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Tourism industry will benefit from GST, says minister.

Tourism industry will benefit from GST, says minister

The tourism industry in Northern Ontario will benefit from the Goods and Services Tax (GST), according to Tom Hockin, minister of state for small business and tourism.

"The GST will help enterprises in Northern Ontario recoup their capital costs," he said during an interview last month. "Right now, businesses pay a 13.5-per-cent Manufacturer's Sales Tax which they don't get back. But under the GST, they'll be able to apply for input credits and get it back in three weeks.

"Essentially, they'll be getting a zero tax."

Under the GST, companies will be able to claim a credit for equipment and related operating costs. Hockin said tourism operators can claim credits for such capital items as telephones and furniture.

"The power of the input tax system to operators and manufacturers has been overlooked," he said.

Hockin added that he believes opposition and third-party politicians are partly to blame for the furore over the GST, because they have concentrated their efforts on fighting the tax rather than explaining the tax to their constituents.

Small businesses, such as tourism operators, shouldn't have to incur any large expense in administering the system, according to the minister. Small business operators are eligible for an administrative credit of up to $1,000 to cover the cost of implementing a system to handle the new tax.

Hockin said officials from Revenue Canada will also be available to assist operators in setting up a system to handle the GST.

The minister discounted tourism operators' fears concerning the effects the GST will have on tourist traffic, particularly visitors from south of the border.

"Their accommodation and goods are exempt from the tax," he said.

Hockin said there are currently a number of methods being considered by the federal government for GST refunds to foreign travellers. The options include having the visitors send in their receipts after they return home or claiming refunds at duty-free stores at the border.

Visitors taking part in tour packages originating in the U.S. could be exempt from paying the tax, or the operator could rebate the tax to the visitors and, in turn, receive a rebate from the government. Hockin said it is unlikely that visitors will be exempt at the point of sale.

"It's not really possible," he said. "There is too much potential for fraud through forged or old I.D.'s."

Hockin noted the exemption is unique to the Canadian version of the tax. "The federal government realizes that tourism is an export."


Travel association officials have also been critical of the federal government's decision to trim $5 million from the country's marketing budget to $25 million.

"The trouble is the federal government is broke and everyone is sharing the pain," Hockin explained.

The minister said the effect of the funds being spent by the federal government were minimized because there was no co-ordination with the provincial governments.

"If we double the amount of money and no one is co-ordinating the effort, then we're wasting the money," he said. "We have to spend the money smarter.

"If we all go separately into the same market, it diffuses the effect."

Hockin said he expected to meet with his provincial counterparts sometime this month to discuss establishing co-operative marketing agencies.

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Title Annotation:Tom Hockin on Goods and Services Tax
Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Date:May 1, 1990
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