FDFA, Canadian border operators, wait for new Federal budget to hear fate of Road TRIP rebate program

Since unveiling the initial plans for its 3-year pilot Road TRIP (Travel Rebate Incentive Program) at its annual convention last November, Canada’s Frontier Duty Free Association has been strongly advocating for the program with government and industry officials to make the concept a reality. Now the Association is waiting to see if the program – which is a rebate of the 5% GST on goods purchased by visitors that can be collected at the border duty free stores as visitors leave the country – is adopted by the government as part of the 2015 Federal budget, which will be unveiled on April 21.

FDFA Executive Director Laurie Karson met with TMI in Orlando to present an update on the program, which is designed to increase retail activity and employment in the Canadian duty free stores across the country.

“We have developed a concise one-page information piece that we give to members of parliament, ministers and industry stakeholders, and we also created an economic study in support of Road TRIP which shows the benefits that will be gained by giving Americans back the 5% GST at the border duty free stores. No one has opposed the proposal, neither in the government nor the industry,” explained Karson.

A broad range of industry stakeholders have written letters to Canada’s Minister of Finance Joe Oliver in favor of the program, says Karson. Oliver’s Ministry will make the final decision on whether the program can go forward. The industry groups who are supporting Road TRIP include the Tourism Industry of Canada (TIAC), the Retail Council of Canada (RCC), the Canadian Federation of Independent Business (CFIB) and the Canadian Vintners Association, among others.

Canadian Chambers of Commerce and Canadian Border Mayors from across the country have also voiced their support of the Road TRIP program with either letters sent to the Ministry of Finance from local political representatives and/or media releases.

“Even John Tory, the Mayor of Toronto, has sent a letter saying the program will be good for the city. We have received 25 letters from Members of Parliament. In all we have more than 60 letters of support,” says Karson (Ed. Note: As of March 23, 2015).

In addition, Ministers from Quebec, Ontario, British Columbia and Manitoba have contacted the Ministry of Finance in support of the program, says Karson.

Karson explains that the program will cost the government about C$5.2 million in rebates, but could generate as much as $89.6 million GDP, according to its economic research study.

RoadTRIP+Economic+Study+CHART“The government canceled the original, earlier rebate program which included accommodations and third party rebators, but this program has been tailored to avoid those issues. Road TRIP will not cost the government much but all these little programs can add up to a much bigger dollar. So we are doing all we can to keep our proposal in their memories,” she says.

According to the FDFA economic summary, the program can bring in an additional 1,300 full time jobs across Canada and $55.6 million in wages: “It will bring in an additional 630,000 American visitors a year, and it will certainly increase our visitation rates to the duty free stores, because people will go into the shops to get their rebate. We know that every time someone goes to get a rebate, they have cash in-hand, and they spend the money back in our stores. (FDFA estimates that up to 60% of customers will spend the rebate in their shops before leaving Canada.) These sales also benefit Canada, since so many visitors buy Canadian-made products such as ice wine, spirits, beer, maple syrup and confections, and souvenirs,” adds Karson.

The FDFA is planning to combine the Road TRIP rebate with a “Take 5” promotion, suggesting that U.S. visitors consider making a final purchase with their rebate in Canada at the duty free shop.

The FDFA says that the Canadian border area retailers are losing significant business to U.S. retailers and internet sales, as well as to falling numbers of cross border visitors. Since 2002 the annual number of U.S. visitors to Canada has declined by 23.9%, with the number of same day visitors, mostly road travelers, down by 55.9%, and overnight trips down by 26%. From 2008-2013 the number of cross border trips by road has declined 14% with spending by visitors down 32.7%.

These declines have severely impacted small and medium-sized business, says the FDFA, with Duty Free border sales down 40% from 2002 until now.

Calling the proposed Road TRIP program a “simple cost-effective policy initiative,” the FDFA says that now is the best time to introduce the effort.

“The U.S. economy is recovering from a protracted recession, U.S. travelers are taking more trips abroad as more than 100 million of them have passports (twice the number as in 2008), the Canadian dollar is more competitive, gasoline prices are declining, and the Canadian tourism industry is mounting new marketing initiatives,” says the economic study.

“The Federal Budget will be unveiled on April 21 so we will know the fate of the file at that time. All the MPs are back in their home constituencies at this time so it’s a waiting game at this point,” says Karson.