After two months of little change in sales growth, total retail sales rose 1.9% in March to an estimated $34.0 billion. The latest monthly increase helped retail sales in the first quarter of 2007 rise by 2.0%, marking a return to strong quarterly growth after a lacklustre fourth quarter of 2006.

Excluding sales by new, used and recreational vehicles and parts dealers, retail sales rose 1.1% in March, extending a string of advances by non-auto retailers to five months. In the first three months of 2007, sales of non-auto retailers rose 2.8% over the previous quarter. This was the strongest quarterly growth for this group of retailers since the series began in 1991. In the first quarter of 2007, there was robust growth in sales by gasoline stations (+7.5%), furniture, home furnishings and electronics stores (+3.5%), and pharmacies and personal care stores (+3.1%).

Of the seven retail sectors posting sales gains in March, the automotive sector (which includes gasoline stations) led the way with a 3.8% increase after two months of declines.

Significant advances were also posted by four other retail sectors. Miscellaneous retailers' sales rose 2.9% to post the highest growth rate since January 2006, while clothing and accessories store sales climbed 1.5%. Furniture, home furnishings and electronics stores (+1.2%) enjoyed their fifth consecutive increase, and retail activity in the building and outdoor home supplies stores picked up in March (+1.0%) after declining in February.

Moderate gains were seen in the food and beverage stores (+0.8%) and the pharmacies and personal care stores (+0.6%) sectors.

Sales at general merchandise stores declined by 0.2% in March.

Once price changes were taken into account, total retail sales increased by 1.4% in March.

Seven of eight retail sectors posted higher sales in March

Sales at new car dealers jumped 5.1% in March, partly recovering from two consecutive monthly declines. However, as a result of the weak start to the year, sales for the first quarter of 2007 were down 1.3%.

Gasoline station sales rose 2.6% due to higher prices at the pump in March. Sales in the first quarter were up 7.5% over the final three months of 2006, partly reversing two consecutive quarterly declines.

Sales at used and recreational motor vehicles and parts dealers rose 1.2% in March, the fourth increase in the last five months.

In the clothing and accessories stores sector, clothing stores had a 1.7% increase in sales, recovering fully from a 1.5% decrease in sales in February. Shoe, clothing accessories and jewellery stores had sales rise a modest 0.7% after two months of declines.

Within the food and beverages stores sector, sales at supermarkets edged up 0.3% in March while beer, wine and liquor stores sales increased by 1.3%. Sales at convenience and specialty food stores rose 3.3% in March, leading to a 1.6% advance over the last quarter of 2006. Within this trade group, sales at specialty food stores continue to represent an increasing share of total sales, accounting for 42% of sales in 2006, up from 39% in 2005.

Sales picked up at home centres and hardware stores (+0.6%) and specialized building material and garden stores (+2.7%) after a lacklustre February. Warmer March temperatures may have revived sales in this sector. According to the Canadian Mortgage and Housing Corporation, housing starts were up by 9.2% in March over February.

Miscellaneous stores retailers (which includes retailers such as office supplies and stationary stores, gift, novelty and souvenir stores, and pet and pet supplies stores) registered gains of 2.7% in March after a 1.1% decline in February. Sales at these retailers have tended to fluctuate over the last 12 months around a generally flat trend. Sporting goods, hobby, music and book stores sales advanced 3.0% in March, extending a steady rise that has seen annual increases of over 6% in the previous two years.

In the furniture, home furnishings and electronics stores sector, sales at furniture stores rose 2.7%. Sales growth of 2.2% at home electronics and appliance stores marked the 11th consecutive monthly gain. The two smaller and more volatile trade groups in this sector posted declines in March, with home furnishings stores sales down 2.0% while computer and software stores sales were down 4.3%.

Strong gains in the Western provinces

March saw sales gains in all provinces except New Brunswick (-0.2%). Sales in the Western provinces were strong in March. Saskatchewan retailers led the way with sales gains of 5.6%, more than offsetting the 2.7% decline in February. Sales in Alberta were up 3.6% in March, closing the quarter with a 3.4% growth rate. Manitoba retailers posted their fourth increase in the last five months (+2.3%). Retail sales grew for the fourth consecutive month in British Columbia (+1.4%).

