DOCUMENT PRESENTED BY THE ASSOCIATION DES MARCHANDS DÉPANNEURS ET ÉPICIERS DU QUÉBEC

Transcription

1 DOCUMENT PRESENTED BY THE ASSOCIATION DES MARCHANDS DÉPANNEURS ET ÉPICIERS DU QUÉBEC Measures to Foster the Existence and Growth of Small Businesses and the Maintenance of a Strong and Diversified Economy in all Regions of the Country TO THE STANDING COMMITTEE ON FINANCE (House of Commons of Canada) IN THE CONTEXT OF THE 2017 PRE-BUDGET CONSULTATIONS October 2016

2 The Association des marchands dépanneurs et épiciers du Québec (AMDEQ) has approximately 1,000 members across Quebec, all of them SMEs that identify with the middle class. We thank you for seeing us here today, in Québec City, the site of our head office. AMDEQ s objective is to represent and defend the socio-economic interests of its members and to lobby both levels of government on issues that directly affect day-to-day operations, including credit card transaction fees and intergenerational transfers. For the past seven years, AMDEQ has been working to convince the Department of Finance to approve a significant decrease in Visa and MasterCard transaction fees. We were able to rely on the support of the opposition parties in dealing with the Harper government, which made a small step forward by initiating the voluntary code of conduct in April The results are currently being evaluated by the office of the Minister of Finance. (Appendices 1 2) The Competition Bureau of Canada had announced in September 2013 that it would not appeal the Competition Tribunal s decision on credit card fees, and asked the Harper government to take action. The Code of Conduct for the Canadian Debit and Credit Card Industry that was established in 2010 did nothing to solve the problems created by high transaction fees for credit cards, but in 2013 the federal Finance Minister insisted that this code would correct the situation. In June 2015, the NDP s motion M-574 was supported by all opposition parties, including the current Prime Minister, the Honourable Justin Trudeau, and numerous MPs who now hold senior positions in his cabinet. In opposition, the federal Liberals were on our side. Now that they are in power, they are hesitating to legislate on our behalf. (Appendix 3) In 2009, we associated ourselves with the Coalition québécoise sur la hausse des frais de cartes de crédit et de débit (Quebec coalition against credit and debit card fee increases), which clearly demonstrated that the cost of the promotions offered by these two credit card giants were being borne by merchants. The figure below demonstrates the reality: 44% of transaction fees are used by Visa and MasterCard to reward their clients. ISSUER REWARDS The question we should now be asking is: Is it fair that the war between Visa and MasterCard is being fought on the backs of merchants, who suffer annual net losses of $15,000, $30,000 or even $80,000?

3 Finance Minister Bill Morneau has repeatedly said that he would take the time to assess the consequences of a decrease in credit card transaction fees for retailers and consumers: Mr. Speaker, we remain committed to carefully protecting consumers and ensuring that we have a competitive market in everything Canada does. To the specific question asked, we have a voluntary obligation for the credit card companies to move forward on a fee review. (Appendix 4) I don t believe this is how the Trudeau government will succeed in supporting merchants, who, I remind you, are active members of the middle class. A reduction that would bring us below 1% would be a significant gain. Our merchants could reinvest in their businesses or hire new staff in order to improve customer service. We have obtained the following numbers regarding transaction fees in other countries: Australia, 0.5%; England and other European Union countries, 0.3%. This brings us to the purpose of Bill C-236, sponsored by Linda Lapointe, Liberal MP for Rivière-des-Milles-Îles. In February 2016, when she tabled the bill entitled An Act to amend the Payment Card Networks Act (credit card acceptance fees), she said the following: It is important to note that small businesses need some wiggle room, and we are the party of the middle class. The bill is intended to cap these fees, as has already happened in Australia and the European Union. The Liberal MP also points out that Canadian households are increasingly using their credit cards for daily purchases, while the market share of credit card purchases is now close to 40%. I will come back to that later. (Appendix 5) In order to give ourselves a stronger voice, we joined Small Business Matters, which includes more than 97,000 businesses in Canada that are now lobbying the Liberal government. As you can see, this file has definitely become a national issue. Going back to the subject of England, a class action suit totalling $19 billion was launched against MasterCard, as reported in a news report: MasterCard sued for $19 billion in Britain s biggest damages claim. The article was originally published by Reuters in London, and was picked up the Toronto Globe and Mail on 9 September As you can see, the repeated abuses of credit card companies can lead all the way to the courts. (Appendix 6) Bill C-236 As soon as our association decided to support Bill C-236, we sent a letter to all Liberal members of Parliament. (Appendix 7) A few weeks later, we involved our members by asking them to write to their local MPs on the subject. (Appendix 8) On 31 May, my colleague and I engaged in a round of meetings, during which we were able to meet with members from the main political parties in Parliament, as well as representatives from Mr. Morneau s office. (Appendices 9 10)

