Introduction

The Retail Business Holidays Act (1990), administered by the Ministry of Consumer Services (MCS), was enacted to establish which holidays would be recognised as a common day of rest for businesses and employees. The legislation outlines nine holidays on which businesses in Ontario are obligated to close their doors, including:

• New Year’s Day
• Family Day
• Good Friday
• Easter Sunday
• Victoria Day
• Canada Day
• Labour Day
• Thanksgiving Day
• Christmas Day

Fines for businesses operating on the above mentioned days begin at $500 for first time offenders, and $2,000 and $5,000 for second, third, and subsequent offences, respectively. Retailers can face up to $50,000 in fines for violation of the Act or the equivalent amount of gross sales tallied on that day.¹

Since the last major debates on the Act took place in the late 1980s and early 1990s, issues with the Retail Business Holidays Act largely surrounded the concept of having a “common day of rest” in Ontario, in reference to Sundays. While prior amendments attempted to address violations of the Act by retailers with some exemptions, arguments against allowing all retailers to open were based upon a perceived threat to Ontario’s families, consumers, employees and their quality of life.² Progress slowly began on reforming the Retail Business Holidays Act to more accurately reflect the economic and demographic backdrop of Ontario as the Ontario Legislature voted in June of 1992 to remove Sunday from the list of days designated as a holiday. Since then, progress has largely stalled in spite of the rapidly evolving economic realities faced by retailers.

Currently, there is a limited criteria in the Act that allows for certain small retailers that sell items like handicrafts, magazines and books that are under 2,400 square feet in size with up to three employees to remain open on holidays. In addition, pharmacies under 7,500 square feet in size, gas stations, flower or plant shops, art galleries and tourism establishments, and businesses selling liquor are also exempt.³ It also gives municipal councils the power to pass by-laws to exempt certain retailers from the Act on holidays under the criteria that they are remaining open for the purposes of the maintenance or development of tourism. In the Niagara Region, applicants for this by-law exemption must pay the regional municipality an application fee of $847.50 with a waiting time that could exceed 90 days.⁴ While current legislation offers some retailers the ability to apply for exemptions from the Act, the following submission will attempt to provide an understanding of the background and challenges that it creates for retailers from a Niagara as well as an Ontario perspective, along with a recommendation that offers greater flexibility for retail business owners facing increased competition in the global economy.

In addition, on-site and off-site wine retail sales are restricted under the same act. Wine retail is largely considered both a driving and complementary force for tourism. As the wine industry expands, there is an increasing market demand for access to small and medium size boutique wineries and access to their product. The Act in its current form restricts that market access.

Background

According to Statistics Canada, the retail sector in Ontario produced over $160 billion in sales in 2010, with Ontario representing approximately 36 per cent of retail economic activity in Canada, making it a significant player in the economic success of the province and the country.⁵ With that said, the retail industry in Ontario, and more specifically in Niagara, face some significant challenges that could hamper future growth if there is no further progress on changes to the Retail Business Holidays Act. In an environment where the removal of trade barriers raises the level of competition for the local business owner, consumers now have the option of choosing from a wider retail market that is not subject to the same limitations. Given the constraints placed on local businesses in Ontario that are forced to close their doors on the holidays outlined in the Act, consumers are given little recourse but to take their money to alternative retail sources either online, or, in the case of border communities such as the Niagara Region, across the border to places like Western New York, where business owners are less constrained by mandatory holiday closures.

With online purchases last valued at over $15 billion in Canada, and estimates pointing to a $20 billion drain on the Canadian economy caused by cross-border shopping, retailers in Ontario are facing competitors that are rapidly encroaching upon their market.⁶ The effects of this onslaught have been seen as recently as June of 2012, as retail sales in Ontario reportedly dropped by 0.3 per cent, as the province struggles behind the competitiveness of bordering states.⁷ Continued setbacks, including the increase on exemption limits for shoppers bringing goods from the United States that were put into effect this past June in the Federal budget by Finance Minister Jim Flaherty, will further motivate consumers to take their money elsewhere as a Canadian Press-Harris Decima poll on cross-border shopping indicates that 54% of Canadians travelling across the border plan to spend more as a result of these changes.⁸ It also means a reduction in government revenues as estimates point to losses of $13 and $17 million in revenues in the first and second years after the changes.⁹

A scan of other jurisdictions in Canada will give some perspective on existing legislation regarding mandatory holiday closures for retailers. Provinces with similar restrictions for retailers during holiday hours include:

• Manitoba
• Quebec
• New Brunswick
• Nova Scotia
• Prince Edward Island
• Newfoundland and Labrador

There are also provinces and territories with no restrictions on retailers during holiday hours, they include:

• British Columbia
• Alberta
• Saskatchewan
• Yukon
• Nunavut
• Northwest Territories¹⁰

Challenge

Given the existing competition coming from within Canada and from the United States from jurisdictions that already allow retailers the choice to remain open on holidays, it is the recommendation of the Greater Niagara Chamber of Commerce to amend the Retail Business Holidays Act so that it provides retailers in Ontario with the choice to decide whether or not they wish to remain open on five of the designated holidays in the Act. Current legislation limits the ability of businesses both in Niagara and Ontario as a whole to compete in an ever-changing economy where traditional barriers are disappearing and retailers face an increasing amount of challenges. Solutions such as the municipal applications process under the Act for exemptions on the basis of tourism and the criteria for smaller retailers to remain open on holidays both fail to take into account the economic impact of lost revenues to the large bulk of retailers who remain unable to compete on a level playing field with other markets while being subjected to a set of criteria that are ineffective, arbitrary and unfair.