Sales in Ontario were up 2.1% in March, the fifth time in the last six months that sales exceeded the national average. In Quebec, sales rose by only 0.6%.

The Atlantic provinces saw a moderate retail sales increase of 0.4% while retail activity in the territories as a whole fell by 2.9%, mainly due to sales declines in the Yukon.

Related indicators for April

Estimates from the Labour Force Survey showed little overall change in employment in April. This follows strong employment gains since September 2006.

Preliminary sales figures from the automotive industry indicate that the number of new motor vehicles sold climbed 7% in April.

The seasonally adjusted annual rate of housing starts was 211,900 units in April, down from 214,000 units in March, according to Canada Mortgage and Housing Corporation.

Wholesale sales increased by 1.9% in March to $44.1 billion, following a 1.0% rise the previous month. The back-to-back monthly increases helped push up sales in the first quarter by 3.4% over the previous quarter.

Around half of March's increase was attributable to strong sales of automotive products (+5.5%). There were also widespread gains among the remaining wholesale sectors, notably building materials, machinery and electronic equipment and farm products. Sales excluding the automotive sector rose 1.1% in March.

After showing signs of easing in the fall of 2006, wholesale sales have resumed their upward momentum in recent months, posting gains in four of the past five months. A major factor behind the recent gains has been the pickup in automotive sales, which had experienced a bit of a downturn during the latter part of 2006.

Sales in constant dollars, which remove the effects of price fluctuations to isolate the change in volumes, rose 1.8% in March.

Wholesale sales regain their momentum in the first quarter

Sales in the first quarter rose 3.4%. While this represented the best quarterly performance in almost three years, it was also partly a reflection of the weak (+0.2%) showing in the fourth quarter of 2006.

Although all seven wholesale sectors recorded higher sales in the first quarter, a major factor behind the first quarter's strong growth was the turnaround in automotive sales. The auto sector bounced back from a 3.8% decline in the fourth quarter of 2006 to record its highest quarterly increase (+7.6%) since the second quarter of 2004.

Wholesalers of building materials (+4.4%) and "other products" (+5.4%) were among the other significant gainers in the first quarter.

All provinces and territories recorded higher sales in the first quarter. The turnaround in the automotive sector pushed sales in Ontario up by 2.9% following a 0.1% drop in the fourth quarter of 2006. Sales in Alberta, which had softened significantly towards the end of 2006, posted a 5.3% gain. This was the 15th consecutive quarterly increase for the province.

Wholesalers in Saskatchewan, Nova Scotia and Prince Edward Island also posted increases substantially above the national average during the quarter.

Auto sector picks up speed

Wholesalers of automotive products continued to gain momentum in March, as sales rose a further 5.5% to $8.7 billion. This was the fourth increase in the past five months for this sector, which had previously undergone a mini-slide between August and October of last year.

Higher sales of motor vehicles (+6.6%) accounted for almost all of the increase in March, as sales of motor vehicle parts and accessories rose at a more modest pace (+0.8%). Sales of motor vehicles account for around 80% of all sales in the automotive sector.

The increase in motor vehicle sales coincides with the recent pickup in Canada's auto manufacturing industry. After hitting an eight-year low last October, motor vehicle shipments have risen significantly, culminating in another strong increase in March (+7.2%). As most of these vehicles are exported to the United States, there has also been a significant rise in passenger car exports during this period. In March, passenger cars exports rose 10.2%.

Building materials sector bounces back from February decline

The building materials sector bounced back in March as sales rose 2.1% to $6.2 billion, reversing all of February's decline.

Higher sales of metal products (+3.7%) and building supplies were behind most of the rise this month. Sales of lumber posted a more modest gain (+1.0%) following a substantial drop in February.

For wholesalers of metal products, this was the third increase in four months. The sales trend for this trade group has been on a continuous upswing since August 2005. The strength of oil and gas activity in Alberta, coupled with unprecedented levels of construction in Western Canada, continue to drive demand for metal products.

