It's a gaming headset from my daughter, but hopefully it will pass muster.
Good afternoon. I want to thank the committee for the invitation to appear today on behalf of the retail sector.
For those of you who may not be familiar with RCC, we represent over 70% of core retail sales nationwide. Our members are drawn from general merchandise, grocery, pharmacy and specialty retailers, both in bricks and mortar stores and online. Retail is Canada's largest private sector employer, albeit one that has been severely impacted by successive waves of COVID. When at full capacity, more than two million Canadians work in our sector.
I want to focus my remarks on several aspects of the 2021 budget, both on flagship measures to deal with the economic impact of the COVID pandemic and on a couple of issues of particular interest to retailers.
The major business support programs, CEWS and CERS in particular, have been vitally important lifelines during the pandemic. While we've suffered a significant number of closings and job losses, some of them regrettably permanent, COVID impacts would have been far worse but for the support that our merchants and workforce have received.
On behalf of the retail sector, we want to express our appreciation to the government for its leadership and to the opposition parties for working collaboratively to ensure that these supports continue to be provided through what we hope will be the conclusion of the final wave of COVID.
I want to turn briefly to a largely retail-specific measure that was raised in the budget, the matter of skyrocketing credit card acceptance costs. The move to online and curbside transactions and the growth of contactless payments, amidst hesitancy around the use of cash, has had a major impact on the cost of payment acceptance. Even pre-pandemic, Canada was seeing huge growth in credit card transactions, with $615 billion spent on credit in 2019, which is up 16% from the year before, according to Payments Canada.
On an average cost of 150 basis points, that represents $9.2 billion in costs to Canada's merchants. In reality, the average costs are higher, because corporate and prepaid cards are not covered by limits in the current stream. We don't have complete data for 2020 or 2021, but even allowing for the fall-off of spending on travel and hospitality, we would expect that the number would now be in excess of $10 billion annually, the vast majority of it falling on Canadian retailers and, ultimately, on Canadian consumers in the form of higher prices.
To be clear, Canadian credit card fees are much higher than in most other countries. In the 27 member-states of the EU, credit card fees are capped at 30 basis points, or one-fifth of the Canadian average level. They're also tightly constrained in Australia, Israel, China, India, Switzerland, and the list goes on. That's why our retailers are delighted to see the government's budget commitment to review these fees in the fall of 2021 and to act to reduce them.
We would suggest adding another criterion for the study and looking at reducing the gaps between fees charged for bricks and mortar transactions and the higher fees charged for e-commerce transactions.
In the five minutes allocated for remarks, it's tough to cover all the bases, but briefly, among RCC's recommendations that were not addressed in this budget was the call for a reduction on import duties, especially on apparel and footwear, which bear the heaviest costs. Those businesses have been devastated through the pandemic. Overall, these customs duties cost $4.5 billion annually. They're hidden in the price of goods, but they do drive up costs for retail businesses and the prices paid by Canadian consumers.
Lastly, we think it's high time that the government revisit the 2007 decision to eliminate the visitors tax rebate. Essentially, every other country with a federal sales tax has such a program in place, making destinations more attractive for tourist spending and, indeed, for tourism overall. You may note that this recommendation was also put forward by TIAC, the Tourism Industry Association of Canada, as both TIAC and RCC understand how important an issue this is for attracting high-spending tourists to Canada. RCC has a study available on this topic for those members who may be interested in the issue.
To close, I want to thank members again for today's opportunity to present a retail perspective on the 2021 budget.
I look forward to answering any questions that members may have.
Thank you, Mr. Chair.