Brandon Sun - PRINT EDITION
“A culmination of factors is likely to unleash a wave of Canadians cross-border shopping this summer in numbers not seen in two decades.”
— Bank of Montreal dep. chief economist Doug Porter
As the summer vacation season approaches, we wonder how many extra loonies are going to end up in the hands of American retailers because of the soon-to-be relaxed cross-border shopping rules.
In a move by the Harper government in its March budget that still has us shaking our collective heads — and still being ridiculed by many businesses near the international border — the duty-free threshold on stays longer than 24 hours is set to $200 from $50 next month.
The limit on stays longer than 48 hours rises to $800 from the current two-tiered levels of $400 and $750, depending on the length of stay.
Anyone can see how this could be very damaging to the future of border towns.
And communities a bit further north of the border — including Brandon — are also left to wonder what the government was thinking when it gave cross-border shoppers such a huge break, as the issue is already a huge concern.
Well, it’s now predicted to cost the Canadian economy much more than believed and the new rules raising duty-free limits will only make matters worse, says a report by the Bank of Montreal.
As reported this week by The Canadian Press, the assessment of cost comes from the bank’s deputy chief economist, Doug Porter, in his latest price-gap comparison between consumer goods in Canada and the United States.
Porter said this week that although the price gap has narrowed to 14 per cent on average from the 20 per cent he found in last spring’s survey, the cross-border shopping phenomenon appears to be intensifying.
He believes as much as 10 per cent of the portion of the value of Canadian retail sales that can be transported — items such as clothes, tires, appliances, sporting goods and electronics — is being lost to U.S. stores.
That is more than double official estimates, but Porter said many Canadians under-report or don’t report what they bring back.
“Even at a conservative estimate of five per cent, we are talking over $20 billion a year,” he said.
“If correct, that represents a real drain on domestic retail sales, employment and government revenues — a drain that looks (likely) to deepen.”
Porter said he believes the problem will get worse starting next month when new, higher duty-free thresholds for bringing back goods across the border go into effect.
Following the federal announcement, Brandon Mayor Shari Decter Hirst said the major shift in federal government policy on shopping limits came as a complete surprise.
“Sometimes it’s recreation (but sometimes) it’s grocery tourism,” Decter Hirst said on CKLQ’s Feedback program at the time.
And the response from Brandon-Souris MP — whose riding includes many towns directly affected by this move — was less than encouraging.
“It’s really to blend what the Americans are doing and our challenge is to create better opportunities for our American shopping friends to buy more here,” Conservative MP Merv Tweed told the Sun at the time.
With all the hurdles Canadian retailers already face, we again call on the federal government to find ways to help those merchants before it’s too late.
If stores start closing, communities will start dying.
It is a sad scenario all due to a bad government policy which nobody can explain or defend.
Republished from the Brandon Sun print edition May 19, 2012
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“A culmination of factors is likely to unleash a wave of Canadians cross-border shopping this summer in numbers not seen in two decades.”
— Bank of Montreal dep. chief economist Doug Porter
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“A culmination of factors is likely to unleash a wave of Canadians cross-border shopping this summer in numbers not seen in two decades.”
— Bank of Montreal dep. chief economist Doug Porter
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