Sales of building materials rose for the third straight month. Following three years of solid growth, this trade group's sales continue to advance thanks to the strong performance of Canada's renovation and construction market.

Mixed fortunes for machinery and electronic equipment sector in March

There were mixed fortunes for the machinery and electronic equipment sector in March, as robust sales of machinery and equipment (+4.9%) were partially offset by lower sales of computers and other electronic equipment (-1.8%) and office and professional equipment (-0.8%).

March's increase in the machinery and equipment trade group was the largest monthly gain since April 2005, and was due in part to strong sales of construction equipment. Nevertheless, while the demand for construction equipment remains strong, a slowdown in demand for other types of equipment (notably oil and gas well machinery) has dampened the rate of sales growth in this trade group over recent months. A combination of higher drilling costs and lower natural gas prices explain some of the recent decline in demand for oil and gas well machinery.

Farm product sales boosted by higher sales of live animals

Wholesalers of farms products enjoyed their biggest monthly gain in nine months, as sales in March jumped 8.2% to $511 million.

This was the third consecutive monthly rise for this sector which, after hitting a recent low in May 2006, has registered generally rising sales. Higher sales of live animals, which make up around half of all sales in the farm products sector, have accounted for much of the recent rise.

Most of these animals are exported and in March exports of live animals increased by 9.4%, following a 12.8% increase the previous month.

Sales rise in most provinces and territories

Overall, 9 out of the 13 provinces and territories recorded higher sales in March.

In Ontario, sales were boosted by the strength of the automotive sector, rising 1.7% to $22 billion. However, sales outside of the key automotive sector were generally flat.

Wholesalers in Quebec continued to gain ground, as sales rose a further 2.9% to $8.3 billion following a 2.7% increase in February. March's increase came in spite of flat sales in the province's key food, beverage and tobacco products sector, which accounts for around a quarter of all sales in Quebec. Higher sales of automotive products, machinery and equipment and "other products" helped to drive up sales during the month. This was the fourth increase in five months for Quebec.

Sales in the Prairie provinces advanced for the fifth consecutive month, thanks to gains in Saskatchewan (+5.3) and Alberta (+2.1%). This also marked the fifth consecutive rise for sales in Saskatchewan, where the growth has been driven primarily by higher sales of "other products" such as agricultural chemicals and fertilizers.

In Alberta, higher sales of building supplies and machinery and equipment were behind most of the rise in sales in March.

Sales rose by 3.5% in Atlantic Canada in March, with Newfoundland and Nova Scotia accounting for most of the gains.

Inventory-to-sales ratio hits 10-month low

There was a significant decline (-10.5%) in motor vehicle inventories in March, but this was completely offset by increases in other trade groups, notably food products, machinery and equipment and "other products." As a result, inventories were unchanged in March at $54.2 billion, following a very small decline in February.

March's big boost in sales, coupled with unchanged inventories, triggered a significant drop in the inventory-to-sales ratio. From February's 1.25, the ratio fell to 1.23 in March, a 10-month low. This was the fourth consecutive decline for this ratio, which hit a three-year high in November.

The ratio is a key measure of the time, in months, that would be required in order to exhaust inventories if sales were to remain at their current level.

Nationally, wholesale sales increased by 6.3% to $497.4 billion (in current dollars) in 2006, up from the 5.2% increase a year earlier. Adjusted for inflation, the gain was 7.4%, indicating that last year's increase in value was the result of higher volumes.

In terms of constant dollars, Canada's wholesale trade industry recorded its second best performance over the past seven years in 2006.

The review, available today in the Analysis in Brief series, found that as in 2005, wholesalers continued to cash in on the boom in Western Canada.

The economic and demographic boom, particularly in Alberta, was most apparent in the increased demand for machinery and electronic equipment, and personal and household goods. These two wholesale categories recorded the strongest growth in 2006.

The gain in overall wholesale sales contributed to another profitable year for wholesalers, as industry profits rose 15.1% to a record high of $16.6 billion.

The wholesale trade industry employed almost 740,000 people on average in 2006. It accounted for 6.7% of Canada's economic output as measured by gross domestic product.

