Everything from books to hockey pants and cars could be cheaper if Ottawa eliminated many import tariffs or brought them into line with lower U.S. rates, a Senate committee says. Higher tariffs are one of the key causes of a persistent Canada-U.S. price gap that has infuriated many consumers and led federal Finance Minister Jim Flaherty to call for the senate study. In a landmark report issued Wednesday, the senate committee on national finance calls on Ottawa to review its tariff policies, noting that in some cases they protect industries that no longer exist. (via Here’s why things cost more here than in the U.S. | Toronto Star)
“Hockey pants that are brought into Canada, manufactured in China, have an 18 per cent tariff. In the U.S., it’s 2.9 per cent. Why the difference? Maybe we were trying to protect a Canadian manufacturer years ago. But they’re all gone now. That one shocked us,” said Senator Joseph Day, who chaired the senate committee.
The Retail Council of Canada, which has borne the brunt of most consumers’ ire over the Canada-U.S. price gap, applauded the report’s findings, noting it had vindicated many of its claims.
Canadian consumers feel “ripped off,” the committee said in its report, called The Canada U.S. Price Gap. The report blamed everything from “country pricing” — the practice of some large multinational suppliers of charging Canadian retailers more than U.S. merchants — to higher fuel prices in Canada.
he study, which found no single factor explains all price discrepancies, made three other recommendations. They include:
- Integrating Canada-U.S. safety standards to remove requirements for extra tests in Canada.
- Raising the minimum threshold for goods that can be shipped duty free through the postal service. This would benefit consumers who shop online on U.S. sites for import into Canada, for example. Many consumers complain that duty, taxes and brokerage fees can nearly double the cost of ordering small items online. The current minimum is $20. Many countries are considering raising that to $100, the committee noted.
- Eliminating the 10 per cent markup that exclusive Canadian distributors can add to U.S. books imported into Canada.
Goods in Canada were 24 per cent more expensive, on average, in 2007 and still 14 per cent higher last spring, said Doug Porter, deputy chief economist at BMO Capital Markets, who has been informally tracking a basket of goods over the years.
Tariffs generated $3.6 billion in revenue for the federal government in 2010-2011, or about 1.5 per cent of total budget revenues, the committee noted.