1 Introduction

View the most recent version.

Governments in Canada raise revenues from tourism through a variety of taxes and other means. When a tourist pays for a room in a hotel, this generates federal and provincial sales tax and room tax. In addition, income taxes are levied on the earnings of hotel employees and on the profits of the business and the hotel pays property taxes. Governments also obtain revenue directly from tourists, for example, through museum admission fees and park entrance fees. Information on how much revenue tourism generates for government, how much of it goes to each of the three levels of government, how much comes from the various sources, however, is not directly available. This study on the government revenue attributable to tourism is intended to fill this information gap.

In last year's study,¹ the first annual estimates of government revenue attributable to tourism covering the period 2000 to 2006 were released. With this study, the time series has been updated to 2007 and previous estimates have been revised. The revisions for 2004 to 2006 reflect the incorporation of updated and revised information from the Canadian System of National Economic Accounts (CSNA) and the National Tourism Indicators (NTI). In addition, a new treatment was incorporated for taxes levied at the border on goods brought back by Canadians visiting abroad. This affected the estimates for all years. Refinements were also made to the estimates for 2000 to 2006 as a result of harmonizing the classifications of commodities and industries with those of the Canadian Tourism Satellite Account (CTSA) and the NTI.

Previously, the estimates of government revenue from tourism were provided only at the level of total tourism spending. With this update, new estimates showing the amounts attributable to spending by non-resident visitors to Canada (tourism exports) and to spending by residents (tourism domestic spending) are provided. This will facilitate a deeper analysis and understanding of the contribution international visitors make to governments' revenue from tourism. In addition, the presentation of the detailed estimates by industry and commodity has been harmonized with that of the CTSA and the NTI. This will facilitate comparisons with statistics from these sources. Apart from the changes mentioned above, the study follows the same methodology and covers the same sources of revenue (approximately 85% of the government revenue from all sources) as before.

There were some noteworthy changes in taxes in 2007, namely the elimination of the GST Visitor Rebate Program as of March 31, 2007 and its replacement with the Foreign Convention and Tour Incentive Program. Under the former program international visitors were able to recoup the GST paid on eligible goods and short-term accommodation while visiting in Canada. The latter program provided relief for GST in respect of property and services used in the course of conventions held in Canada and the accommodation portion of tour packages for non-residents. Last but not least, 2007 was the first full year in which the impact of the one percentage point reduction in GST (that took effect on 1^st July 2006) was recorded.

Overall the incorporation of revised data from the CSNEA and the refinements to methodology lowered the estimates of government revenue directly attributable to tourism in all years, most notably for 2006. For 2000 to 2005, the revised estimates range from $22 million (0.2%) to $290 million (1.6%) lower than previously published. For 2006, however, the revised estimate is $570 million (2.9%) lower than previously published. Almost all of the revision stemmed from a lower estimate for tourism revenue at the level of provincial/territorial governments in 2006, and almost all of this stemmed from a downward revision to taxes on products sold to end users. Estimates for the most recent year are based on the most preliminary data and consequently subject to more significant revisions as more complete data become available.

To outline the remainder of the report, the following section discusses the aim of the study and its scope in terms of the sources of revenue included. The next section presents an overview of the results focusing on the most recent reference year. These results rely on more aggregated, preliminary data and are not available by commodity or industry. The following section presents more detailed results for the year 2005. These are based on more comprehensive data by detailed industry and commodity. Discussion of the study's concepts and definitions, sources and methods, and the classification of tourism industries and tourism commodities are included in the appendices. The detailed statistical tables provided last year in the appendices will no longer be shown in the report. Detailed tables are available on request however.

 

1. Government Revenue Attributable to Tourism, 2000 to 2006. Catalogue no. 13-604, no. 57, Statistics Canada, September 2007.