Canadian Groups Battle Feds for Visitor Rebates

By Rachelle Crum -- Tradeshow Week, 11/20/2006

Is the Canadian government about to pull the welcome mat out from under the tradeshow industry? Yes, according to Canadian tourism leaders — at the same time increasing costs for foreign tradeshow organizers and participants by 6 percent every time they do business in the country.

In September, Canadian Finance Minister James M. Flaherty introduced a proposed amendment to a tax bill that would eliminate the Goods and Services Tax Visitor Rebate Program. The Canadian House of Commons is expected to vote on the change within the next several weeks and, if successful, the 6-percent rebate foreign visitors receive on expenses would be eliminated beginning April 1.

As it is now set up, the program entitles foreign show organizers and participants to rebates on a wide range of costs including space rental fees, production costs, room nights billed to master accounts, shuttle buses, decorations and registration fees. Half the tax on food and beverage that is master billed is available for a rebate. Also, international visitors receive a refund of the GST they pay on short-term accommodations and goods they buy to take home.

The Tourism Industry Assn. of Canada has formed the Visitor Rebate Program Coalition to lobby to keep the rebate program. Thirteen groups, including the Canadian Assn. of Convention & Visitor Bureaux, Convention Centres of Canada and two U.S. organizations (the American Bus Assn. and Natl. Tour Assn.), make up the alliance, which held a national press conference, met with government officials and is spearheading a letter- and e-mail-writing campaign.

"We'll keep up the pressure," said TIAC President and CEO Randy Williams. "The industry is certainly coalesced behind this issue."

The president of the Canadian Assn. of Exposition Management, Naomi Wagschal, manager of exhibits and sponsorships for the College of Family Physicians of Canada, wrote the Department of Finance in October: "This decision will have a profound effect on both leisure and business travel to Canada, particularly for convention and exposition organizers."

CAEM Secretary David Chisholm, who also serves as a co-chair of the CAEM communications committee and is director of sales for the Metro Toronto Convention Centre, called the program "a sales tool."

Bruce M. MacMillan, outgoing president and CEO of Tourism Toronto, the Toronto Convention & Visitors Assn., and incoming president and CEO of Meeting Professionals Intl., called the proposed amendment an "unfortunate policy decision."

"This is not the way to do it," he said.

The coalition's work so far at least has received some government attention, said Chris Jones, vice president of public affairs for the TIAC. "The government is beginning to recognize that they potentially made a mistake."

The government's decision reflected "insensitivity" to the country's tourism industry, Jones added, and "was based on a poor grasp of the actual data."

The Canadian government introduced the GST in 1991 in an effort to make it easier to export goods from Canada and to promote the country as an attractive destination. However, according to a Department of Finance spokeswoman, "the program proved to be an ineffective and inefficient way to promote tourism."

The reintroduction of the GST for foreign visitors would hit the country's tourism industry hard, said Jones, especially following a significant drop in U.S. visitation (a decrease of 28 percent between 2000 and 2005, according to the TIAC), mostly due to the increase in value of the Canadian dollar, volatile fuel costs and American travelers' uncertainty about border documentation required under the Western Hemisphere Travel Initiative.

Chisholm said, "It just comes at the wrong time for all of us, when we have so many other challenges."

However, although he doesn't support the Canadian government's proposal, Steve Barry, president and CEO of the Las Vegas-based tradeshow industry logistics firm TWI Group, said if the program is eliminated, "I do not necessarily think that it would make a huge difference in somebody deciding whether to go to Canada."

TWI Group has a Canadian office and, according to Barry, 10 to 15 percent of the company's business involves helping tradeshow exhibitors from around the world get to Canadian shows.

According to the TAIC, the elimination of the Visitor Rebate Program would make Canada the only major country in the world with a value-added tax that does not provide a visitor refund program for international visitors.

The Canadian government estimates that dumping the rebate would put at least CAD $75 million (U.S. $66.4 million) into tax coffers and save about CAD $3.8 million (U.S. $3.4 million) in administrative costs.

Earlier this year the government reduced the GST by 1 percent and plans to reduce it another 1 percent, which "will also make Canada a more affordable destination and will benefit all visitors," according to the Department of Finance.

In 2005, the Canadian tourism industry employed 625,800 people directly, and there are more than 200,000 tourism-related businesses in the country.