Good evening. My name is Alex Scholten, and I serve as the president of the Canadian Convenience Stores Association.
On behalf of the 23,000 Canadian convenience stores in Canada and the 183,000 people they employ, I want to thank you for taking time to listen to our concerns.
It may surprise some of you to know that convenience stores contribute more than $39 billion to the Canadian economy each year. We buy more than $26 billion in goods and services, and we serve over 10 million Canadians on a daily basis. We're an important small business stakeholder, with unique challenges facing our owners and operators.
I'll outline three main issues facing our industry, followed by our recommendations for this committee.
The first issue is the persistence of contraband tobacco in our communities, owing to the continued trafficking and sale of contraband tobacco. There are three main impacts.
Number one is lost revenue for government. There are millions of dollars lost by federal and provincial governments as a result of tax avoidance in this illegal industry. The Department of National Revenue has estimated this to be as high as $2.5 billion per year.
Number two is that tobacco becomes more accessible to youth through contraband sales. Convenience stores must follow strict tobacco control measures designed to prevent tobacco sales to minors. Responsible retailers train their staff and ensure that they perform complete age verification checks. Contraband traffickers will sell to anyone who is willing to buy their products, and they often do so in schoolyards. Furthermore, because contraband tobacco is sold without collective federal and provincial taxes, the price is more attractive and the product is more accessible to youth.
Impact number three is that contraband tobacco supports organized crime, putting communities at risk. As some committee members may know, the RCMP have identified over 175 criminal organizations that participate in this illegal activity. With seizures of contraband, police forces have confiscated large quantities of drugs and illegal weapons. The Canadian Convenience Store Association is pleased to see the Government of Canada take the contraband problem seriously; however, we need to ensure that previous commitments, particularly with regard to enforcement, are followed through swiftly.
We're also very concerned with the proposal to move the Cornwall border crossing. This will significantly affect contraband tobacco activity. We're not alone in this concern, and we have spoken extensively with provincial governments and the RCMP. If this move is made, increased enforcement around the Cornwall area will be absolutely critical in order to prevent what we believe to be a significant increase in contraband availability in Canada.
The second issue we would raise is credit card fees, which negatively affect convenience store income. Canada's retailers currently pay some of the highest credit card swipe fees in the world. This has resulted from the anti-competitive practices of the credit card companies. Convenience stores and convenience stores with gas stations net over $39 billion in national sales. This has led to approximately $825 million in net debit and credit card fees, which is almost as much as Canadian retailers make in pre-tax profits on an annual basis. The Canadian Convenience Store Association estimates that average annual costs in net credit card charges and commissions are in excess of $36,000 per year per site. This not only results in low profitability and higher operating costs, but also contributes to slower economic growth and low employment rates within the industry.
The third issue we would raise is overregulation within the convenience store industry.