Canada faces C$238m loss after axing visitor rebates

Emily Pacey

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A new study highlights the extent of the damage caused by the Canadian government's decision as the local border duty-free industry reveals another drop in sales

A study conducted in Canada by international tax rebate agency Global Refund has found that cancelling the country’s visitor rebate programme (VRP) will result in a loss of C$238m ($203.4m) in GDP. The government decided to abolish the scheme last year, having estimated that it would save $86m in programme and administrative costs.

The study supports the concerns voiced by the Canadian duty-free industry body Frontier Duty Free Association (FDFA), which today released November retail sales figures for land border stores and airport operations. Total land border sales fell by nearly 8% compared with the same month in 2005, while total airport retail sales declined by 12.75%.

The study was commissioned by the Tourism Industry Association of Canada (TIAC) and endorsed by FDFA. TIAC president and CEO Randy Williams said: "The decision to cancel the programme was based on incomplete information and made without consultation. The industry has been lobbying against the proposed cancellation since the announcement last September. There has been a solid case for keeping the VRP for conventions and group tours from the beginning; this report demonstrates the danger of removing the programme for individual travellers as well."

In other news, figures have been released on passport take-up figures in the US and Canada in advance of the US government’s Western Hemisphere Travel Initiative (WHTI), which dictates that all airline passengers landing in the US will have to carry a passport by January 23. The rule will apply to US citizens returning from Canada, Mexico or the Caribbean. At present, such travellers are allowed to show drivers’ licences or birth certificates.

Applications for passports are reportedly up by 53% in the US and by 33% in Canada in 2007 compared with the previous year. By January 23, tighter security rules will mean that all airline passengers landing in the US will have to carry a passport, including US citizens returning from Canada, Mexico or the Caribbean. Previously, they were allowed to show drivers’ licences or birth certificates.

The results are likely to be welcomed by Canada’s duty-free industry, which has been lobbying the US government to accept other forms of identification in order to stimulate US visitor levels.

In the US, where an adult passport costs nearly $100, about 27% of people have passports. In Canada, where they cost $75 but last just five years (compared to 10 years in the US), 40% of the adult population hold passports.