Study Details Full Impact of Canadian GST Decision

January 16, 2007

Study Details Full Impact of Canadian GST Decision
Jan. 16, 2007 – Last September the Canadian government elected to eliminate the Canadian Goods and Services Tax Visitor Rebate Program, effective April 2007. The Tourism Industry Association of Canada and the Frontier Duty Free Association, with the support of industry allies, commissioned a study to look into the possible ramifications of the decision.

Released today, the VRP Economic Impact Assessment Report argues that the decision essentially revokes tourism’s status as an export industry. While the GST elimination, which TIAC felt was made without adequate consideration of tourism interests and impact on affected stakeholders, was estimated to save $86 million in combined GST rebates and VRP overhead costs, the full financial consequences of the decision need to be analyzed.

The report presents detailed information on the negative economic impacts of the decision, including an estimated:

 

Decline in visitor spending of CDN$382 million

Loss of CDN$132 million in government revenue leading to a net loss of CDN$46 million

Reduction in the Gross Domestic Product of CDN$238 million

Decline in employment of 5,700 jobs in the tourism sector

Loss of key accommodation, convention, restaurant/bar and retail expenditure by both group and individual incoming visitors, which will impact a broad range of Canadian businesses across the country

NTA is a member of the Visitor Rebate Program Coalition, which was established by TIAC to help push for reinstatement of the VRP.