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Tourism hoping for more from budget

No help for CTC, tax measures may help

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.