As the Liberal government once again considers raising the $20 threshold on foreign goods Canadians can purchase online and import without incurring taxes and duties, polling released this week by Nanos shows the move would have the public’s backing.
Conducted at the end of September and barely noticed when it was released Monday, the Nanos data show a combined 76 per cent support, or somewhat support, raising the current exemption amount tenfold, to $200.
The polling was commissioned by the Canadian American Business Council, whose members include companies such as UPS. The council has created a website to draw attention to a threshold that hasn’t been touched since 1985 — but which they hope could be included in the upcoming federal budget.
One hint that’s a possibility is a petition sponsored by Liberal MP Sonia Sidhu and presented in the House on Monday.
Signed by 15,257 Canadians, the petition notes that “Canadians who are able to cross the border to shop in person are permitted up to $800 in purchases without incurring duty and tax penalties, while those who rely on online shopping are unfairly penalized for purchases as low as $20.”
“Because Canadians are buying more things online, I sponsored this petition to help us discuss the current rate of duty and tax penalties across the border when shopping online, such as buying from an online store, which has just expanded a facility in my riding this past week,” Sidhu said in presenting it in the House Monday.
A peer-reviewed C.D. Howe study from June, commissioned by eBay Canada, found that by keeping what’s formally known as the de minimis threshold at $20 — the lowest in the industrialized world (one of the next lowest is Mexico, at US$50) — the government collects $39 million in additional revenues, at a cost of $166 million.
In other words, it’s not exactly efficient.
Shopify, the Canadian Chamber of Commerce and the Canadian Manufacturers and Exporters have all expressed support for raising the threshold, and records show a flurry of recent lobbying activity ahead of the 2017 federal budget.
Equally active in resisting change, however, is the Retail Council of Canada, which maintains an increase in the threshold would devastate its members, making them uncompetitive against American online retailers and forcing them to lay off workers.
“Merchants in Canada (whether in-store or online) would be required to collect sales taxes on the same or competing items sold to customers in Canada and to pay duties on imported goods. On sales taxes alone, the U.S. merchants would have a tax advantage over merchants in Canada ranging from 5 per cent in Alberta to 15 per cent in Atlantic Canada,” they note on their website.
“De minimis at anything like the $200-level would lead to massive increases in cross-border orders, with the obvious negative consequences for retailers in Canada and their employees. Even a seemingly small increase could have a major impact, especially because, as the threshold level rises, U.S. online merchants could start to offer free shipping to Canada as many of them do for their customers in the United States.”
The Conservative government withstood pressure from American negotiators in the Trans-Pacific Partnership talks, they add, and the Liberal government resisted a “well-funded and well-organized lobby” in their 2016 budget.
“They are actively lobbying federal Ministers and MPs, many of whom report being pressured on this issue in encounters with U.S. Senators, Congressmen and officials,” the Council says.
“RCC does not understand why the Government would ever want to confer a tax and duty advantage on a U.S. warehouse seller, who employs few if any people in Canada, at the cost of a Canadian employer who creates jobs and economic activity here, whether in bricks-and-mortar stores or online.”
Countering that argument, however, are small and medium-sized Canadian exporters who’ve made the argument that the $20 threshold is disadvantaging them. “It complicates our ability to access business inputs or accept retail returns,” 12 companies argued in a joint letter in June to the prime minister.
Andrea Stairs, managing director for eBay Canada, made its pitch to the finance committee on Monday and cited the Nanos data. Karl Littler, a former senior official in the Paul Martin administration and now vice-president public affairs at the Retail Council of Canada, made its points the next day.
The government, thus far, is playing its cards close to its vest.
Canada is a trading nation and ShipGooder (www.shipgooder.com) believes in keeping goods moving.
“While we’re broadly supportive of streamlining custom processing and importation requirements, when it comes to waiving duties and taxes, the impact that would have on Canadians and on Canadian businesses needs to be carefully considered, not to mention economic and administrative considerations for both the federal and provincial governments.”