Finance Committee on April 29th, 2021

[Philippe Bachand]

Thank you very much for your question, Mr. Ste-Marie.

The visitor rebate program was intended for all tourists visiting Canada. For example, American or European tourists who made purchases or booked hotel rooms in Canada could be reimbursed for the federal tax, the GST, that they had paid. We—the Canadian duty-free stores at the U.S. border—provided the tax rebate service right in our stores. It was a very popular program with the Americans.

Unfortunately, this program was abolished in 2007, for reasons that seem somewhat obscure to us. The program was actually working very well. I can tell you that, even 10 years later, Americans were still coming to our stores, receipts in hand, asking for the tax rebate. They had come to Canada 10 years earlier and, after other trips around the world, when they were back in Canada, they came back to our store to get the tax rebate because they remembered our good service. We are the only OECD country that does not refund its federal tax to visitors. It would help all the tourism businesses in Canada, such as hotels. So it's a very important program.

In terms of the export designation, it is important to note that duty-free stores around the world, including those in Canada, must purchase their products directly from the manufacturers. In order for visitors leaving the country to take advantage of this market, the products are absolutely tax free, except in Canada. In Canada, the federal government collects an excise tax on all export tobacco products. For example, an American who comes to Canada and wants to buy a carton of cigarettes before returning home will have to pay an excise tax on Canadian-made cigarettes.

In addition, provincial governments mark up the prices of alcohol through the various liquor boards, such as the SAQ in Quebec and the LCBO in Ontario. We are forced to purchase alcohol from these monopolies, and they, as wholesalers, apply outrageous markup rates that are not in line with the intent of the trade laws.

We are therefore asking for legislation that would govern Canadian duty-free stores, especially border stores. At the very least, we're asking that certain Canadian laws not apply to these stores, so that we can compete with the American duty-free stores that are 200 metres south of us. They sell to those entering Canada products that they have purchased directly from the manufacturers without paying tax, which we cannot do in Canada. For these reasons, we are requesting an export sector designation.

Thank you very much.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

No, no, thank you.

[The Chair, Liberal, Wayne Easter]

Thank you. We are a little over time.

Before I go to Mr. Julian, I have a question to the Frontier Duty Free Association.

I met with one of your people the other day. I know your situation now is that your inventory is running past its best-before date. I think I have this right. I was informed that if you now donate, say, chocolates or whatever, it might be with a best-before date. I know that for good Scotch, there's no best-before date—it's just better—but if you donate that material, you still have to pay the duty. Am I correct on that?

[Tania Lee]

With respect to inventory donations, because we are an export market, we cannot donate goods and inventory. We cannot sell to the Canadian domestic market.

I can speak for my store. We have been giving all of our inventory away, free, to our essential truck drivers crossing the border. We've given away hundreds of thousands of dollars' worth of confectionery. I'm currently giving away water, which has an expiration date on it, because our goods are destined only for an export market. We can sell only to people crossing into the U.S.A., so this is an issue. Because of our status, our goods are for export, and we cannot donate them to the domestic market.

[The Chair, Liberal, Wayne Easter]

Do you still have to pay duty on that when you give it away, or not? If you gave it away locally, you would have to.

[Tania Lee]

We cannot give it in locally. As for the goods that I've given away in my store, I do not have to pay tax and duty on them because I'm giving them away free to a truck driver crossing into the U.S.

[The Chair, Liberal, Wayne Easter]

Okay. It has to go that way.

[Philippe Bachand]

Personally, I applied to give away my chocolates. The border closed in March 2020. Since our season starts in March, we were fully stocked. So I applied to be able to give my chocolates to the health care workers at the hospital near me. I paid 25% duty and taxes on those chocolates so that I could bring them back to Canada and give them away. When you have no income, it is very difficult.

[The Chair, Liberal, Wayne Easter]

Okay, I thought that was the case.

We will turn to Mr. Julian for two and half minutes, followed by Ms. Wagantall.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Mr. Chair.

My next question is for Mr. Poisson and Mr. Chartier.

Right now, we are seeing unfair competition. The numbers you just gave us are quite shocking. Half of the titles have been eliminated in recent years. Facebook, which pays no taxes, can cancel all the publications, weekly and otherwise, for our communities.

Where will it end? Should the government act in the next six months, as we believe is needed? If we do nothing in the next few years, what will be the results in Quebec and elsewhere in Canada?

[Benoit Chartier]

The results will be the same in Quebec and elsewhere in Canada. The issue is national, not provincial.