Machinery and equipment: Business investment continues to drive sales

Canadian businesses invested heavily in machinery and electronic equipment for a third consecutive year. Wholesale sales in this sector increased 9.7% to $104.8 billion, surpassing the $100-billion mark for the first time in 2006.

Much of this investment was again driven by the mining and energy sectors, most notably in Alberta, where considerable infrastructure was added to the oil sands. This increase in business investment has also been helped by the rising value of the Canadian dollar.

While the exchange rate has posed significant challenges for many of the country's export-oriented enterprises, it has helped reduce the cost of capital goods, many of which are priced in US dollars.

Sales of computers and other electronic equipment increased 10.0% to nearly $31.5 billion, which was the fastest growth rate for this trade group since 1999.

Record consumer spending boosts sales of household and personal goods

Robust consumer spending helped wholesalers of personal and household goods to record their strongest gain since 2002, as wholesale sales in this sector rose 8.3%, up from the already impressive 7.0% growth a year earlier.

Much of the growth in this wholesale sector reflected higher demand from retailers. For 2006 as a whole, retail sales increased at the fastest rate in nine years, with some of the most notable increases coming in home furnishing, pharmacy and personal care and clothing categories.

Growth in the automotive sector picks up

Following three years of little or no growth, the wholesale automotive sector grew by 4.5% in 2006, as a result of higher sales in the motor vehicles trade group. The auto parts wholesaling industry, in contrast, was little changed.

Sales in the motor vehicles trade group were boosted by double-digit growth of heavy trucks and recreational vehicles. These accounted for around 20% of all sales in this trade group, but were responsible for some 40% of the growth in 2006.

Wholesale sales of passenger cars and light trucks moved ahead at a more modest rate of 3.7% in 2006, as overall sales were held back by lower demand from the United States for many of the vehicles produced in Canada. Exports of passenger vehicles declined by 4.7% in 2006.

The drop in demand from the US motor vehicle market was in contrast to the market in Canada, where sales of new motor vehicles recorded their second best year on record.

The provinces: Alberta juggernaut continues

Wholesalers in Alberta had another excellent year, leading the nation with a 13.0% increase in sales. This marked the third consecutive year of double-digit gains for the province. Most of the remaining growth in Western Canada came in British Columbia.

In Alberta, energy-related investment, together with robust demand from the household sector, continued to drive demand for wholesale goods. The biggest contributors were a 14.7% gain in machinery and equipment sales and an 18.1% jump in building materials. These two accounted for 60% of overall growth in the province.

Sales growth in British Columbia exceeded the national average for the fifth consecutive year in 2006, making it the only province to achieve this feat during this period.

Overall sales increased by 7.3% in British Columbia to $50.7 billion, following an 8.7% increase in 2005. With the exception of the farm products sector, which accounts for less than 1% of wholesale sales in the province, all wholesale sectors posted gains in 2006.

Ontario's huge wholesale trade industry rebounded from a disappointing 2005 to post its best performance since 2002. In total, wholesalers in the province sold over $250 billion worth of goods, up 6.4% from 2005.

Double-digit growth in the machinery and equipment and personal and household goods sectors provided much of the impetus for the increase. As well, the key automotive sector halted a three-year slide, thanks in part to a jump in sales of motor vehicles.

Sales growth in Quebec came in below the national average in 2006, rising 3.4% to almost $94 billion. This was the second consecutive year-over-year slowdown in the growth rate of sales for the province, which as recently as 2004 had recorded growth of 7.5%.

Canadian companies exported $40.6 billion worth of merchandise in March, up 1.4% from February. Automotive products led the growth of exports, increasing a robust 7.9% to $7.4 billion.

Imports were up 3.3% in March, reaching a record high of $35.9 billion. The advance in imports of energy products led the gain. All but two sectors, namely forestry products, and agricultural and fishing products, registered increases as well.

The growth of imports surpassed that of exports, leading Canada's merchandise trade surplus with the world to contract to $4.6 billion from a revised $5.2 billion in February.

