Toronto

Toronto lost nearly $1B in GDP due to scrapped tourist rebate, report says

It was a program that was eliminated by the federal government more than a decade ago, but new numbers from the Retail Council of Canada suggest the visitor rebate could have brought in $993 million in GDP to Toronto and $5.96 billion to Canada.

Retail Council of Canada analyzed 10 years worth of numbers, is pushing for the program's return

The Caribbean carnival is just one of a number of festivals that attract tourists to Toronto. But a new report says the federal government's decision to scrap the visitors rebate in 2007 cost the city nearly $1 billion in tourism dollars. (Christopher Katsarov/Canadian Press)

It was a program that was phased out by the federal government more than a decade ago, but new numbers from the Retail Council of Canada (RCC) show the visitor rebate could have brought in $993 million in Gross Domestic Product to Toronto and $5.96 billion to Canada over the span of 10 years.

The visitor rebate program — introduced in the 1990s — allowed visitors to Canada get a rebate for the sales tax on items that they purchased in the country. 

The RCC analyzed international visitor spending over the span of 10 years, also factoring in other elements such as currency rates and spending on advertising. 

"Nearly $6 billion has been lost from our economy as a result of this policy change," said Sebastian Prins, senior policy analyst with the RCC.

The federal government scrapped the program in 2007, citing costs to administer it and a low number of tourists actually using it.

Toronto hit hardest

"Toronto was the hardest hit," said Prins, who explained that the city is the country's business hub and sees the most international visitors who stay for more than one night.

The Tourism Industry Association of Ontario is also pushing for the Visitor Rebate Program to be be brought back, saying it would attract more international tourists who spend money to the province.

The visitor rebate program allowed international visitors to recoup the sales tax on products purchased in Canada. It was scrapped by the federal government in 2007. (Robert Short/CBC)

"The tourism industry has been talking about bringing the program back for 10 years," said Beth Potter, president and CEO of the Tourism Industry Association of Ontario.

"Anywhere where we can make it any easier to choose Canada — and Ontario in particular — that's a good win in our perspective."

Program replaced

The federal government replaced the visitor rebate with the Foreign Convention and Tour Incentive Program (FCTIP). 

It doesn't offer rebates on GST/HST products bought in Canada. Instead, it offers rebates to:

  • Non-residents for the GST/HST paid on short-term and/or camping accommodation in Canada included in an eligible tour package.
  • Convention sponsors, organizers and exhibitors for the GST/HST paid on certain properties and/or services used in the course of conventions held in Canada.

But the RCC says that doesn't go far enough, adding that Canada is the only Organization for Economic Co-operation and Development (OECD) country that has a federal sales tax but doesn't  have a rebate system.

"We would like to see this brought back," said Prins.

"We've seen a damage to GDP as a result of this program being cancelled. It's our stance that the government should bring this back."

In a written statement to CBC Toronto Wednesday evening, a federal Ministry of Finance official wrote that "the government has made significant investments to drive tourism, including enhanced tourism marketing and other areas that directly benefit from this important industry. 

"Numbers are on the rise, with 2017 being the best year ever for tourism in Canada," the statement reads.

"In her capacity as Minister of Tourism, Minister [Melanie] Joly will also be working on a new federal tourism strategy that will drive even more economic growth and create good jobs for the middle class in this important sector."

 

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.