OTTAWA, ONTARIO--(Marketwired - Feb. 12, 2014) - The Canadian Convenience Stores Association (CCSA) and the 23,000 convenience retailers it represents are left with mixed feelings following the release of Budget 2014. While the CCSA recognizes some positive measures that will help their small businesses, retailers are disappointed and concerned about the negative impacts a significant tax increase on tobacco will have on their businesses, and a lack of specific action to address excessive credit card fees.
Measures to Assist Small Businesses Will Help
Budget 2014 made commitments to continue to reduce bureaucratic red tape through the Red Tape Reduction Action Plan, revise tax remittance thresholds for small business, and to hold the line on EI and CPP rates. Each of these measures will assist convenience store retailers in the day-to-day operation of their businesses.
Despite being pleased with the announced measures that will assist small business, the CCSA is disappointed with the lack of definitive action to address the issue of excessive credit card merchant fees experienced by retailers in Canada (recognized in the Budget as amongst the highest in the world). Excessive credit card merchant fees continue to have a tremendous negative impact on retailers in Canada - something the Competition Tribunal acknowledged in a recent ruling. Budget 2014 does not introduce any specific measures to address the issue, referring instead to continued stakeholder outreach to promote fair and transparent practices and to help lower credit card acceptance costs for merchants.
The CCSA hopes to play an active role in these proposed consultations to ensure that convenience store retailers will no longer face exorbitantly high merchant fees.
Retailers Disappointed with Tax Increase
While certain measures in Budget 2014 will assist retailers, many are left with serious concerns regarding the impact a 23.7% increase in federal tobacco taxes will have on their businesses, and on the illegal tobacco market. "A significant increase in taxes on legal tobacco products will further incentivize contraband trafficking which will make their products far more accessible," said Alex Scholten, President of the CCSA.
While law abiding convenience retailers continue to comply with numerous federal and provincial regulations specifically enacted to control legal tobacco consumption and sales, contraband tobacco is sold by criminal organizations without health warnings, without age-verification checks and now (with the added announced federal tax increases) at rates far lower than controlled legal products.
"This means that illegal tobacco products sold by criminals will more likely end up in the hands of youth who should not be smoking at all," adds Scholten.
Though the Association recognizes positive allocations made in Budget 2014 to fight contraband tobacco through the RCMP, this positive investment will be undermined by the significant tax increase.
Canadians Agree that Increased Tobacco Taxes Incentivize Illegal Market
Canadians have also expressed concern over the impact a tax increase on legal tobacco products will have on both retailers, and on incentivizing illegal tobacco traffickers. A public opinion survey conducted by Abacus Data in November 2013 found that 75% of Canadians agreed that contraband tobacco has a negative impact on retailers, while nearly 8 in 10 (78%) respondents believed a rise in tobacco taxes will result in an increase in the use of contraband tobacco.
Retailers are concerned about the immediate impact this increase will have on their livelihood. "Tax increases are never good for small businesses, and it is disappointing to see a Conservative government raising taxes" said Tony Gallo, Owner of New York Convenience in Niagara Falls, Ontario. "In my area, contraband trafficking has always been a problem and increasing taxes on legal tobacco products will only make matters worse. I can't compete with criminals who sell contraband tobacco on the streets to anyone at a far cheaper price."
Terry Yaldo, Owner of Midway Convenience in Windsor, Ontario agrees. "Contraband trafficking in Windsor has been on the rise. I hear it in the news and I see it in my store through lower sales. This huge tax increase will only make matters worse. Contraband traffickers don't follow any rules and they sell their products at far lower prices than mine. Where is the control measures there? How is this fair?"
ABOUT THE CCSA
The Canadian Convenience Stores Association (CCSA) is a national not-for-profit trade association that represents the interests of over 23,000 convenience store retailers operating in Canada. Our mission is to foster the success of the convenience store industry in Canada by representing the best interests of our members, and the communities they serve. We accomplish our mission through government relations and advocacy, promoting the professionalization of the industry and creating industry recognition and awareness.