Thank you very much. I appreciate the opportunity to be back here again with you. It seems like it was only about six weeks ago.
My name is Tony Pollard. I am president of the Hotel Association of Canada. We represent all of the lodging industry across Canada. I'm not going to name out all the members because I'd eat up my five minutes in doing that.
As I said, I was here on September 19, when I pointed out that tourism is a growth industry worldwide. I also pointed out that Canada is losing market share in this growth market. I underscored the impact of the western hemisphere travel initiative--passport, dollar, energy--and I'm not going to get into all of that again at this point.
However, we are now even more threatened with the proposed elimination of the GST visitor rebate program. Just in terms of the size and scope of our industry, in the hotel industry we generated $14.2 billion in 2005. The value-added is about $12.8 billion. We employ 301,000 people right across Canada. The important point I love to remind the people in government is that the hotel industry alone generated $5.7 billion in tax revenues, of which $2.5 billion goes to the federal government, and I continue to reinforce that point.
Where are we today? Unfortunately, Canada is losing market share. We slipped from 12th place to 7th place worldwide. Our U.S. market is in a free fall. While international visits are increasing, they cannot make up this deficit on their own. Here's some new news for you: two days ago, on Tuesday, November 7, the World Tourism Organization released a study that shows that travel internationally worldwide is up by 4.5%, whereas Canada's travel is down 4.1%. We have the dubious record in the Americas of only being exceeded by Montserrat, Aruba, and Uruguay as being places where people travel to less than Canada.
Funding for the CTC, the Canadian Tourism Commission. Our colleagues from the CTC are here. I always like to point out that we need more money to support the Canadian Tourism Commission, that an investment of $50 million would result in $1.2 billion worth of new business, that a $100 million investment would alone give the feds $620 million of new revenue.
Let's get to the GST, the reason we're here today. At the outset, let me say that perhaps we as an industry could have done a better job of quantifying the impact of the GST visitor rebate program on our convention, tour, and group business. We are very much aware of and support the fact that the government is casting a discerning eye on all government programs that spend taxpayers' dollars. We support that completely.
Let me give you a couple of numbers very quickly. In 2005, total tour, group, and convention business in Canada generated in excess of $1.28 billion. This proposed program cut is putting in jeopardy all of this business because it's making it 6% more expensive. The new Government of Canada prides itself on its competitive agenda, but I don't think they quite understand--I think they're getting it now--this impact.
Let me just tell you how. The government is shooting itself in the foot, because what they are doing is jeopardizing tax revenues of $496 million on the $1.28 billion that we generate just in the group, tour, and convention business if this exemption for business coming into Canada is eliminated. Of that $496 million, which is going federally, provincially, and municipally, $218 million of that goes directly to the federal government.
Let me expand on that very briefly. I'll be the first one to say that all of that $218 million to the federal government will not be lost, but even if half of it is lost, what it means is that you're trying to save $75 million, but forgoing $109 million as a result. I can name various cities and what it means, the impacts there. I won't get into that right now. However, let me just say that around the world foreign competitors are just showing so much delight and glee because we are 6% more expensive.
Ladies and gentlemen, our commitment to you and to the Canadian taxpayers is accountability. We are not asking for handouts, but simply your commitment to this program. This will, in turn, provide the government with funds for other critical programs you're undertaking.
Thank you very much, Mr. Chair and ladies and gentlemen, for this opportunity.
Good morning, Mr. Chairman and members of the committee.
My name is Kim Furlong, and I am the Director of Federal Government Relations at the Retail Council of Canada.
The Retail Council of Canada represents over 40,000 storefronts from coast to coast and is the voice of retail in this country.
I would like to thank you for the opportunity to speak to you today about the elimination of the GST visitor rebate program and the impact it will have on the retail sector. Since the September 25 decision, we have surveyed our small, medium, and large members and have found two trends.
Members who understand the program well have adopted it in their sales promotion techniques. They are successful users and want to see the program preserved.
