GST rebate scrap challenged

Yukon officials have little hope the $78.8-million GST-rebate program will survive following the first meeting of Canada’s tourism ministers in…

Yukon officials have little hope the $78.8-million GST-rebate program will survive following the first meeting of Canada’s tourism ministers in more than three years.

“It’s not likely that they will re-instate the program as it once was,” said Tourism and Culture Minister Elaine Taylor after her discussions with federal Industry Minister Maxime Bernier at the Council of Tourism Ministers in Gatineau, Quebec, last week.

“However, that opens the door for it to be offered via another venue,” she said.

Recently, tourism industry lobbyists asked federal Finance Minister Jim Flaherty to reconsider his decision to end the GST visitor rebate program.

Then, at last week’s meeting, the Yukon joined all other jurisdictions in pressuring Bernier to examine ways to lessen the blow on Canada’s tourism operators if the cuts go through.

Options include keeping the program — which reduces the GST international visitors must pay from six to three per cent through rebates — as well as handing its administration over to the private sector to allow Ottawa to save money while not dealing Canada’s tourism industry a heavy blow, said lobbyists.

In September, the GST-rebate program was one of several targeted for cutting from the 2007 budget as part of a package of cuts that could see the Conservatives trim more than $1-billion in federal spending.

Less than three per cent of the 35 million foreign visitors that come to Canada every year apply for the rebate, explained Conservative MP Rick Dykstra.

But Taylor and Yukon tourism lobby groups believe the numbers the feds are using to justify cutting the program are taken out of context.

“It’s kind of misleading because one only has to look at the 100-per-cent uptake by group tour operators, and those in the conventions, meetings and incentive-travel market,” said Taylor.

The tax-rebate scheme is the lifeblood for many tour operators in the Yukon.

About 80 per cent of the territory’s tourists come from the United States and overseas markets, and many come through operators and wholesalers that offer discounted prices through the GST rebate program, said Taylor.

“What we’re hearing thus far from our partners in Europe is that we may be facing a pretty big decline in visitation, if the proposal does go ahead,” she said.

“They quote anywhere from 10 to 20 per cent.”

The math used to justify the cuts is “completely incomplete,” because it doesn’t quantify pre-negotiated tax exemptions for international visitors doing film and video work, attending conventions and several other areas, said Patti Balsillie, executive director of the Tourism Industry Association of Yukon.

“It’s the belief of the Tourism Industry Association of Canada, and therefore all of the associations, that in order for the federal government to make a sound decision, they need complete information,” said Balsillie.

The national industry association is assembling research to champion the cause of keeping the rebate program and, in November, the several other groups lobbied on Parliament Hill and held more than 80 meetings with ministers and MPs.

“The message was: cancelling the visitor-rebate program will seriously hinder our ability to grow tourism in Canada,” said Balsillie, who was at the lobby day on behalf of the Yukon’s association.

At last week’s meeting, the Yukon delegation sent yet another message to Bernier that something must be done to spare the territory’s tourism operators, said Taylor.

“What we were stressing was ‘Let’s take a look, at the very least, at making a similar program available for our tour operators, who are by far those impacted the most,’” she said.

“We urged him to go back and address this issue with his cabinet colleagues, and take a look at perhaps re-instating the program in some form, and at the very least, for our group-tour operators.”

If the program disappears, “Canada will be the only destination in the world to ever have a value-added program for visitors taken away,” said Balsillie.

“It sends messages all over the world in the travel trade that Canada’s not open for business.”