Some local business owners and associations are not pleased with last week’s federal budget announcement which increased the amount of goods Canadians can purchase in the U.S.
The duty-free limit for a 24-hour stay has increased from $50 to $200, while a 48-hour stay has gone from $400 to $800.
The new rates will begin June 1, 2012.
“It’s perplexing that the federal government is making it easier for Canadian earned dollars to leak out of the Canadian economy,” said Gerri Charles, owner of Champagne & Lace in downtown Abbotsford.
“It seems the feds are working at cross purposes to Canadian business.”
She has talked with some Canadians who have declared their purchases at the border for same-day trips and customs personnel have waved them through without charging GST or duty.
“It just doesn’t seem equitable. Can you imagine how quickly the CRA (Canada Revenue Agency) would notice if Canadian businesses didn’t collect GST?”
Charles said the change doesn’t seem to consider the big picture
“It’s about the jobs generated by business in general, the support to charities and school fundraisers, tax dollars which fund vital infrastructure.”
She has already placed a call with local MP Ed Fast to ask why the change was made.
“It just feels wrong.”
Charles said she already knows that cross-border shopping has impacted her company.
“We know because our sewing room does alterations on garments purchased elsewhere and those customers tell us where they bought.”
Allan Asaph, executive director of the Abbotsford Chamber of Commerce, said like all government decisions, there are those who see it as a positive and those who don’t.
“Certainly while the cross-border shoppers might be celebrating – because they feel they have gained a significant advantage here – it has come at a cost to local business.”
He said the federal government indicated one of the reasons for the change was to create more equity between the exemptions on both sides of the border.
“That’s fine if everybody’s working on the same equal playing field, but unfortunately, Canadian business is not,” said Asaph.
He used Canadian marketing boards as an example. The boards control the price of chicken, eggs, milk and cheese.
“Those controls are in place because it’s part of our overall economy and our approach to business. The U.S. doesn’t have those.”
He also said Canadian businesses pay higher import duties on the same goods the U.S. imports. In the case of China, Canada pays 18 per cent more than the U.S.
Asaph said it’s just “the way our duties are set up.”
The wholesale cost of goods in Canada is also higher than in the States, he added.
With the Canadian dollar remaining close to par or even above the U.S. dollar, Asaph said shoppers are drawn to the U.S. However, he said enforcement of the rules is also an issue, as many people travel across the border for less than 24 hours and some return with hundreds of dollars in merchandise, without having to pay duty.
Other than the increase in cross-border shopping limits, Asaph said the new budget didn’t contain any huge changes – rather a lot of “interesting refinements.”
“The recognition of the fact that there is a labour and skills shortage that we will be facing in the future, they’ve done some good things in that regard.”
He said adding $50 million to the youth employment strategy, more money to improve opportunities for Canadians with disabilities, and also more money for First Nations employment opportunities is a positive move.
As for the decision to eliminate the penny, Asaph fully supports it.
“Should have done it long ago. It’s a simple business decision. When it costs you 1.6 cents to make it, get rid of it.”
Paul MacLeod, president of the Abbotsford Downtown Business Association, said cross-border shopping has alway been a concern for local businesses and the new exemptions just make an ongoing problem worse.
“Of course it’s affected us.”
He understands the draw to the U.S., but feels consumers have to look at the bigger picture.
“All we are doing is hurting our own country,” said MacLeod.
He believes consumers may save some money in the short term, but “as soon as a dollar leaves Canada, it’s gone forever.”
He said it’s important to support the Canadian economy, especially now.
While no official response has been prepared by the ADBA, MacLeod said the board is meeting in two weeks and cross-border shopping will be one of the main issues discussed.
‘We are planning to start an advertising campaign designed to keep shoppers here.”