The other trend is that a number of our members only had a peripheral understanding of how the program works and are ambivalent about its efficiencies. This trend I believe can be explained by the level of visitors these members interact with. The members who would be most strongly impacted by this cut are the merchants located near convention centres, in airport terminals, and near land borders. Our duty-free members have suffered this year already with changes to the security measures relating to carry-on liquids. The elimination of the VRP would add to an already very difficult year.
In addition to points of exits and convention centres, merchants located in small tourist destination areas such as the Niagara Peninsula, Stratford, Lake Louise, Whistler, Jasper, Banff, and North Hatley, and in large urban centres such as Vancouver, Calgary, Toronto, Montreal, and Halifax, which attract a good number of visitors to Canada every year, would be impacted as well.
Our high ticket item merchants have also commented on the cut of the GST visitor rebate program. Many of these members advertise this program successfully and have found that the 6% advantage has had an impact on sales. From the tour planner who sells Canada as a destination because of a 6% competitive advantage, to the hotel chain that in turn also offers a discount to visitors, these people eventually will walk into our merchants' shops and are often keen to spend because they are on vacation. The use of the 6% additional rebate on an item is often enough to make the sale.
The bottom line is that the many industries represented at the table today are interconnected and work together to fuel the Canadian economy. The health of Canada's tourism industry is important to the retail sector because retailers benefit from the inflow of visitors to Canada every year.
The tourism industry is already facing many challenges, as you all know--gas prices, the Canadian dollar, the western hemisphere travel initiative. Eliminating the VRP is simply adding to the hardship of this industry. The VRP is important to our industry but equally as important is the ability of convention centres and tour operators to waive the GST so they offer more competitive products to our visitors.
Our coalition has met several times with Minister Flaherty's office and his officials since the decision to cut the VRP was announced. These conversations were valuable to both sides, I believe. We, as a group, were able to bring a perspective that this cut is larger than a simple program cut, and we have gained an understanding of the inefficiencies of the current model and its cost to the government.
As you will hear in the subsequent presentation by Christopher Jones of the Tourism Industry Association of Canada, the industry has come together and is ready to offer an alternative to a government-run VRP. The Retail Council of Canada supports a pay-per-use program where the user and not the taxpayer assumes the cost of the program. Our members have been very clear that they would like to see a streamlined and efficient process without adding any burden to doing business, and I believe that the alternative that has been designed by the VRP coalition achieves that objective.
I will end my presentation here. Please feel free to ask your questions in English or French. Thank you.
The Tourism Industry Association of Canada represents 400 members and approximately 200,000 tourism-related businesses in Canada, of which 80% are small- or medium-sized enterprises. We contribute about $26 billion to the GDP of this country annually. We employ in the tourism sector directly 625,000 people. In total about 1.6 million people, or 10% of Canada's workforce, work in tourism-related businesses.
I'll say a brief word about the coalition, because we're here in that capacity today. It makes up 14 national business and industry associations on both sides of the border, and this is a substantial part of the Canadian economy.
To jump to the quick, the implications of the cancellation of the existing program are pretty clear: the loss of a substantial portion of volume convention, package tour group accommodation, and trade show business; the loss of related spending on retail, meals, entertainment, and other ancillary items--for example, business services--by both convention delegates and foreign visitors.
We also believe that Canada will lose business in the international convention market, as the 6% premium will render us too expensive. A convention planner facing a choice between Toronto and Las Vegas will be more tempted to go to Las Vegas. We also know that tourists will opt for other tour packages to other destinations, as Canada will lose its competitive edge.
This comes on top of a number of challenges that have faced the industry in recent time. The Canadian currency appreciation has made us about 20% less competitive as a destination in the last year. The increase in fuel prices of the spring and early summer was certainly a disincentive to travel, and that's been reflected in the number of visitors to Canada from the U.S. Also, the uncertainty occasioned by the WHTI has confused quite a few U.S. travellers as to what the appropriate documentation is. Finally, I think Canadian domestic air travel costs continue to be somewhat higher than they are in the U.S., so those are also a disincentive.
