Sure.
Good evening, ladies and gentlemen. My name is Alex Scholten, and I'm president of the Canadian Convenience Stores Association. Thank you for giving me the opportunity to speak with you tonight on behalf of the convenience store industry in Canada.
Our trade association represents the 26,000-plus convenience store operators in Canada and the 230,000 employees we employ in this industry in rural and urban communities from coast to coast to coast. Many of these stores may be small businesses, but together we contribute significantly to the economic well-being of Canada. We serve at the centres of many communities.
To give you an idea of the economic footprint of our industry, Canadians purchased from our stores, last year alone, in excess of $51 billion in goods and services. Those sales also resulted in $18 billion in taxes being collected on behalf of federal and provincial governments.
We're also significant employers of new Canadians, providing these entrepreneurs with an opportunity to own and operate their businesses.
Our association is encouraged by a number of small business measures announced in the recent election platform, particularly around lowering small business taxes by two percentage points. As this committee will likely hear through consultations, small businesses are the first to be positively impacted by these types of initiatives, so we are appreciative of them.
Two of our biggest priorities in working with the Department of Finance are the impact of excessive merchant credit card fees and the persistence of illegal, untaxed tobacco that is sold in Canada.
On the first issue, merchant credit card fees, the Canadian Convenience Stores Association works with a coalition of 24 other trade associations, the Small Business Matters coalition. This coalition came together to provide government with the concerns and direction of over 98,000 small businesses operating in Canada. It's no secret that merchant swipe fees in Canada are among the highest in the world, and have risen sharply over the past number of years.
Last year saw the introduction of an average credit card merchant fee rate of 1.5% under a voluntary agreement between the Canadian government and credit card providers. Unfortunately, this was not enough to create any real difference to Canada's small businesses. In an effort to support their small business merchants, several other countries have lowered their rates to 0.3% to 0.5%, or one-fifth or one-third of the average rate imposed under the voluntary code of conduct. We think these examples from other countries would serve as an excellent model for Canada.
We need to do more for small businesses so that expense savings can be used for hiring more staff, making capital investments in our businesses, and lowering consumer prices. We also would like to see this committee put forward a recommendation to implement greater enforcement behind what currently remains a voluntary code of conduct on swipe fees.
With respect to the issue of illegal and untaxed tobacco, the Canadian Convenience Stores Association and our four regional counterparts regularly engage government to advocate against additional tax increases on tobacco products. We do this because of the impacts such increases have on illegal tobacco activity in Canada. The issue of contraband tobacco has consistently affected our sector, as we view ourselves as being a partner with government in the controlled sale of legal tobacco products. Not only do our members keep tobacco out of the hands of youth, but we also collect taxes on behalf of federal and provincial governments. In 2014 that amounted to in excess of $4.7 billion.
Tobacco tax increases are often advocated as a way to reduce smoking rates, particularly youth smoking rates. The reality, however, is that once taxes become too high and prices skyrocket, consumers simply purchase their products elsewhere, that is, in the illegal and uncontrolled environment.
In December of last year, Prime Minister Trudeau himself acknowledged, when discussing the potential of taxation on marijuana products, the potential for illegal market activity if taxes rise too high. He stated that by taxing a product too much, it inadvertently creates or fuels a black market. An increase in the illegal market also diminishes the impact of tobacco control measures.
Our association has long advocated for greater deterrence measures against the illicit market, including additional resources for the RCMP, Canadian Border Services Agency, and other investigative bodies.
Additionally, it is important to note that fines levied against illegal tobacco traffickers are very often not collected. This is an incredible source of lost revenue that this committee should strongly pursue as a means of deterring criminality while also recouping lost government revenue.