By Clare Ogilvie
The recent federal budget is both good news and bad news for
the tourism sector.
It includes measures that should put more money in the pockets
of taxpayers — discretionary money they may choose to spend on travel
— but it also neglects to increase funding of the Canadian Tourism
Commission, according to the Council of Tourism Associations (COTA), the voice
of the B.C. tourism industry.
For some time Canadian tourism representatives have been
advocating for an increase of $100 million in federal funding for the CTC, the
national Crown Corporation responsible for tourism marketing.
“Out concern is that as the world becomes more expensive, and
it is more competitive out there, Canada is losing ground in terms of its
marketing efforts,” said Mary Mahon Jones, COTA’s CEO.
Currently the federal government funds the CTC to the tune of
$75.8 million. COTA believes that it should be funded for $175 million.
“The business case shows that an investment of an extra $100
million would result in a $620 million return (in the form of additional tax
revenues) for government, so there is a good business case for this,” said
Mahon Jones.
“We feel that (level of funding) will be able to assist the CTC
in putting together a more far reaching campaign. One of the issues, for
example, is that our U.S. market is declining and we need to have some real
effort put into doing some more marketing in the U.S. to bring people to
Canada.”
There is a sense of urgency behind the desire to increase
funding as Canada deals with several big tourism issues including the 2010
Winter Olympic Games and the Western Hemisphere Travel Initiative, which will require
all travellers to and from the U.S. to possess a valid passport or alternative
“secure” documentation by January 2008.
“Even before it is implemented in 2008 we could be looking at a
12 per cent decline in U.S. visitation so that is a big concern for us,” said
Mahon Jones.
Figures for January of 2006 show that U.S. visitors to Canada
were down 5 per cent to 1.6 million. Total automobile travel from the U.S.
recorded a 12.4 per cent decrease in February 2006, with overnight car travel
declining 11.6 per cent and same-day auto travel declining 12.7 per cent, its
lowest level on record.
Other travel modes also registered significant declines in
February, with total plane travel down 12.1 per cent and bus travel dropping
17.2 per cent. In addition, train, boat and other methods declined 21.5 per
cent.
This is the second year that the increase in funding for the
CTC has not been addressed said Mahon Jones, adding that COTA will be working
with its national partners through the Tourism Industry Association of Canada
to continue to draw attention to the issue with the federal government.
Mahon Jones was encouraged to see investments in borders,
emergency preparedness, transportation infrastructure, transportation security
and corporate tax reductions.
The federal government’s announcement of a $25 million
expansion of the Nexus air program was good news for the industry too, said
Mahon Jones. The money will allow the streamlined airport security pilot
project to expand from Vancouver International Airport to seven other major
Canadian airports.
But, said Mahon Jones, what the federal government really needs
to do is amalgamate the Nexus program for land, sea and air into a single
program.
She noted that Whistler is vulnerable to border issues and it
already being impacted by WHTI.
“As soon as the border started to have problems Whistler
started to see decreases in overnight travelers, so it is a big issue,” said
Mahon Jones.
“The Nexus program is a huge issue for Whistler. We continue to
urge the federal government to bring that together into one card.”
Unfortunately the budget did not address the needs of some
Canadian airports for increased funding through the Airport Capital Assistance
Program.
“This is something that we continue to be concerned about
because smaller airports are faced with some fairly significant challenges in
terms of keeping up the infrastructure,” said Mahon Jones.
“It’s a catch 22. In order for the airport to stay viable it
has got to attract more flights and if it can’t keep its infrastructure up and
begins to decline it won’t be able to attract more flights.”
But it is not all doom and gloom. The budget did include some
other measures, which may have a positive effect on individual tourism
businesses, according to the Tourism Industry Association of Canada.
• A reduction in the general corporate income tax rate to 19
per cent by 2010 and the elimination of the corporate surtax effective Jan.1,
2006.
• A new tax credit of up to $2,000 for employers who hire
apprentices.
• An increase in the income threshold for small business
eligible for the reduced 12 per cent tax rate from $300,000 to $400,000
effective Jan. 1, 2007, and a reduction of the 12 per cent rate to 11.5 per
cent in 2008 and 11 per cent in 2009.
• $591 million over eight years for Canada’s Pacific Gateway
initiative.
• $95 million over two years to enhance the security of passenger rail and urban transit operations as well as $133 million for the Canadian Air Transport Security Authority over two years to cope with increasing passenger flows and related operating expenditures.