So in a nutshell, essentially what's happened is that between 2000 and 2005 Canada has sustained a 28% reduction in visitors from the United States. That's substantial. If you look at cross-border drive-ups, same-day visits, they're down by 41%. There's been a substantial impact on border towns in this country. The communities of Niagara, Windsor, and Victoria, B.C., are all dependent on tourism. Our travel deficit--in other words, the amount Canadians spend versus what Americans spend in Canada--is now minus $5.5 billion. In other words, we're spending more in the U.S. Canada has slipped down in the world rankings of tourist arrivals from seventh in 2002 to twelfth in 2005.
To reiterate the point that Tony made, we're here to be constructive today. We accept that the existing program was administratively burdensome and was characterized by fairly high overhead costs. We would like to try to work out an accommodation here.
As a result, we've prepared a proposal that would see the private operation of the program. We've only had time to prepare this in English, given the short notice of this meeting. I've sent it out to the clerk. We'll translate it and get it to you guys as soon as possible, but you do have it in English.
I think it's imperative that we retain the existing exemption for group package tours, conventions, and trade show businesses, as these earn Canada substantial revenue in the international markets.
We also believe--and I want to make this clear--that Canada should continue to offer a rebate to individual foreign guests as this incents substantial spending by these visitors. Canada would be alone amongst major OECD tourist destinations in not offering a value-added tax type of rebate to visitors. We think that's not a distinction we want to have.
We think this program can be operated successfully at no operational cost to government, as our proposal lays out. As I say, we'll let you read this document at your leisure, and we'll be happy to chat about it with you.
I'd like to thank the finance committee for inviting me to appear before you today.
My name is Dawn Hardy, and I'm the Local 90006 president of the Union of Taxation Employees.
The Union of Taxation Employees, a component of the Public Service Alliance of Canada, represents more than 22,000 members of the Canada Revenue Agency. My local has approximately 700 members who live in P.E.I. and work at the Summerside Tax Centre.
Other organizations participating in this panel will outline the impact on the hotel and convention industry. I will focus directly on the job loss for my members and the Summerside economy.
In the context of the government's overall workforce and budget, the impact on the workforce of the decision to end the visitor rebate program is relatively insignificant. But in the context of Summerside, in the context of P.E.I., and for the members who I am privileged to represent, it's significant. Somewhere between 60 and 80 people employed by the CRA will lose their jobs when the program is cancelled, and additional jobs will be lost in the private sector in Summerside. The local economy will lose between $3 million and $4 million in wages currently paid to my members who administer the rebate program.
This is not the first cut that we have been subjected to within the CRA in Summerside. In the last two years we have absorbed almost 40 employees due to the losses within the tax centre due to the relocation of our human resources compensation section, which has moved to Winnipeg. Moreover, our finance and administration section was moved to Halifax. I'm sure that all the committee members understand that absorbing federal government job cuts in P.E.I. is far harder than in locations like the national capital region, where workers can more easily move from one government job to another.
My plea to the committee is to urge the government to reconsider the decision to eliminate the visitor rebate program. Failing that, I would urge you to locate new or expanded CRA services in Summerside so that the local economy and financial security of my members will be protected.
Thank you, Mr. Chairman and members of the committee. I'm very pleased to be here today on behalf of the Conference Board.
Basically, I'm here today with the Conference Board to be an objective voice and an impartial adviser, to some extent, even though this is clearly an issue that also affects many of our members from provincial governments, city governments, and businesses in the tourism industry throughout the country.
At this point, what we're trying to do is understand what the potential impact might be of the elimination of the visitor rebate program, and perhaps even the likelihood of it going forward or possibly being revoked.
That being said, there is a definite potential for a serious financial impact on the Canadian tourism industry. The Conference Board of Canada has been instrumental in doing impact analyses on a number of issues that have affected the industry, most notably the WHTI impact on the tourism industry from the U.S. Right now, though, what we have to say is that there isn't quite enough statistical analysis done and not really enough data to thoroughly conclude that the impact would be minimal. It could potentially be quite large.
We believe the impact could be significant, because the convention business represents a significant chunk of the visitor rebate program and the competitiveness of that industry. Also, many foreign tour operators don't price in the GST when they offer their products to foreign visitors.