As mentioned earlier, the government must provide legislation right away. It could introduce a mammoth bill that would encompass Bill C-10, the anti-smear bill, and the bill against Facebook and Google to help Canadian newspapers. Whatever happens, it needs to happen as soon as possible.

In terms of the media, the equivalent of the Australian legislation that was passed this winter needs to be implemented in Canada. I am speaking on behalf of 100 weeklies in Quebec, but I also include all the newspapers associated with News Media Canada, of which Hebdos Quebec is a part. It includes all the weeklies and community newspapers across Canada. They are in every riding. All of the members of Parliament here on the Standing Committee on Finance have a special relationship with the newspapers in their ridings: they know the editors and the reporters, and the reporters know the members of Parliament, their press secretaries and political staffers.

Newspapers across Canada are under great strain right now, and the COVID-19 pandemic is not helping.

We cannot wait a few years, or even six months. Legislation must be introduced by the end of this parliamentary session in Ottawa, before the summer recess, so that there is some hope for the summer, and before an election is called. If an election is called, the process will take even longer, because we will have to wait to find out whether there will be a majority or minority government, which ministers will form the new cabinet, and so on. I think the Minister of Canadian Heritage needs to speed up the process and introduce legislation as soon as possible.

[The Chair, Liberal, Wayne Easter]

Okay. Thank you all.

I hear this election talk. You know when the election is scheduled? It's October 2023. Who wants the election? It's the media. That's all we hear. That's my point of view.

We'll go to Ms. Wagantall, followed by Mr. Fragiskatos.

[Benoit Chartier]

All right. We'll write it down tomorrow in our newspaper.

[The Chair, Liberal, Wayne Easter]

That's my view.

Ms. Wagantall, sorry. You have five minutes.

[Cathay Wagantall, Conservative, Yorkton—Melville, SK]

Thank you, Chair. Every committee has its own feel. It's quite interesting.

I would like to ask a couple of questions of Mr. Reimer. I took some notes as you were speaking, and it just reflects so much of what I see and hear in my own riding as well in Saskatchewan.

You cannot live on oxygen for long when that oxygen is not of high quality. You cannot compete with other countries when they're moving forward and you're not. You talked of housing, construction and roadwork. All of these are areas where they are making profits, and yet tourism, lodging and travel have collapsed. As a business person, I can't help but think that we saw right from the very beginning that there just wasn't the help that was needed in this particular sector.

You talk about operating safely as your very first option, as what you would want to see happen. I struggle with where we are today as a country economically. If you were to go out and purchase a product like a vaccine that was purchased by another country for $2 and you're finding yourself purchasing it at $8, clearly that's not a healthy market.

What would it take, do you feel, to be able to operate safely? We're hearing all these words on our news media—24-7 COVID—but I'm not hearing the real things that I need to hear about what is truly needed to be safe in Canada to be able to operate our businesses. We cannot afford another shutdown and we need to get moving. What would you say are the most important things you need to see from this government to be able to open your doors and get back to work?

[Mike Reimer]

I think the only way we can expedite that is to establish some sort of rapid testing system that allows travellers to enter the country safely, travel to their destination safely, experience whatever it is they're doing and return down that same pipeline back to their various countries, such as the States, Europe—we get a lot of Europeans—or wherever they're from, thereby not interacting or having contact with members of the general public, who are obviously still quite fearful, and rightly so, of the effects of COVID.

I think that's a very viable option.

[Cathay Wagantall, Conservative, Yorkton—Melville, SK]

Right, and the right rapid testing has not been available. People have had to isolate, possibly because of the COVID virus, for 14 days when that puts them out of work and puts your whole employment group in jeopardy.

Mr. Wood, I missed a lot of this because of Internet issues, but I know that small businesses carry a great deal of weight, not only for the fact that you only take from your business what you need to but also because you employ people who depend on you, and mental health is a huge issue. My own staff in my office, who have their jobs, are in tears over trying to cope with people who know that they're losing the business that they've worked so hard for or because they cannot keep their staff. What kind of experience has that been for you?

[Michael Wood]

It has been a difficult experience. What I ended up having to do in Ottawa was hold an info session with provincial minister Prabmeet Sarkaria and provincial minister Tibollo, as well as with the Royal Ottawa Hospital and Ottawa Public Health. We put together an info session for business owners on how to access mental health resources, because for small business owners it's not white and black, day and night, as to how they can access these resources. So many people are struggling right now because of the potential risk of losing everything that I felt, as a member of my community, that I had no choice but to put together this info session in order to help. There are a lot of people struggling, not only in Ottawa and not only in Ontario, but across our great country.