Imports from the United States increased by more than $1.0 billion to reach a peak of $23.6 billion, while exports to our southern neighbour grew just over $300 million to $31.3 billion. In comparison, Canada's imports from countries other than the United States rose by $136.7 million to $12.3 billion, while the gain in exports to these destinations accounted for more than one-third of the overall jump, rising to $9.3 billion.

Automotive products drive growth of exports

Exports of automotive products, industrial goods, forestry and agricultural products contributed to the gains for the month. However, automotive products stood alone as the sole sector with a gain greater than the drop recorded the previous month.

Exports of automotive products, which increased for the first time since December 2006, led the way with a robust 7.9% gain to $7.4 billion. Exports of passenger autos drove the export growth of this sector, accounting for 65% of the total as manufacturers' stepped up production. Exports of trucks and other motor vehicles were also up in March.

Industrial goods and materials increased 3.1% to $8.8 billion, primarily due to rising exports of metals and alloys. Nickel prices continued their meteoric climb due to robust demand from stainless steel producers, driving exports to a new record in March.

After a very weak February, forestry products exports jumped 7.0% to $2.7 billion. Exports of lumber, wood pulp and newsprint all contributed to the increase. Agricultural and fishing products rose 2.0% to $2.9 billion.

Energy products posted the largest decline, with exports falling 5.0% to $7.7 billion. Natural gas exports fell 13.9% to $2.5 billion, following a large increase in February. The decline was attributed to a drop in volumes.

Machinery and equipment edged down 0.5% to $8.2 billion, primarily because of lower exports of both aircraft and other transportation equipment, and other machinery and equipment. These declines overshadowed record exports of industrial and agricultural machinery.

Energy products fuel growth of imports

Energy products led the expansion of imports in March, accounting for almost half of the increase. Imports in this sector soared 22.1% to $2.9 billion. An increase in the volume of crude petroleum imports to refineries in Eastern Canada was the main contributor, pushing values up 22.9% to $1.7 billion, on the heels of a significant decline in February.

Automotive products grew 4.5% from the previous month to $7.2 billion. The bulk of the increase was due to imports of motor vehicle parts (+5.2%), coupled with growing imports of motor vehicles and passenger autos as new models are unveiled.

Machinery and equipment imports increased 1.5% to $9.9 billion, led by advances in imports of aircraft, engines and parts, as a result of national airlines building up their fleets. Imports of aircraft, engines and parts rose by over 20% for the second consecutive month, topping the $1.0 billion mark for the first time since August 2001. The increase for the sector was lessened by declines in both office machines and equipment (-5.3%) and industrial and agricultural machinery (-1.4%).

Industrial goods and materials increased for the second month in a row to a record high of $7.5 billion. Although the increase was just shy of 1.0%, it masked the robust growth of imports of chemicals and plastics, up 8.1% to peak at $2.8 billion.

Imports of other consumer goods advanced for the eighth straight month, breaking the previous month's record value and reaching $4.7 billion. Imports of pharmaceutical products played a role in the increase, while imports of apparel and footwear declined after hitting a record high in February.

Imports of agricultural fishing products faltered, edging down 0.8% to $2.1 billion. This decline was concentrated in imports of sugar and fresh vegetables, following record-high imports of these commodities in February.

Snapshot of emerging markets: China

During the first three months of 2007, imports from China totalled $9.1 billion, an 18.1% increase over the first quarter of 2006. Exports also increased for the first quarter of 2007, up 31.0% to $2.1 billion over the same period.

The products in highest demand from China continued to be computers, other telecommunication and related equipment (such as cellular phones and televisions) and clothing. Imports of these three commodity groups were valued at $2.5 billion in the first quarter of 2007, with computers accounting for more than half of that value.

By contrast, the goods exported to China are vastly different in nature. In the first three months of 2007, Canada's top three exports to China were wood pulp, nickel and alloys, and organic chemicals. Together these three commodities were valued at just under $900 million, up 64.1% over the same period last year.

