Thank you very much.
Mr. Chair, committee members, on behalf of the Tourism Industry Association of Canada, I am very pleased to be here today as part of the committee's study on Bill C-44.
TIAC is the only national voice representing the interests of all sectors of the tourism industry in Canada. This includes accommodations, transportation, destinations, and attractions. Our members range in size from small businesses, including many tour operators, to some of Canada's largest hotel chains, national airlines, rail services, destinations, and iconic tourist attractions from coast to coast to coast.
Tourism is a top economic driver for Canada, which last year generated $91.6 billion in revenues, surpassing forestry, agriculture, and fisheries combined. It also employs in excess of 627,000 Canadians and is considered a top employer of Canadian youth.
The first thing I'd like to do is reiterate our gratitude for the support received by the Minister of Small Business and Tourism, as well as the Minister of Finance concerning a number of positive commitments in the last budget. Specifically, we were pleased with news that Destination Canada, Statistics Canada, and indigenous tourism will receive much-needed funding to support tourism marketing, data collection, and indigenous tourism development. These are important initiatives that will reap significant benefits for the Canadian economy and job creation in the long term, and will help strengthen one of the primary growth industries in this country.
This said, changes to the foreign visitor tax rebate program, the FCTIP, and their proposed implementation have created a wave of concern and alarm within the tourism industry. As we try to obtain an interpretation from CRA as to how the changes will be implemented, there continues to be anxiety. While the stated goal of this proposed repeal is to eliminate inefficient tax measures, it may very well create financial hardship for a number of small tourism businesses across the country and will also make Canada even less cost competitive than it is today.
While tourism has seen important gains in international arrivals in the last couple of years, and especially last year, it's important to recognize that, globally, Canada is in 18th position in terms of international arrivals, falling behind countries like Saudi Arabia. For perspective, in 2000 Canada ranked eighth in the world, so we've lost some ground.
In terms of our cost competitiveness relative to other countries, Canada now ranks 97th out of 141 countries measured annually by the World Economic Forum. While the $50 million per year savings outlined in the supplementary budget documents may seem small and inconsequential, in reality the change is cause for concern. While the GST/HST rebate may have appeared to be underutilized, it was widely used as a competitive tool to attract international travellers to Canada by lowering the cost of tour packages to make them more affordable.
In the absence of this rebate, many businesses, including significant numbers of small and medium-sized tourism operators, will be left absorbing significant additional cost and in some cases eliminating their profits. Further, tour operators are also impacted, as travel packages can be pre-sold up to two years in advance and sometimes even longer. The rebate is usually built into the price of packages offered internationally, but actual payment doesn't occur until well after the travel has occurred. In fact sometimes it can be as late as three months later.
We understand that the proposed repeal is meant to apply in respect of supplies of tour packages or accommodations made after budget day. This implies that contracts made prior to budget day would still be eligible for the rebate. Given that the business cycle operates up to two years in advance, many contracts have been solidified well into 2018, with secondary agreements made under this umbrella. The fact that we don't yet know whether those secondary agreements will benefit from the current rebate is cause for concern.
The Minister of Small Business and Tourism unveiled a new tourism vision last week during Canada's largest travel trade show in Canada, which is Rendez-vous Canada. The minister set out bold goals for tourism growth in the coming years and recognized the importance of this sector to Canada's economy and to its job creation.
So do we. We fully support and embrace growth and intend to work closely with the minister and others to see those goals become a reality, but in order to get there, Canada must address its cost competitiveness. Every new tax, every new levy, every new additional fee chips away at our ability to compete internationally and grow the sector. Tourism remains the only export sector in Canada that's not zero rated. The GST/HST rebate, while perhaps imperfect, was at least one very small way of lowering costs, but now that, too, will be gone.
As I said at the opening, Canada's tourism is a $91.6-billion sector, and we want to see that grow to $125 billion, but we need to address our cost competitiveness if we're going to increase overall tourism numbers by 30% in the next few years. Otherwise the numbers may very well go in a different direction.
Thank you very much for your attention.