TORONTO – Retail Council of Canada (RCC) together with four border community Chambers of Commerce are asking for the federal government to level the playing field for Canadian retailers, starting with the elimination of import tariffs (taxes) on finished goods.
"Start with what can be changed immediately and eliminate import tariffs," is the message to Federal Finance Minister Jim Flaherty from RCC and the Chambers of Commerce of Surrey (BC), Winnipeg (MB), Altona (MB), Niagara Falls (ON), and Fredericton (NB).
"The government's decision to increase duty exemptions on goods bought in the U.S. is salt in the wounds of retailers in border communities," said Diane J. Brisebois, RCC's President and CEO. "They already face too many obstacles to competition, such as import duties, as high as 18 per cent on sports equipment. Now Canadians are being offered yet another incentive to cross border shop."
"Many retailers in border communities are struggling just to stay in business," said Carolyn Bones, President of the Niagara Falls Chamber of Commerce. "The federal government needs to act immediately to remove barriers to competition, so that Canadians want to shop and keep their tax dollars here in Canada."
Tariffs on many finished goods – including clothing, hockey equipment and skates, sporting equipment and footwear and linens – are paid by the retailer to the Canadian government. Historically, these tariffs were put in place to protect Canadian manufacturers. However, very few of these products are manufactured in Canada anymore.
RCC recently made a submission to the Senate Committee studying the reasons for price discrepancies between Canada and the United States. RCC presented several facts that contribute to the discrepancy:
- Merchants selling food items are particularly hard hit because staples such as eggs, cheese and milk are often significantly cheaper in the U.S. Canada takes a different approach to subsidizing farmers and this artificially increases prices on those items. Even with the dollar near parity, retailers pay more in Canada.
- Retailers in Canada must purchase branded products through Canadian subsidiaries of multi-national manufacturers (many of which are based in the U.S.). They cannot buy those products directly from the manufacturer in the U.S. Prices charged to retailers in Canada for such items as tires, health and beauty care products, running shoes, jeans, small appliances and electronics are often 30 per cent higher than what these manufacturers charge U.S. retailers. And these distributors rarely pass on the savings from a strong Canadian dollar. Even with the dollar near parity, retailers pay more in Canada.
- And if a retailer wants to import products that are not sold through distributors in Canada, higher import tariffs are applied. Even with the dollar near parity, retailers pay more in Canada.
Brisebois urged the committee to compel multi-national manufacturers and their Canadian subsidiaries to appear before the Senators to explain why retailers in Canada still pay more than their American counterparts for the same goods. Retailers, who value their customers, also asked the Senate to set the record straight to ensure consumers understood why some products were priced higher in Canada.
RCC and the Chambers of Commerce agree: "What retailers in Canada want is a level playing field to compete with their US counterparts so that they can bring the best products at the best value to Canadian consumers."
Retail Council of Canada (www.retailcouncil.org) is the Voice of Retail. Founded in 1963, RCC is a not-for-profit association which represents more than 45,000 stores of all retail formats, including department, grocery, independent merchants, regional and national specialty chains, and online merchants.
Source: Retail Council of Canada
