Tuesday, August 28, 2007

GST refunds eliminated in Canada

Biking Stanley Park with a view of Coal Harbour. Sue Frause photo.
I somehow missed the news that refunds for Canada's GST or value-added tax that apply to a majority of goods and services was eliminated on April 1, 2007.

The Visitor Rebate Program provided GST relief for goods exported from Canada by non-residents, short-term accommodation (hotels) and certain tour packages for visitors. Some property and services taxes used in the convention arena were also eliminated. It all has to do with the Canadian government's package of "specific spending restraint measures" announced on September 25, 2006.

In this statement from the Tourism Industry Association of Canada released on Oct. 18, 2006 it's clear that TIAC is not happy about the cost-cutting decisions:

Eliminating the GST/HST Visitor Rebate Program will put Canadian jobs, economic growth and tax revenues at risk. That's the message the federal government got today from the VRP (Visitor Rebate Program) Coalition, a broad-based business group formed to fight the planned measure, announced last month as part of a wide-ranging series of spending cuts.

"Canada's competitiveness as a tourism destination is at stake," said Randy Williams, President and CEO of the Tourism Industry Association of Canada (TIAC), which is leading the multi-stakeholder initiative. "While other countries are going out of their way to attract visitors, Canada is essentially rolling up the welcome mat. All of our major competitors have visitor rebate programs and a number of them have, in fact, been expanding those programs and making them easier to access."

Visitors will no longer receive a six percent savings on goods and accommodations in BC and other provicnes. That loss, along with the US and Canadian dollars almost being at par, could play a factor in the ongoing decline of Americans crossing the border into Canada. 
The press release concluded with these final thoughts:
The industry is already struggling with a substantial decline in visitation from the United States, Canada's primary international tourism market, which was 28% lower in 2005 than in 2000. Factors include a stronger Canadian dollar, rising fuel prices, an underfunded national tourism marketing effort, and confusion about border documentation requirements under the Western Hemisphere Travel Initiative. Now, by canceling the GST/HST exemption for convention, group and tour business, the government is effectively revoking tourism's status as an export industry.

"The Canadian tourism industry is working hard to reposition itself in a market that has changed radically in recent years," said Mr. Williams. "Canceling the Visitor Rebate Program is an additional blow that could prevent it from doing that. The federal government is kicking the industry while it's down."
With the Vancouver 2010 Winter Olympic Games only a few years away, the Canadian suits need to rethink this action. And soon.