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Dana FlavelleBusiness Reporter

 

 

 

Dana Flavelle

Business Reporter

 

There’s a bill before the U.S. Congress that would allow Americans to bring back $1,000 worth of Canadian goods duty-free after just a few hours of shopping across our border.

 

Meanwhile, Canadians can’t bring back anything from the U.S. duty-free until they’ve been away for 24 hours. Even then the limit is $50.

 

This protectionism is one of the reasons U.S. retailers who open up shop in Canada can charge higher prices here than in their home market, an economics professor says.

 

“There are two reasons prices are higher in Canada,” said Ambarish Chandra, a professor with the University of Toronto’s Rotman School of Management. “It is more expensive. Retailers here have to pay higher taxes and have somewhat higher costs. But a larger part of it is because they can get away with it.”

 

Canadians can complain all they like but unless they do more cross-border shopping, retailers here will charge whatever the market will bear, Chandra said. The same barriers exist online: Canadians are charged duty on items shipped across the border.

 

The Consumers Association of Canada says it has lobbied Ottawa to raise the limits, noting the maximum exemption - $750 after a week-long stay - hasn’t changed in more than 15 years.

 

But the consumer group says its efforts are always opposed by Canadian retailers.

 

The Retail Council of Canada denies it has lobbied the government on this issue.

 

“In an age when you can shop around the world, travellers’ exemptions would be the least of our concerns,” said council president and chief executive Diane Brisebois. “We have not had any conversations with the government about exemptions.”

 

Ottawa doubled the exemption for 48-hour trips outside the country to $400 from $200 in 2007, but has no plans to make further changes at this time, said a spokesperson for federal Finance Minister Jim Flaherty.

 

“We continually monitor the adequacies of the travellers’ exemption for Canadians. This includes taking into consideration the impact of any further modifications on the government’s budgetary balance and the impact on Canadian retailers,” the minister’s office said in a written statement.

 

The U.S. currently allows $200 for same-day shopping.

 

The issue of retail price parity arose again this week after some Canadian customers complained U.S. retailer J. Crew is charging higher prices in its new Canadian store and on its Canadian website than in its U.S. stores and on its U.S. website.

 

The difference in the stores averages 15 per cent; the difference online is up to 40 per cent, once taxes and shipping are included.

 

Canadians have been railing about price differences between the two countries ever since the Canadian dollar rose to parity with the U.S. greenback in 2007 after years in the doldrums.

 

“It’s come to the fore again because the Canadian dollar is so strong and so many U.S. retailers are coming here,” said Lynn Bevan, a partner with the consulting firm RSM Richter in Toronto.

 

Bevan said retailers who bring their operations north of the border face a slew of higher costs, from duty and freight to real estate and labour. Overhead costs in Canada are spread across fewer stores, and in some cases the Canadian business is separately owned and must pay royalty and other fees to the U.S. parent.

 

“It’s not like Canadian retailers are making out like bandits,” she said.

 

Prices were on average 20 per cent higher in Canada than in the U.S. on a broad range of goods from DVDs to luxury cars to golf balls, according to a survey last April by Doug Porter, deputy chief economist at BMO Capital Markets.

 

The only times the price gap has closed in the past four years are when the Canadian dollar has dropped below the U.S. greenback, Porter said.

 

http://www.thestar.com/business/article/1043928--canadians-need-higher-duty-free-limits-prof-says

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Impressive to see something like that coming out of the Torstar!

 

Ottawa should simply eliminate the border inspections and let people drive in with whatever they want!

 

Yeah! Like drugs, guns, illegal immigrants...

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Yeah! Like drugs, guns, illegal immigrants...

 

All those American illegal immigrants :D Just take care of the outer boundaries and let the inside be free. In Europe it works excellent and in Central America it works excellent, and of course a big reason the US is successful and wealthy is the free passage between the states... and it would make it easy to run infrastructure more efficiently, like instead of investing billions to improve Hwy 17 through Ontario, just drive through Michigan...

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Harper was making some noises about a "perimeter" but remains to see what the Americans will allow, with idiots like Napolitano running DHS it is hard to have much faith, but with a majority and the opposition imploded it is a good time in Canada to do everything that needs to be done :D (OMG if I was Harper I'd run around and start dynamiting ministries :rotfl:)

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Clearly more competion results in lower prices. For canadian retailers, that would imply smaller gross margins. That however need not mean lower profitability, provided productivity is increased-- but that would translate inter alia into reduced number of retail outlets (and correspondingly increased sales per square foot--or meter!). But governments (through taxation of all kinds) would have to adjust too, not an unconsequential change in view of public spending. Inevitably, this would tend to force some sort of convergence between the two countries. Of course, taxation "could" be shifted away from consumption toward income, but this would be contrary to policies aiming at improving incentives to work. So you see, in the end, things are not so simple...

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Clearly more competion results in lower prices. For canadian retailers, that would imply smaller gross margins. That however need not mean lower profitability, provided productivity is increased-- but that would translate inter alia into reduced number of retail outlets (and correspondingly increased sales per square foot--or meter!). But governments (through taxation of all kinds) would have to adjust too, not an unconsequential change in view of public spending. Inevitably, this would tend to force some sort of convergence between the two countries. Of course, taxation "could" be shifted away from consumption toward income, but this would be contrary to policies aiming at improving incentives to work. So you see, in the end, things are not so simple...

 

At work someone who gives this kind of explanation will get shit from yours truly lol... this only means he/she doesn't want to get the job done.

 

Everything affects everything else in life, you can sit and do nothing (that would affect something too somewhat), or you can do something and adjust for the consequences later.

 

Removing that limit, is just a matter of changing a number or two in some text somewhere in our huge bureaucracy.

 

If you're chicken shit, go by baby steps... add 100$ each year and observe the consequences, stop or keep on adding that 100$, until the limit doesn't mean anything.

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