Northern Ontario Heart-A-Tax

Originally Published in the January/February 1992 issue of The Outfitter Magazine.

 

The Impact of the GST on Northern Ontario Tourism

Editor’s Note: The following position paper was submitted by NOTO to the Honourable Tom Hockin, Minister of State for Small Business and Tourism, in Ottawa on Thursday, November 7, 1991, It was prepared by Bud Dickson, then Vice-President of Finance, with input from other NOTO members.

The membership of NOTO, and most operators within the tourism industry, strongly believe that the impact of the GST has produced extremely negative ramifications for tourism in this country. Canadian operators are competing globally in “one-on-one” marketing campaigns and their marketing edge is rapidly diminishing with the many inhibiting factors imposed on them. The GST initiative was the most severe hardship and has proven to be very distasteful to our guests visiting Canada.

While quality and service are still of paramount importance, the state of the global economy dictates that people must spend their dollars more carefully. Canadian tourist operators need incentives to entice people to visit this country - not deterrents.

The strong Canadian dollar has been another factor in visitor decline. Previously, the positive exchange difference was a definite incentive. We must endeavour to keep our rates competitive with our U.S. counterparts, while paying higher costs for goods and services. Then, we must charge an additional 7% GST on their package vacations, give them a form to complete and explain that they may, or may not, receive a rebate on the accommodation portion of their vacation.

NOTO would like to focus on the viable alternatives to the rebate system or assist the Federal Government in redefining “accommodation” and broadening the goods and services that can be rebated to visiting guests.

We will begin by identifying a few of the major problem areas;

PROBLEMS

Moreover it appears that the GST is encouraging those tourists who wish to visit Canada to bring along all their own food and equipment. Although a “package vacation” contributes more dollars to the economy and a quality service for visiting guests, it doesn’t make sense to pay an additional 7% for goods they can purchase at home at a much lower cost.

One clear example is unprepared food. When food is provided on a package canoe trip, a houseboat vacation, or a fly-in outpost package despite the fact that visitors must prepare their own food, they are charged the GST. Conversely, if they purchase food in the U.S. they do not have to pay GST nor do they have to pay duty at the border.

A family from Chicago chose to have food included in their outpost package and prepared the food while they were at their remote location. This addition to the package increased the cost and they paid approximately $500.00 in GST. Although the accommodation portion of their GST was eligible for a rebate, the greatest portion of the package was not. Needless to say, they will be supplying their own food and bait next season.

POSSIBLE SOLUTIONS

CONCLUSION

In summary, either one of these solutions would go a long way toward solving some of our industry’s problems. The proposed solutions would enable Canadian operators to be more competitive, as well as encourage Canadians to travel within their own country. In addition, the paperwork jungle that is created by the rebate system would be eliminated. Moreover, these alternatives to the present system would go a long way in helping the operators make their guests happy who are currently very disgruntled with the rebate system.

It has been an extremely difficult year for our industry. We can not endure another year of disillusioned tourists. It is imperative that positive action be taken before we begin traveling to promote our next season. We can not afford our markets to be eroded any longer by the negative publicity that this tax has generated.

There is a recognized formula in the marketing world called the “3-11 Theory”. Customers who receive a good experience might tell three people about it, but those who have a negative experience will tell at least eleven others. Together we can find a solution to help our operators make the experience of their customers more positive and one that they will share with at least three others.

We urge you to help our industry by taking immediate action on this issue.

Share

NOTO 386 Algonquin Avenue, North Bay, ON P1B 4W3 • T 705.472.5552 • F 705.472.0621 • info@noto.net
Website designed by Sofa Communications