Merchandise trade
	February 2007r	March 2007	February to March 2007	March 2006 to March 2007	January to March 2006	January to March 2007	January–March 2006 to January–March 2007
	Seasonally adjusted, $ current
	$ millions		% change		$ millions		% change
Principal trading partners
Exports
United States	30,932	31,253	1.0	4.4	91,988	93,107	1.2
Japan	885	935	5.6	2.3	2,592	2,732	5.4
European Union1	3,424	3,287	-4.0	15.7	8,044	10,315	28.2
Other OECD countries2	1,713	1,892	10.4	41.1	3,907	5,300	35.7
All other countries	3,079	3,213	4.4	19.4	7,909	9,634	21.8
Total	40,032	40,580	1.4	7.6	114,440	121,086	5.8
Imports
United States	22,637	23,643	4.4	8.0	65,088	68,982	6.0
Japan	1,044	1,038	-0.6	15.7	2,821	3,111	10.3
European Union1	3,643	3,585	-1.6	6.3	10,105	10,619	5.1
Other OECD countries2	2,025	2,124	4.9	12.1	5,570	6,289	12.9
All other countries	5,446	5,548	1.9	17.5	14,468	16,541	14.3
Total	34,795	35,938	3.3	9.6	98,053	105,542	7.6
Balance
United States	8,295	7,610	...	...	26,900	24,125	...
Japan	-159	-103	...	...	-229	-379	...
European Union1	-219	-298	...	...	-2,061	-304	...
Other OECD countries2	-312	-232	...	...	-1,663	-989	...
All other countries	-2,367	-2,335	...	...	-6,559	-6,907	...
Total	5,237	4,642	...	...	16,387	15,544	...
Principal commodity groupings
Exports
Agricultural and fishing products	2,880	2,938	2.0	12.9	7,787	8,778	12.7
Energy products	8,062	7,660	-5.0	12.4	21,650	22,568	4.2
Forestry products	2,523	2,699	7.0	-6.3	8,937	7,997	-10.5
Industrial goods and materials	8,576	8,840	3.1	21.3	21,777	26,367	21.1
Machinery and equipment	8,239	8,197	-0.5	-1.1	23,955	25,065	4.6
Automotive products	6,835	7,377	7.9	3.2	22,186	21,526	-3.0
Other consumer goods	1,659	1,608	-3.1	10.3	4,298	4,995	16.2
Special transactions trade3	721	696	-3.5	-4.9	2,232	2,157	-3.4
Other balance of payments adjustments	538	564	4.8	8.3	1,618	1,633	0.9
Imports
Agricultural and fishing products	2,117	2,101	-0.8	12.0	5,675	6,353	11.9
Energy products	2,352	2,872	22.1	15.7	7,587	8,180	7.8
Forestry products	256	254	-0.8	2.8	756	766	1.3
Industrial goods and materials	7,398	7,468	0.9	7.7	20,585	21,989	6.8
Machinery and equipment	9,787	9,929	1.5	4.5	28,170	29,599	5.1
Automotive products	6,900	7,213	4.5	11.5	19,470	20,849	7.1
Other consumer goods	4,688	4,730	0.9	11.0	12,786	14,095	10.2
Special transactions trade3	622	685	10.1	98.0	1,054	1,684	59.8
Other balance of payments adjustments	677	686	1.3	3.9	1,970	2,028	2.9
r revised ... figures not appropriate or not applicable 1. Includes Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and United Kingdom. 2. Includes Australia, Canada, Iceland, Mexico, New Zealand, Norway, South Korea, Switzerland and Turkey. 3. These are mainly low valued transactions, value of repairs to equipment, and goods returned to country of origin.

Note to readers

Merchandise trade is one component of the current account of Canada's balance of payments, which also includes trade in services.

International trade data for the United States, Japan and the United Kingdom are available on both a balance of payments basis as well as a customs basis. Trade data for all other individual countries are available on a customs basis only.

There will be a section in The Daily at the end of each quarter describing trends in trade between Canada and emerging economies, such as China. This section will discuss data which is on a customs basis and is not seasonally adjusted.

The International Trade Division is currently updating the base year for import and export price indices. This update will see the base year change from 1997 to 2002, and is being undertaken in collaboration with the System of National Accounts. Base year 2002 CANSIM tables will replace the current CANSIM tables 228-0035 to 228-0040 and 228-0044 to 228-0046 next month.