A lot of the feedback we receive from our panels that we follow in the U.S. and overseas markets shows that they're very concerned about the impact of the visitor rebate program and what it will do to their offerings into Canada. And as we've heard before, Canada is already suffering from a competitive decline.
As a country, Canada has become more expensive against virtually every major foreign competitor out there. We've seen that in the numbers. We've seen the numbers slip in terms of overseas arrivals, certainly the numbers of American arrivals. For instance, the U.S. cost of travel to Canada has gone up almost 50% over the past two years. A trip that used to cost, let's say, $700 may now cost $1,000. That's a significant increase.
On balance, we'd like to urge the government to be very diligent when they do go ahead and implement this cut in the visitor rebate program, because it does affect the competitiveness of the Canadian tourism industry as a whole.
Thank you for inviting us to appear before you today.
As a crown corporation of the Government of Canada, the Canadian Tourism Commission is specifically legislated to sustain a vibrant and profitable Canadian tourism industry; to market Canada as a desirable tourism destination; to support a cooperative relationship between the private sector and the governments of Canada, the provinces, and territories with respect to Canadian tourism; and to provide information about Canadian tourism to the private sector and the Government of Canada, the provinces, and territories. We do this in collaboration with industry and all levels of government.
Through the CTC, the Government of Canada has been at the forefront of working nationally with the tourism sector to maintain its competitiveness and market Canada as a destination of choice for international travellers. Our ultimate goal is to grow tourism export revenues. The commission focuses on attracting visitors from nine international countries where we generate the most revenue. These markets represent 64% of international revenue and 91% of international visits to Canada.
Tourism is an export industry. Marketing messages transmitted abroad to come to explore Canada helped bring $17.5 billion in foreign exchange into Canada last year. The Canadian Tourism Commission drives new dollars into the Canadian economy, which is why Canada has invested in one of the most competitive and fastest-growing industries in the world. Global consumers spend $623 billion U.S. a year on their trips to other countries. Within our own borders, Canada's tourism industry generates $62.7 billion in revenues. The taxpayer is well served. Thirty cents out of every tourist dollar goes directly to government. The federal government's share alone amounted to $9.3 billion last year.
However, consumers have more destinations than ever to choose from. Thirty-five years ago, Canada was second in the world's ranking of tourism destinations. As air travel became more affordable and more countries started getting into the tourism business, Canada and many others started to lose market share. We are now ranked at twelfth place in the international tourism revenue our country is bringing in. Despite the slide Canada has shown some growth. Overseas travel, for example, was up by 7% last year.
Competition is fiercest for the American traveller. The U.S. continues to be our most important international market. It accounts for 57% of Canada's international tourism revenue. While U.S. plane arrivals into Canada are still doing better than what we've seen in the last couple of years, overnight automobile trips from the U.S. have seen the sharpest decline. As of July, overnight auto trips from the U.S. were down 7.3%, while plane arrivals from the U.S. were down 2.7% for the year as of July.
Our research shows that U.S. awareness of Canada as a travel destination is weak. In America, the CTC and partners have about a 4% share of voice. Our collective investment in the U.S. market makes up just a fraction of what our competitors are spending. As a result, U.S. consumers are much more aware of destinations in Europe, Mexico, and the Caribbean. This uphill battle makes fostering tourism's growth all the more important.
It is within this context that the proposed cancellation of the visitor rebate program could impact the competitiveness of Canada's international convention, tour, and group business. This has the potential to make it 6% more expensive to do business in Canada. We believe the visitor rebate program has assisted in attracting meetings and conventions from the U.S. In 2005, we invested $4.6 million in the meetings, convention, and incentive travel market in the U.S. Our investment contributed to the American business traveller spending $1.5 billion in Canada last year.
Tours from other countries such as Japan and France will also be impacted by these changes. At this point, however, we are still assessing what potential impact this may have on our ability to attract tours, meetings, and conventions to Canada--a very important line of business for us. We continue to stress to international partners that Canada is still one of the world's top travel destinations, offering world-class facilities, services, and experiences.
