Thank you, Mr. Chair, members of the committee, I'm pleased to be here today.
Tourism is a sector that generates $74 billion and has the potential to develop more, particularly as a result of the stimulus from the agreement whereby China has granted Canada approved-destination status. The TIAC is delighted with the Canadian government's success in negotiating that agreement. I would like to congratulate the Prime Minister and the Minister of State for Tourism in particular.
However, the industry is still facing major barriers as a result of the recession, such as the cost restructuring in the aviation industry, the high Canadian dollar, problems related to the border and required travel documents, high fuel prices and the lack of resources to promote Canada in new markets.
Just to give you some recent trends in tourism--some of which have been gone over by my colleagues--tourism demand has averaged about 6.3% growth since 2004, but negative growth is expected for 2009.
Since 2000, inbound travel from the United States has fallen, we estimate, by about 48.6%. U.S. overnight travel declined 6.6% from 2007-08. In 2008 our travel deficit with the United States was $8.9 billion, and our international travel deficit continued to grow and currently stands at $12.6 billion.
Hotel occupancy rates are down 5.1% in Ontario and 6.1% in B.C., and average daily room rates have declined 5.8% in Ontario and 4.9% in B.C. this year over last year. Air traffic at major Canadian airports declined 14.4% over the last year.
Now, while the ADS issue has been resolved, another has emerged as significantly problematic for the industry in two of our largest provinces. HST is nominally a smart tax, but mitigation strategies are needed for the tourism sector because many of these businesses were previously exempt from PST/RST. Hence, end consumer costs will now go up. Most tourism-related products and services will be subject to tax increases of the order of 7% in B.C. and 8% in Ontario. Tourism businesses are labour intensive, so input tax credits will not be available to operators to offset the negative impacts of increased tax levels. In the questions, I can provide some examples and illustrations of some businesses that are going to be impacted by that.
The B.C. Council of Tourism Associations estimates revenue losses of between $360 million and $545 million, direct and indirect job losses of 7,000 to 10,000, and average tourism price increases of 4.66% in B.C. In Ontario, cost increases for average vacation scenarios range from 14.2% for a shopping weekend in Toronto to 43.6% for a weekend getaway.
Leisure travel demand from approximate markets is highly price sensitive. There's no national value-added tax in the U.S., no GST levelled at the national level, and there has been significant massive discounting by U.S. destinations and properties. Given the price elasticity of tourism, many of our key customers in the nearer markets are choosing to stay in their own jurisdictions.
By way of recommendation, we think that greater thought and allowance should be made for the impacts on non-manufacturing sectors, such as tourism, which have heavy labour inputs. While the federal government has limited jurisdiction to specify which provincial sectors will be exempted from the HST, it can mitigate the impact of this measure through the approach it takes to rebating value-added taxes to foreign visitors.
Therefore, TIAC's submission today calls for three things: reaffirming the principle in the tax code that tourism, as an export industry, ought to be exempted from national value-added taxes such as the GST/HST; two, ensuring the full HST amount is eligible for rebate under the FCTIP that applies to tour operators and conventions and meetings; and finally--and this is perhaps most critical--reinstating individual rebates to foreign visitors on GST/HST for qualifying goods and services.
That's the end of my submission. Thanks.