4 Over the summer, we continued our consultations, urging MPs to treat this issue in a non-partisan way. They were all very open and attentive, indicating that they hoped the bill would be accompanied by concrete measures that would serve to significantly lower credit card transaction fees. (Appendix 9) At our most recent annual general meeting in Lévis in mid-september, the delegates from every corner of Quebec discussed this situation. Our association s board of directors unanimously adopted the following motion: AMDEQ Supports Bill C-236 Whereas our members are calling for a significant decrease in Visa and MasterCard transaction fees. Whereas Bill C-236, sponsored by Linda Lapointe, Liberal MP for the riding of Rivière-des-Milles-Îles, addresses our needs. Whereas this bill will be debated in the House of Commons in the coming weeks. AMDEQ, which has 1,000 members, gives its support to Bill C-236. [Translation] Letter to Quebec Members of Parliament Furthermore, in anticipation of the return of Parliament, AMDEQ sent a new letter to the 78 Quebec MPs. We provide here some excerpts from our correspondence: the members of the board of directors decided to send the 78 MPs a letter asking them to support Bill C-236, sponsored by Linda Lapointe, Liberal Member of Parliament for Rivière-des-Milles-Îles. [Translation] AMDEQ is of the view that all of the associations involved in this file have done their job in providing information and raising awareness. [Translation] It is now up to MPs to get involved; they have all the necessary information to do so, according to Mr. Yves Servais, Executive Director of AMDEQ, adding that the document he would be sending them that week provided a good summary of AMDEQ s demands. [Translation] AMDEQ is taking advantage of the resumption of parliamentary business to restart the debate, knowing that Bill C-236 will be studied in the next few weeks. AMDEQ will be asking its members to follow up with their local MPs. [Translation] Bill C-236 addresses many of the requests our association has addressed to finance ministers in recent years, including the current minister, the Honourable Bill Morneau. [Translation] (Appendices 12 13) In closing, we hope the federal government will legislate on this matter before the end of We believe the Trudeau government has all the information it needs to take action. In conclusion, the measures AMDEQ is asking for are needed to help the association s 1,000 members. They won t cost the federal government anything, but will be immeasurably helpful in ensuring the sustainability and growth of our SMEs commercial activities.

5 Reinvesting in our businesses In the event that the Canadian government announces this fall that it will be cutting credit card transaction fees by half, significant amounts of money could be reinvested in our businesses. Using the current rates imposed on our businesses, which range from 1.5% to 3%: Convenience store without gas station: $10,000 to $20,000: annual investment between $5,000 and $10,000 Convenience store with gas station: $60,000 to $90,000: annual investment between $30,000 and $45,000 Better monitoring and control of banking institutions If the Trudeau government agrees to legislate credit card transaction fees, it should ensure that there are legislative and regulatory provisions for monitoring the law in order to ensure that it is respected by credit card companies. An oversight committee should be created and required to table an annual report to MPs in the House of Commons. Bill C-274 We are also interested in another bill that falls under the Minister of Finance. That is Bill C-274, which should be adopted in order to help with intergenerational transfers. This bill is sponsored by Guy Caron, NDP MP and Vice-chair of the Finance Committee. It is aimed at ending the unfair tax on transfers of family businesses. (Appendix 13) Mr. Caron criticized this situation during his visit to Québec City earlier this month, stating: The current tax rules penalize parents who want to sell their business to their child because it makes them pay more tax than if they sold it to strangers. The bill would correct this situation by enabling owners and purchasers from the same family to benefit from the same rights and privileges as exist in the context of a transaction between unrelated individuals. [Translation] AMDEQ supports this initiative. C-274 will reassure several of our members who have already begun the process of selling their business to one of their children. The current rules are absurd in that they do nothing to encourage the maintenance of family businesses. In the case of our association, a number of convenience store owners that are firmly established in their community would like to sell to their children, but would have to pay more tax. It is high time to change the rules, commented Mr. Yves Servais. [Translation] The Government of Quebec has already made changes to address this financial injustice, as reported in Le Soleil on 9 September Mr. Caron was quoted as saying: And Quebec corrected this in its 2015 budget, effective as of Now, the federal government must follow suit. [Translation] (Appendix 14)

6 Another important point we should mention is that our association has dozens of well-established convenience stores in rural areas. Many municipalities have seen institutions close: schools, churches, Desjardin locations, Canada Post outlets that end up in pharmacies. These people have only one place to obtain services, and that is their independent convenience store. It is important to have a sense of belonging in rural areas, and people become attached to businesses that remain in the same family, and that have invested in the community. This includes farms and SMEs. According to the Union des producteurs agricoles and the Canadian Federation of Independent Business, in the next ten years, almost 75% of SME owners will be transferring their business. We ask the federal government to protect our rural and regional communities.