The Canadian Tourism Commission's five-year strategy will reposition Canada and make it more relevant to the international consumer. Our objective is to see international tourism revenues climb by 10.9% to nearly $20 billion by 2011. To get there, we are attracting more high-yield customers from a wide range of lucrative markets. Our focus is on markets where we'll get the highest return on investment.
The consistent application of a brand that builds powerful personal relationships between international consumers and Canada is the heart of our strategic approach. With our brand as the base, industry partnerships, cutting-edge research, and the world's most advanced e-marketing techniques, we'll improve Canada's standings in the global tourism rankings by turning us into a must-see-now destination.
This concludes my opening remarks.
Mr. Chairperson and members of the committee, thank you for inviting me to speak before you today.
I am Kevin Boughen and I'm president of Global Refund Canada Ltd. We are a subsidiary of Global Refund Group, incorporated in the Netherlands. Global Refund Group provides 80% of all tourist tax refunds in the world. Since its inception in 1980, Global Refund Group has grown to a point where we now service 30,000 travellers each and every day. We operate in 37 countries, across four continents.
In 2002, we began facilitating visitor tax refunds here in Canada and currently employ 60 people across the country. Over the past five years, we have invested several million dollars growing our Canadian operation. Today, Global Refund Canada offers instant cash refunds to visitors at all five of Canada's largest airports. We are the largest third party service provider in Canada, with 80% of this market. No other organization has the depth of experience and knowledge we have in this area. We know what makes visitor rebate programs work in all the various countries that offer them. And there are many common elements that distinguish the best-run programs.
What brings me here today is my understanding that government officials recommended that the Canadian program be eliminated because it was expensive to administer and vulnerable to fraud. Rather than eliminate the program, however, we believe there are several simple, easy steps the government can take to solve both of these problems.
Our proposal will accomplish three main things. First, it preserves the value of a visitor tax refund system that stimulates growth in the tourist numbers and stimulates growth in tourist spending. Second, it eliminates the costs for the government that are associated with its operational responsibilities. And third, it will significantly improve the security and minimize fraud.
There are two essential components to our proposal. The first is that the tourist, and not the taxpayers, should fund the system. Today, Canada stands as only one of three OECD countries with a taxpayer-funded visitor rebate program. By changing Canada's model to a user-pay, the government can shift the administrative burden to the GST refund operators, the tourists they serve, and thereby eliminate all its costs in operations.
Under the current system, the tourist can apply for a refund in one of any number of ways.
First, the tourist can apply directly to the government's rebate office in Summerside, P.E.I., and receive 100% of their GST back in six to eight weeks' time. Alternatively, if they're travelling by land, they can stop at a participating duty-free shop and receive 100% of their GST back in Canadian dollars instantly. A third option would be for them to visit a third party, such as Global Refund, at an airport. At the airport, they would receive an instant refund, but it would be discounted by a 20% administration fee. In most OECD countries and in our proposal, the only way a visitor should receive a rebate is by paying an administrative fee at the point of exit.
The second essential element we recommend is to enhance program security. In our view, when it comes to fraud prevention, the current Canadian visitor rebate program lags well behind the best practices used in other countries. Today it is far too easy for people to defraud the system by generating false rebate claims and using phony receipts. To strengthen the integrity of the program, we recommend that Canada take a page from the security playbook used in other OECD countries by adopting simple but important changes to document verification, proof of export, and visitor eligibility.
The most important of these changes is the introduction of secure forms, which are supplied by GST refund operators, provided directly to the visitors at the point of sale by participating retailers and hotels. These forms include security features such as bar codes and serial numbers to enable tracking and to provide an audit trail. Secure forms distributed by merchants offer a level of security that ordinary shopping receipts simply cannot.
Today, more than 230,000 merchants, from Louis Vuitton, to Nike, to Apple, use Global Refund as their facilitator of tax rebates for visiting shoppers. These merchants all provide secure documents required to provide a secure program.
In conclusion, tourism is an export industry. The decision to cancel the program arbitrarily revokes the tourism industry's export status, even though it continues to serve as a significant source of revenue. Singling out the tourism industry as the only export sector required to charge GST is punitive to our already challenged industry.
