VRP cut will cost Canada says new study

    OTTAWA, March 9 /CNW Telbec/ - A federal government decision to cancel
the GST Visitors' Rebate Program in order to save program dollars will cost
Canada - hurting Canadian tourism and negatively impacting the economy as a
whole, according to a new study.
    The first-round impact of abolishing the VRP will reduce international
tourism spending in Canada by an estimated $213 million per year, according to
the revised Economic Impact of Abolishing Canada's Visitors' Rebate Program.
The study, carried out by CRA International, was commissioned by Global Refund
Canada and endorsed by the Tourism Industry Association of Canada and the
Frontier Duty Free Association.
    This new report supplements a study released in January 2007 and includes
revisions and clarifications that were made in response to constructive
dialogue with federal Finance Department officials.
    "The industry is pleased with the helpful feedback it has received from
Finance," said Chris Jones, TIAC's Vice President of Public Affairs. "We
believe the revised study reflects the department's legitimate concerns while
supporting our position that getting rid of the VRP will cause substantial
damage to an already weakened tourism industry."

    Using an established international trade model, the report's economy-wide
analysis indicates that cancelling the VRP will:

    - Reduce GDP by approximately $114 million per year;

    - Reduce net national product-a good measure of the net income impact
      on Canadians-by some $40 million per year;

    - Cost 1,900 jobs.

    The report also states that around 13% of tourists currently use the
program-much more than the 3% figure cited by the government - and well in
line with similar programs in other countries.
    While all people believe their country is unique, the report indicates
that every country offers 'unique' experiences and international tourists
readily substitute one destination for another. The consequence is that even a
small rise in the cost of visiting Canada, as a result of abolishing the VRP,
would see tourists choose other destinations.
    "The Visitor Rebate Program is one of the financial incentives in Canadian
tourism's toolkit that helps lure foreigners to Canada and induces them to
spend while they are here," said Kevin Boughen of Global Refund Canada. His
company, and those in the duty-free sector, are expected to lose a sizeable
number of employees if the rebate program for international visitors is indeed
    As an alternative to cancelling the VRP, the tourism industry has proposed
an industry-delivered mechanism based on user-pay principles. This solution
would eliminate administrative costs to Canadian taxpayers, while maintaining
a program that contributes to international visitors' positive impressions of
Canada, thereby encouraging return visitation.

    The full report is available at

    The Tourism Industry Association of Canada (TIAC) is the national
private-sector advocate for Canada's $62.7 billion tourism industry. It
performs a unique and pivotal role in ensuring the Canadian business and
policy environment works for tourism, by communicating its importance to
Canadians, advocating positive measures, and lobbying government for action.
Contact Chris Jones 613.295.9530.

    Global Refund has local organizations in 37 countries, with over 200
international Cash Refund offices on four continents, supporting clients in
Europe, Asia and the Americas. The strength of our organization and global
presence enable us to provide over 30,000 travellers a day with tax refunds
through Global Refund. Contact Kevin Boughen 416.509.4047.

    Frontier Duty Free Association represents the interests of its members,
including Canada's 31 land border Duty Free Shops,  Canadian Airport and U.S.
land border duty free shops, and duty free trade suppliers. Contact Laurie
Karson 613.868.6369.

For further information:

For further information: Susan Wong, Manager, Communications, Tourism
Industry Association of Canada, (613) 238-9400, swong@tiac.travel

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