Mr. Speaker, thank you for the opportunity to speak about Bill C-463, which is sponsored by the MP for Saint-Léonard—Saint-Michel. Before I get into the details of the bill, I would like to begin today by taking a few moments to speak about the important contributions tourism makes to our economy in every region of our great country.
Each year, millions of visitors from around the world and from across Canada travel our great country to discover its many natural and man-made wonders. The industry that serves those people is an important part of our economy. Indeed, thousands of Canadians rely on tourism for their jobs and livelihoods.
While large hotel chains, airlines and tour operators are important, about 98% of Canada's tourism sector consists of small and medium-sized businesses, such as lodges, wineries and spas. As such, it is mostly made up of thousands of private sectors and not-for-profit organizations and associations, as well as departments and agencies at all three levels of government.
In 2011, tourism accounted for approximately 2%, or $31.1 billion, of Canada's gross domestic product, some $78.7 billion in revenues, over 600,000 direct jobs and 3.5% of total employment in Canada. Tourism-related businesses often work with destination marketing organizations, which exist at the municipal, regional, provincial and national levels. These organizations promote development and market Canada's various tourism destinations and experiences.
Through various agencies, the three levels of government directly run many of Canada's most important tourism attractions, including parks, museums, sports stadiums and convention centres. Governments also establish policy and legislative frameworks and administrative practices that support and affect how our tourism businesses operate.
The diversified nature of the tourism sector makes it critical that all partners find ways to collaborate to build world-class destinations that offer first-class services and uniquely Canadian experiences. In the fall of 2011, after consulting with the men and women who help to make Canada such a great place to visit, it became very clear that a new federal tourism strategy was needed to help position Canada's tourism sector for long-term growth and global competitiveness.
The strategy focused on four priorities. The first was to increase awareness of Canada as a premier tourist destination. Second was to facilitate the ease of access and movement for travellers. Third is encouraging product development and investments in Canadian tourism assets and products. Fourth is fostering an adequate supply of skills and labour to enhance visitor experiences through quality service and great hospitality.
Canada's tourism industry has expressed support for the four priority areas and recent federal actions to foster tourism, including investments in tourism, infrastructure and marketing, through Canada's economic action plan and the signing of an approved destination status agreement with China.
In 2008 to 2009, during the global economic crisis, we invested more than $530 million in direct support for the tourism sector. This included more than $360 million in product development and tourism infrastructure, such as convention centres, and $113 million in tourism marketing. An additional $782 million was spent, largely on artistic, cultural and sports-related activities that have an indirect impact on tourism. We also made significant infrastructure investments in roads and bridges in support of this industry.
In addition to this ongoing support, Canada's economic action plan provided economic stimulus to the visitor economy through direct funding from our key tourism events, national parks, cruise infrastructure and marketing. Under the plan, we also invested billions of dollars in transportation and community infrastructure and in economic development that will provide enduring benefits to the sector. These actions supported the tourism industry through the economic downturn, and the sector continues to be resilient in the face of today's frequently volatile environment.
Given these strengths, we do not believe the proposed amendments to the Income Tax Act would be necessary. Although Bill C-463 would be intended to encourage Canadians to discover Canada by recognizing the costs of travel involving the crossing of at least three provincial boundaries, it is unclear whether and to what extent the proposal would motivate individuals to travel more, or to change their travel plans to take advantage of the tax deduction. Moreover, the proposal would have a number of deficiencies and would raise a number of equity and fairness concerns. In particular, it would recognize only the costs of tickets for travelling by bus, train or air. Other travel expenses, such as lodging, which may be significant for travel outside an individual's home province, may well present a deterrent for people who might otherwise take advantage of the proposed deduction. This deficiency would likely create pressure to extend tax relief to travel expenses that are not eligible under this proposal. Such extended tax relief would come at a significant fiscal cost. The deduction would provide significant benefits to those who would have incurred eligible travel expenses in any case. As such, it would represent a windfall gain to these individuals without increasing tourism.
The proposed deduction would apply only for airplane, train or bus transportation. It would not apply to travel by other modes of transportation, such as motor vehicle or boat, which may favour certain urban centres or regions over others. The bill would also stipulate that the percentage that could be deducted from income would vary, depending on the mode of transportation: 100% for travel by bus; 75% for travel by train; and 40% for travel by airplane. There is no policy rationale for why particular modes of transportation should be provided different tax treatment. Those travelling by air or train would view the measure as unfair, and rightly so.
In addition, the proposed measure would likely provide more tax relief to higher-income individuals, for two reasons. First, the deduction would apply to discretionary travel expenses that are typically incurred by higher-income individuals. Second, the value of the proposed deduction would be greater for individuals who are in higher personal income tax brackets.
To conclude, the bill would be inconsistent with existing tax policy, which generally does not allow taxpayers to deduct personal expenses and could entail significant costs. Indeed, implementing this deduction could cost about $215 million annually in foregone federal revenue, starting in 2017. It would also entail a cost for the provinces that use the federal definition of “taxable income”, in other words, all provinces except Quebec. It is unclear to what degree the proposal would induce individuals to travel more or to change their travel plans. For all these reasons, and others, my colleagues will mention as this debate progresses that our government opposes Bill C-463.