The potential benefits of amending the Act can empower local retailers, giving them the ability to meet the challenges of the market as they face increased online shopping, cross-border shopping and a strong Canadian dollar. In British Columbia, Alberta, and Saskatchewan, the three provinces in which retailers are given the choice to remain open on holidays, figures show that they routinely outperform the rest of Canada in retail sales as Alberta and Saskatchewan are currently leading the pack in retail sales growth in Canada for 2012 with 7.4 and 5.7 per cent increases in sales, respectively.¹¹ In communities bordering with Canada, such as Western New York which has seen increased retail traffic, there has been a direct connection between higher retail sales and an improved economic outlook. In the heat of the holiday shopping season in December of 2011, Canadians took some 2.5 million same-day trips across the border into the United States. The effects of this massive influx was seen in places such as Erie County, the location of the city of Buffalo, as they alone collected a record $401 million US in sales tax revenues for 2011, contributing to a $26 million budget surplus for the county that officials attributed partly to cross border traffic.¹² While several issues factor into this influx of Canadian shoppers into the U.S., the fact that retailers in Ontario are prevented from remaining open on holidays can only add to the problem as each additional day they are closed can spell revenues lost to competitors across the border, particularly in places like the Niagara Region. As a further consequence, it can also spell lost sales tax revenues for the province and the people of Ontario who benefit from them, particularly as the cost of government services continue to rise.

Figures for cross-border traffic on several of the holidays designated in the Act also show that trips across the border remain steady or even increase on holidays while retailers must remain closed in places like Niagara. Looking at traffic figures from the Niagara Falls Bridge Commission and the Buffalo and Fort Erie Public Bridge Authority for five of the designated holidays, the numbers for 2012 provide a useful example of the loss in customers that retailers face in Niagara:

As the figures above show, the numbers of US-bound trips taken at the Queenston-Lewiston, Rainbow, and Peace bridges during the designated holidays are up to 20 per cent higher than their monthly averages. Thus, with higher volumes of traffic going into the US on the above mentioned holidays, it is evident that retailers in Niagara and Southern Ontario are losing significant numbers of potential customers and sales revenues to cross-border traffic on designated retail holidays when they are forced to close their doors.

Recommendation

The Greater Niagara Chamber of Commerce recommends:

That the Ontario government uses the 2013 budget to demonstrate leadership by establishing the ability for retail businesses to make the choice to remain open on holidays as they see fit. The consequences of not being given this flexibility can have negative repercussions on retailers as well as the economic well-being of Ontario if retailers continue to face barriers that prevent them from meeting the demands of an increasingly competitive market. As other parts of Canada and the United States already give retailers this choice, it is time that Ontario moves forward to modernise legislation and level the playing field for its retailers.

The Greater Niagara Chamber of Commerce recommends that the Government of Ontario:

1. Amend the Retail Business Holidays Act in order to give all retailers the choice to remain open on the following holidays:
   • Family Day
   • Victoria Day
   • Canada Day
   • Labour Day
   • Thanksgiving Day
2. Amend the Retail Business Holidays Act in order to give all on-site and off-site winery retail stores the choice to remain open on the following holidays:
   • Good Friday
   • Easter Sunday

Works Cited

1. Retail Business Holidays Act, e-Laws, http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_90r30_e.htm (Accessed: September 6, 2012)
2. Hansard, February 12, 1987. http://www.ontla.on.ca/web/house-proceedings/house_detail.do?Date=1987-02-12&Parl=33&Sess=2&locale=en#P8_218 (Accessed: September 6, 2012)
3. Retail Business Holidays Act
4. The Retail Business Holidays Act Backgrounder Information and Tourism Exemption By-Laws, Niagara Region,  http://www.niagararegion.ca/government/bylaws/pdf/niagara-region-holidays-act.pdf (Accessed: September 6, 2012)
5. Retail trade, operating statistics, by province and territory, Statistics Canada,  http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/trad38g-eng.htm (Accessed: September 6, 2012)
6. See: E-commerce: Shopping on the Internet, Statistics Canada, http://www.statcan.gc.ca/daily-quotidien/100927/dq100927a-eng.htm, and, “Cross-border shopping a $20B economic drain,” CBC News, http://www.cbc.ca/news/business/story/2012/05/17/loonie-border-shopping.html (Accessed: September 6, 2012)
7. “Cross-border shopping drags retail sales lower,” CBC News, http://www.cbc.ca/news/canada/toronto/story/2012/08/22/retail-sales-june.html?cmp=rss (Accessed: September 6, 2012)
8. Julian Beltrame, “Cross-border shoppers plan bigger haul under new duty-free rules,” The Globe and Mail, June 24 2012,  http://www.theglobeandmail.com/report-on-business/international-business/cross-border-shoppers-plan-bigger-haul-under-new-duty-free-rules/article4366981/ (Accessed: September 12, 2012)
9. Marina Strauss and Sean Silcoff, “Ottawa’s budget gives cross-border shoppers a break,” The Globe and Mail, March 29, 2012, http://www.theglobeandmail.com/news/politics/budget/ottawas-budget-gives-cross-border-shoppers-a-break/article4097274/ (Accessed: September 13, 2012)
10. “Government Holidays/Store Hours,” Retail Council of Canada, http://www.retailcouncil.org/training/storehours.asp (Accessed: September 7, 2012)
11. “Provincial Current Trends,” Royal Bank of Canada, http://www.rbc.com/economics/market/pdf/provtrend.pdf (Accessed: September 7, 2012)
12. “U.S. cashing in on Canadian shoppers,” CBC News, http://www.cbc.ca/news/canada/toronto/story/2012/02/21/cross-border-tax-shopping.html?cmp=rss (Accessed: September 7, 2012)
13. Data Sources: Niagara Falls Bridge Commission, http://www.niagarafallsbridges.com and The Buffalo and Fort Erie Public Bridge Authority, http://www.peacebridge.com (Accessed: October 18, 2012)