Our proposal can help revitalize an important tourism program while effectively removing the administrative costs from the government. At the same time, the security of the program is enhanced significantly to meet the standards set by other OECD countries. In addition to these important features, the program changes we are recommending would result in a significant increase in the visitor refunds being spent and cycled in the Canadian economy at the point of exit.
We ask the government to accept our recommendations and preserve the program.
I would like to thank all of the witnesses.
I want to concentrate my comments and my questions on how the effectiveness or ineffectiveness of this program is calculated. It is probably owing to my professional background that I'm interested in this aspect. As an engineer, I was often called upon to calculate the productivity of what we were doing. If I had used the same calculation method as the government is using, I probably would have lost my job pretty quickly. In my opinion, even if the figure of 3% is surprising, it is still anecdotal in nature. That is not the way to measure how productive this program is. That was made clear earlier. Generally speaking, only one person makes a claim on behalf of all members of the family, so you need to multiply that figure by three or four, so we are looking at 11%. Even there, we are omitting the key element of how much money is not actually claimed. It is unlikely that someone who spends a day here and who buys a $100-walkman would ask for a rebate of $6, minus administration fees.
I do not know whether you have the figures, but what proportion in terms of dollars—and not in terms of travellers—is claimed? That would give us a better idea.
I would like to bring up a second point regarding the program's effectiveness. It seems to me that, if we want to measure the effectiveness of the program, we need to measure not how much people claim but what percentage of people decides to travel for business or tourism because of the rebate. In other words, we need to measure the effect of the rebate from a marketing standpoint. Companies that offer mail-in rebates on products in stores know very well that a whole lot of people who buy a printer, for example, because of the mail-in rebate never claim it. But it is still a very effective tool for the vendor. In fact, it is doubly effective, since the product sells because of the rebate, but the rebate is never claimed.
Do the industry people have figures, not for the number of people who make a claim, but for the number who take this rebate into account when they choose their destination?
Those are my two questions. What dollar amount are we talking about? What are the marketing arguments involved?
I express my thanks to the committee for all of the work that has been done on pre-budget consultations. I know that the committee has travelled extensively and done a great deal of work, and I look forward to reviewing the report of the committee as part of budget preparation.
On the point that you mentioned, Mr. Chairman, I'd be honoured to appear before this committee to provide Canadians with the state of our nation's finances on Thursday, November 23. I will deliver the fall economic statement of Canada's new government. As you know, we have established strong economic fundamentals through implementing significant tax relief, debt reduction, and efficient spending, and by focusing on the priorities of Canadian families and businesses, but we must build on our success and seek new ways to unleash our potential. For these reasons, I will also be providing Canadians on that day with our economic plan for Canada. This new economic platform is a strategic long-term plan designed to improve our country's prosperity, both today and in the future. Canada's new government is getting things done for Canadians, and you will see further evidence of that on November 23.
I would like to turn to , Chair, and then in a few minutes, I understand, we'll look at finance estimates.
Once passed, will implement certain tax relief measures that Canada's new government announced in budget 2006, but that were not included in the initial budget implementation bill last spring. I will say at the outset, Chair, that Canadians pay too much tax, and the tax burden on individuals, families, and businesses is still too great and must be reduced. Our government made significant progress on this front this past May. Budget 2006 provides more tax relief for individuals than did the last four federal budgets combined.
Once passed, will implement certain tax relief measures that Canada's new government announced in budget 2006, but that were not included in the initial budget implementation bill last spring.
Mr. Chairman, Canadians pay too much tax. The tax burden on individuals, families and businesses is still too great and must be reduced. Our government made significant progress on this front this past May. Budget 2006 provides more tax relief for individuals than did the last four federal budgets combined.
All told, we left some $20 billion more in the pockets of individual Canadians in budget 2006. As the measures in demonstrate, the tax relief will have widespread benefits.