[Cathay Wagantall, Conservative, Yorkton—Melville, SK]

Absolutely. Thank you so much.

Mr. Fast, did you have a question you wanted to ask? I'm more than pleased to share my time.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mrs. Wagantall.

Mr. Reimer, I appreciated the fact that what you're asking for in the first place is not money and it's not support; you're asking for the economy to be safely reopened so that your business can go back to doing what it does best, which is create jobs and serve the public.

The government did come up in its budget with a $500-million tourism fund. When you look at that spread across the country, across the different regional development agencies, that certainly doesn't leave a lot for Manitoba. Then when we look at some of the conditions that have been attached for how that money could be applied, again, I'm not sure it's going to serve your needs.

You have suggested that the government has not provided specific, targeted industry support for your industry. Perhaps you can comment on whether that fund is actually going to achieve what it was intended to achieve, which is to support businesses like yours, which were the first to close and will be the last to reopen.

[Mike Reimer]

Thank you for that, Mr. Fast.

I don't see it as really being a solution. I still insist that the only solution that will save us is to let us get back to work, let us re-employ and get our people back on the job and move forward with, as you said, what we do best. We would appreciate extra help, extra money, and extra programs, but in the long term, those are not going to save us. We need our doors open and we need to get back to work.

[The Chair, Liberal, Wayne Easter]

Thank you all.

Before I go to Mr. Fragiskatos, we have time for a round from one more Conservative and one more Liberal. If somebody wants to signal me on that, they can.

Mr. Fragiskatos, go ahead for five minutes.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Thank you to the witnesses. I want to ask Mr. Cameron and Mr. Reimer questions, but rapid tests have come up here in the meeting, and I think that's a good thing. Rapid tests are an important tool in the tool kit, so to speak, and are recognized as a way forward in some sense. They're not as accurate as PCR tests, certainly, but they need to be looked at more.

The federal government, if we look at the government's own website, makes it clear that close to 41.8 million rapid tests have been sent by the federal government to the various provinces. Unfortunately, only 1.7 million have been used. Something is wrong in the distribution. I'm not quite sure where things are off. The federal government has lived up to its commitment to support provinces in this way, again with almost 42 million rapid tests sent by the government to the various provinces, but not even two million have been used. I think that poses some real questions.

I've said this before at this committee, Chair. Provinces have a difficult responsibility right now. They are squarely in charge of health care, and things are not easy, but something is wrong in the distribution, and I think that needs to be put on record.

Mr. Reimer, your testimony is certainly moving. You've built up your business. I respect that. I am the son of the owner of a small business, although not in the tourism sector. My father was in the restaurant business for decades, and I saw how hard he worked and I respect that he was an entrepreneur.

I want to ask you a few questions. I'm sure you have clients who have come from the U.S. and other countries, but what percentage of your customers are from Canada, and within that, how many fly in from different parts of the country?

[Mike Reimer]

Probably about 10% of our clientele are from Canada, while 20% to 30% are from the States, and then the balance are from places like Europe and Asia. Australia also figures pretty heavily in our numbers. We are entirely fly-in, of course. That is one of the things we ran into.

Actually, this year we attempted to do a domestic tour in March, one of our winter adventures, and we finally had found some Canadian clientele who were in our demographics— i.e., who had the financial wherewithal to spend the sort of money it takes to do a trip like ours—only three weeks before the borders closed, and that—

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much. I don't mean to cut you off. My time is limited, though.

The reason I'm asking is that when I look at a country like Australia, I see that for various reasons the Australians have been able to keep infection rates quite low, and as a result, their economy is more open.

Now, we do see in Canada that vaccines administered are moving apace in impressive ways. We're second in the G20 on a regular basis, or perhaps third today. It fluctuates between second and third, second and third on a daily basis in the G7, and by the end of June it's quite likely that we will see the vast majority of Canadians, all those Canadians who want a vaccine, being given at least one dose, and that will provide plenty of protection, a great deal of protection.

Of course, by the end of the summer, all Canadians who want to be fully vaccinated will be fully vaccinated. Deliveries continue. We see two million doses arriving this week.

With all that in mind, when you look at what the Australians have done to boost their tourism sector, you see that the government recently provided 800,000 airline tickets at half price, and the result is that we already see Australian citizens taking advantage and trying to buy tickets to go to various destinations. I know you're saying 10% of your customer base is domestic, but still, is an outside-the-box approach like that something that could be considered to help tourist-based businesses such as yours?