Thank you, Mr. Chair and members of the committee, for your time today.

On behalf of Canada's 22,000 convenience stores, which employ 188,000 people in communities across the country, I want to highlight the significant costs credit card fees are to the daily operations of our retail stores.

In a nutshell, these fees, second only to payroll, have a direct impact on our ability to invest in our stores and the workers who serve Canadian communities 24-7, 365.

Convenience matters to communities. Recent data collected by our industry found that six out of 10 Canadians—by the way an overwhelming majority under the age of 40—believe convenience stores are important to meeting their weekly needs. Canadians also believe that our stores are responsible, safe and trustworthy, all attributes that we definitely take a lot of pride in. While we are essential to so many Canadians, they may not know that convenience stores collect more taxes than any other retail sector.

Unlike your local bakery, coffee shop or clothing boutique, which collect about 13% in HST, convenience stores collect approximately 48% in tax because we sell high-tax products such as lottery, fuel and tobacco. To put this into perspective, our members collected more than $11 billion in taxes last year just for the federal government alone. That works out to about $525,000 per store.

Adding to this is the shift to touchless digital payments. More than 70% of all gas purchases at our retail outlets were made by credit card last year and that number is increasing daily. Contactless payments are the new normal for our stores, and that means new pressures for our businesses.

Convenience stores also face what we call a double whammy with credit card fees. Not only do we pay an interchange fee on the products sold, but we also pay interchange fees on the taxes applied to those products. That means our retailers are swamped by excessive fees that punish our stores for no other reason than to be tax collectors for government.

Regrettably, a 2019 promise to eliminate interchange fees from the tax portion of retail sales remains unfulfilled. The result is that each convenience store is out of pocket close to $14,000 annually, courtesy of the tax portion of sales made by credit cards.

Some committee members may be wondering why our stores do not surcharge customers to help offset these rising costs. The answer is simple: competitiveness. If we want to compete with big box stores and offer products at prices customers demand, our members have no other choice than to absorb the cost of collecting taxes.

I also want to be extremely clear that recent changes to cap interchange fees for small businesses will not help the convenience store industry. This measure only helps the smallest of businesses, micro-businesses, in Canada and leaves out our mid-sized operations. What's worse is that large corporations like Walmart and Costco have the negotiating power to demand better rates with credit card companies and processors, leaving a huge swath of SMEs without any solution to this growing business cost.

I also want to make it abundantly clear for committee members that these fees have a direct impact on the survivability of our stores. Last year in Canada 1.5 convenience stores closed their doors every day. The majority of these unfortunately are located in rural and remote areas where corner stores are often the sole place for essentials for Canadians.

Our stores are urging decision-makers to take action on this issue. Convenience store owners should not be out-of-pocket because they are required to pay interchange fees on taxes. That's not only unnecessary, but that's also just bad policy.

Removing the interchange fee from the tax portion of sales could be done via a tax credit for qualifying businesses where retailers are reimbursed for the fees they pay exclusively on the tax portion of sales.

Of course, we would welcome a broad-based fee reduction, but that must be accompanied by strict rules that prevent acquirers from passing through additional costs directly to the merchants.

To conclude, it is absolutely perverse that an essential industry like convenience stores/gas stations are paying out-of-pocket for the privilege of collecting taxes. Imagine if Canadians were told that the federal government was going to charge taxpayers a 2.5% administrative fee every time they remitted their taxes. There would be outrage. Quite honestly, we fail to understand why there's no similar concern for our local businesses, which are an entry point to entrepreneurship for so many, including many new Canadians.

Thank you for your time today. I'd be happy to answer any questions.