Revisions

In general, merchandise trade data are revised on an ongoing basis for each month of the current year. Customs basis data are revised for the previous data year each quarter.

Factors influencing revisions include late receipt of import and export documentation, incorrect information on customs forms, replacement of estimates with actual figures, changes in classification of merchandise based on more current information, and changes to seasonal adjustment factors.

Revised data are available in the appropriate CANSIM tables.

Bar sales plummet 26% province-wide since 2000

TORONTO - Toronto bar and restaurant owners have weathered the impact of 9/11, SARS, a blackout, smoking bans and the NHL lockout, but the city's new powers of taxation may be the last straw for many.

Today the city begins public consultations on a host of new taxation powers, including a proposed tax of up to 10% on beer, wine and spirits purchased at bars and restaurants. This would be in addition to the 6% GST, 8% PST and 10% provincial liquor tax that bar and restaurant patrons already pay.

"It's a simple formula: when taxes go up, consumer spending goes down. Every 1% in new liquor taxes will reduce spending at Toronto's bars and restaurants by at least $4.2 million." says Stephanie Jones, Vice President, Ontario with the 34,000-member Canadian Restaurant and Foodservices Association (CRFA). "Given the unprecedented challenges of the past few years, this is a loss our members simply cannot absorb."

The bar industry has been particularly hard hit over the past six years, as illustrated by the following Ontario-wide data from Statistics Canada. Toronto accounts for nearly 40% of the industry in Ontario.

<< - Total revenues in the bar segment (adjusted for inflation) plummeted by nearly 26% between 2000 and 2006.

- This translates to a 31% real drop in revenues for the average bar owner in Ontario.

- Pre-tax profit margins are now in negative territory, falling from 6.5% of operating revenues in 2001 to a 0.5% loss in revenue in 2005.

- The number of bars in Ontario has dropped by 20% since 2000 - from 1,252 to 1,000. >>

"Any new taxes threaten the viability of Toronto's bar and restaurant industry," says Jones. "Toronto should be encouraging a vibrant, growing hospitality industry. Instead the city is placing its fiscal woes squarely on the backs of these small businesses."

"Visa Members in the U.S. and Asia-Pacific have successfully deployed contactless technology starting in 2005," said Michael Bradley, Vice President, Products at Visa Canada. "In Canada, Visa payWave will leverage our Members' investment in chip security, and offer customers a fast and convenient way to pay."

For merchants, Visa payWave will offer benefits including faster transaction times, increased ticket size, card usage, and customer loyalty. "Visa's global experience has shown that both retailers and consumers support contactless programs because they allow payments to be transacted faster and are more convenient than cash for smaller ticket items," continued Bradley.

Visa payWave builds on the success of Visa's "No Signature Required" (NSR) program as it offers merchants in traditionally cash-heavy, smaller ticket businesses with a payment option that can decrease check-out times. Currently, the NSR program does not require a cardholder signature for purchases of $25 or less at certain merchant locations such as fast food restaurants, movie theatres, parking lots, variety and convenience stores, news stands and video/DVD rental stores. Visa payWave-enabled products will offer quicker transaction times and leverage the security of chip card technology.

The introduction of Visa payWave in Canada follows the January 2007 Visa mobile platform announcement that paves the way for deployment of mobile payments and services. It is also closely aligned with the Visa migration to chip card technology, as Visa payWave was developed using a standard for global interoperability and fraud prevention. Visa employs technology both on the card itself as well as on Visa's processing network to help prevent fraud.

Visa payWave in Canada is based on EMV chip technology, which can securely store and encrypt confidential information. An EMV chip is virtually impossible to copy and uses a standard 128-bit encryption technology to generate a cryptogram that uniquely identifies each transaction. No two cards share the same key, and the key is not transmitted.

To use a Visa payWave-enabled product, cardholders simply wave their card or device near a secure reader at checkout, instead of swiping it. All other aspects of a Visa payWave transaction are handled in the same way as a traditional Visa transaction.

"Because Visa uses encrypted data, even if a fraudster attempts to 'read' the information from a Visa payWave-enabled transaction, the information would be useless," added Bradley.