New evidence suggests that losing the GST visitor-rebate program will cost Canada’s tourism industry hundreds of millions of dollars.
A report commissioned by the Tourism Industry Association of Canada found that cancelling the rebate project could hurt tourist numbers, foreign visitor spending and domestic employment “far in excess of any potential savings reaped from this cut.”
Industry representatives see the study’s finding as further proof the execution of the program, which costs nearly $80 million annually, was based on flawed research and should be stayed.
“The feds now have more accurate information by which to base a decision,” said Patti Balsillie, chief executive officer of the Tourism Industry Association of the Yukon.
“I’m hoping that they adjust their decision to enable the visitor rebate program to remain for significant portions of the tourism industry, such as meetings and conventions, working with the wholesale travel trade and group touring,” she said.
“I hope that’s the minimum of what’s retained.”
In September, Stephen Harper’s Conservative government announced more than $1 billion in spending cuts from the 2007 budget.
The cuts affect a litany of federal programs, including the GST rebate scheme, which is scheduled to be cancelled by April.
Under the program, international visitors to Canada can apply for rebates for tax they pay in Canada, effectively reducing their tax rate from the usual six per cent to three per cent.
Ottawa argued that fewer than three per cent of the 35 million foreign visitors to Canada every year apply for the rebate.
It was cut to save money.
But many have questioned the math behind that decision.
“One only has to look at the 100-per-cent uptake (of the GST rebate) by group tour operators, and those in the conventions, meetings and incentive-travel market,” Yukon Tourism and Culture Minister Elaine Taylor said in an interview in early December.
Up to 80 per cent of the tourists that come to the Yukon come from overseas markets — many of them through tourism wholesalers that offer discounted prices through the rebate program, added Taylor.
The tourism industry’s study found that the government looked at claims sent in by families or individuals but left out tour operators.
“They based their reason on incomplete information,” said Balsillie.
Yukon tourism officials fear losing the rebate program will drastically hurt business.
Many tour companies have already advertised their packages internationally, assuming the three-per-cent rebate would still be in place.
That means their prices may be inaccurate if the program is cancelled, said Balsillie.
She wants the program to be spared.
“I hope with all this news and research that they, in fact, find ways to enhance it,” said Balsillie.