90% of the ISCs in Canada being women.
I think we can all agree that Canada's economy fared better than most during the economic downturn. Despite that, we are still in a delicate process of economic recovery, and many Canadians still find themselves either out of work or in need of additional income. With fewer full- and part-time jobs available, Canadians continue to look for other options to meet income needs, including direct selling.
The direct selling industry has met the needs of thousands of Canadians who find themselves in these difficult situations by assisting in and promoting entrepreneurial activity. Direct selling offers flexibility of hours, training, education, and support for running a business. It offers a wide variety of earning situations and the opportunity of maintaining or returning to a meaningful and fulfilling standard of living.
The direct selling industry also has an unlimited capacity to transform individuals who are dependent on social programs such as employment insurance into successful, small business entrepreneurs. The DSA supports improvements to federal and provincial employment programs that encourage individuals transitioning from dependence on EI to independence.
For our part, the DSA has been working with officials at HRSDC to ensure that direct selling is recognized by HRSDC and the provinces as a legitimate form of self-employment, as it has been for many years by Finance Canada, the Canada Revenue Agency, and the Competition Bureau. We believe more needs to be done to communicate these messages to the provinces to ensure that there are no artificial disincentives to pursuing direct selling as a legitimate form of self-employment. The DSA will also engage the provincial ministries on this matter.
I should also acknowledge our industry's appreciation of the measures introduced by Minister Finley to extend EI special benefits to the self-employed. For many in our industry, these changes provide increased financial security and flexibility as they pursue their entrepreneurial goals.
The other item I will briefly address deals with the GST collection mechanism used by our industry. The GST direct sellers' mechanism, as we have stated during many appearances before this committee, is an example of government and business working in partnership to develop a policy that has been beneficial to both. The direct sellers' mechanism, enacted in 1991, is based on pre-collection and remittance of GST by the direct selling companies themselves on the suggested retail price, thereby removing a considerable burden from both the ISCs and the CRA.
Changes to the DSM in the 2009 federal budget made it available to the 20% to 25% of the industry that operates on an independent sales representative basis, as opposed to a buy-resell basis. We appreciate this committee's support for this important tax change and are pleased to tell the committee that companies have begun the process to enter the mechanism.
Mr. Chairman, members of the committee, we are an industry that touches the lives of Canadians from coast to coast to coast by giving them an opportunity to work, to learn, to prosper, and to grow. On behalf of the Direct Sellers Association of Canada, I want to thank you very much for this opportunity to appear before you today.
Thank you.