The question is often asked, Chair, why we've reduced taxes and why we reduced the tax burden on Canadians. It is not simply for the sake of reducing taxes. The actions taken by this government will serve to build a stronger, more competitive and productive Canada, both for today and tomorrow. Our goal is, first of all, to focus on the priorities of Canadians; second, to maintain a balanced budget; third, to reduce debt; and fourth, to spend on programs that are both efficient and effective. We will also create a real tax advantage for Canada that encourages and rewards investment, hard work, and savings.
I won't go into excessive detail on the bill, but allow me, if I may, Chair, to take a few moments to explain how the measures in Bill C-28 contribute to our goal.
First of all, the Canada employment credit recognizes that working Canadians are the foundation of Canada's economic growth. It rewards them by helping to offset work-related expenses that are not covered by the employer, expenses such as uniforms, books, or home computers. The credit will allow each and every working Canadian to claim a credit on up to $500 in employment income in 2006, starting last July 1. This coming January 2007 the amount of income eligible for the credit will double to $1,000.
Together with the new Canada employment credit is a new deduction for tool expenses. This new measure provides for a deduction of up to $500 to tradespeople for the cost of tools in excess of $1,000 that they must acquire as a condition of employment. Mr. Chairman, the tools deduction combined with the Canada employment credit will provide tax relief to about 700,000 employed tradespeople in Canada.
This bill also contains proposals to help meet the demand for skilled workers, particularly in the construction trades. The new apprenticeship job creation tax credit will encourage employers to hire new apprentices to learn a trade. As a result of this proposed measure, eligible employers will be able to receive, to a maximum of $2,000 per apprentice per year, a tax credit equal to 10% of the wages they pay to qualifying apprentices in the first two years of their contract.
In this year's budget, we also proposed a tax credit so that people who use public transit with monthly passes in Canada will have about two months free public transit per year. This initiative will be instrumental in cutting the commute, cleaning the air, and driving our economy.
Similarly, Mr. Chairman, Canadians have been very supportive of our efforts to help upcoming generations secure their futures. In recognition of the expenses involved in putting our children through school, includes a new non-refundable tax credit to help cover the costs of textbooks for students. Also to help students, Bill C-28 will fully exempt from tax scholarships, fellowships, and bursaries received by a qualifying post-secondary student. Currently, the situation is that only the first $3,000 is exempt. This measure, with respect to scholarships and fellowships and bursaries, will help provide tax relief to more than 100,000 post-secondary students.
As you can see, Canada's new government has taken significant action to help Canadians prepare for their future, but there is more. In budget 2006, we introduced our physical fitness tax credit for up to $500 to assist parents with the costs of programs that require regular physical activity for our children.
We have also delivered significant positive initiatives in support of our pensioners and seniors. In our first budget, Canada's new government proposed to double to $2,000 the maximum amount of eligible pension income that can be claimed under the pension income credit. This is the first time the credit has been increased. Not only will this measure provide greater tax assistance to those who have saved carefully for their retirement, it will remove approximately 85,000 pensioners from the tax rolls completely.
Since then, of course, we have gone further, through the tax fairness plan I announced on October 31, permitting income splitting for pensioners beginning in 2007, and increasing the age credit amount by $1,000, to $5,066, effective January 1, 2006, or this past January.
For businesses, budget 2006 introduced a reduction in the general corporate tax rate to 19% by 2010; the elimination of the corporate surtax for all corporations in 2008; and the end of the federal capital tax in January 2006, two years earlier than had been scheduled. These tax reductions have already been legislated.
We also announced on October 31 a further 0.5% cut in the general corporate income tax rate starting January 1, 2011, under the tax fairness plan, which will reduce that rate a further 0.5%, to 18.5%.
For small businesses, which are 95% of all Canadian businesses, contains further tax reduction measures from the budget. These proposals will increase the small business income threshold to $400,000 starting next January, and will reduce the small business income tax to 11% by 2009.
There is more on this bill, Mr. Chairman, but I think my remarks so far serve to illustrate the government's course and where we intend to go in future budgets.
I now invite any questions you may have about . With me today are officials from Finance Canada who are here to help address any technical issues members of the committee may want to clarify.
I gather, Chair, later we'll deal with the estimates part?