Canadian tourism group proposes privatized tax rebate program
By David Cogswell, Travel Weekly, 11/21/2006
The Tourism Industry Association of Canada has proposed a plan to the Canadian government through which the Canada Goods and Services Tax (GST) Visitor Rebate Program would be financed and administered privately.
The move is in response to an announcement in September that the federal government would repeal the GST exemption on tourism purchases as of April 1.
Although the rebate is designed to stimulate international sales of Canadian goods and services to boost its balance of trade, officials deemed the program too costly to administer. Canada's Dept. of Finance calculated that it would gain $78.8 million in revenue, plus $5 million in administrative costs, by dropping the rebate program.
"We're suggesting, like other countries, a private solution which will create no burden on Canadian taxpayers," said Randy Williams, president and CEO of the TIAC, "The people claiming the rebate are paying for the service."
Williams said the TIAC made the case to the government that removing the rebate would hurt more than help Canada's fiscal concerns. Using standard economic formulas, the TIAC revealed that the drop in demand that might result from repealing the exemption would likely cost Canada $400 million in revenue from its $20 billion foreign tourism market.
"The point is, we need to rethink this and make sure we're not being penny wise and pound foolish," said Williams.
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