Losses mount after tourist rebate scrapped
Niagara Falls continues to see record numbers of tourists visiting the city, despite a new report by the Retail Council of Canada that says the region has lost nearly $600 million of potential tourism revenue in the past decade.
The study, released Friday, estimates that Niagara’s gross domestic product (GDP) is $589.7 million less than it might have been if the federal government hadn’t scrapped the visitor rebate program in 2007, said Retail Council of Canada senior policy analyst Sebastian Prins.
The same report estimates Canada’s GDP was reduced by $5.96 billion in the decade since the cancellation of the program that reimbursed international visitors for taxes paid on purchases in Canada.
Niagara Falls Tourism chairman Wayne Thomson said that city continues to see significant increases in visitors.
“In the last three years, tourism has been the best in the last 20,” he said. “We’re getting to the point where 14 million to 14.5 million visitors are coming to the city.”
But Prins said the tourists that are coming aren’t spending as much money as they once did.
“We noticed that those visitors, they’re spending the same amounts on their travel here and their hotels and things like that, that hasn’t changed. But what has changed is the money that they’re spending in the trip. When they’re actually here, they’re spending about $66 less per person,” he said, adding a significant amount of that reduced spending can be traced back to the cancelled rebate program.
Prins said the federal government is being adversely impacted by the cancelled program, too — despite the saving associated with no longer offering the tax
rebates to tourists.
“Even after they rebate the GST, they make money off the business income and the income from employees,” he said. “And, of course, when shopkeepers make money, they’re more likely to take on new staff.”
Despite the increasing numbers of tourists, Prins said tourism growth in Canada has actually been slow compared to other Organization for Economic Cooperation and Development (OECD) member countries.
“In the last few years we started to pick up a bit. But if you look at a bit of a longer snapshot, we’ve actually been the fifth-slowest growing country in the OECD,” he said.
“If you compare us to other countries, it’s: why is Canada’s tourism industry growing so slowly?”
He said other countries that have taken a more innovative approach to tourism rebates have seen far more growth.
For instance, he said Japan implemented a visitor rebate program in 2014 that is much easier to access than the program Canada scrapped a decade ago. As a result, he said Japan has almost doubled its tourism export in the years since.
Niagara Falls Tourism executive director Noel Buckley said the Retail Council of Canada research confirms fears tourism industry representatives warned about when the federal government initially chose to scrap the program.
He said the tourism industry was disappointed and opposed to ending the program a decade ago, and “I would imagine that’s still the feeling of everyone in the industry.”
When scrapping the visitor rebate program in 2007, the former Conservative government established the Foreign Convention and Tour Incentive Program to replace it. That program, however, only provided rebates for taxes paid by international visitors on accommodations, or on properties used for conventions.