Blue Water Bridge at the Sarnia border
Credits: QMI AGENCY
SARNIA, ON - Changes to duty-free shopping exemptions may help consumers, but some retailers are worried they only add to a cross-border shopping culture harmful to local business.
The federal government rolled out new duty-free thresholds Friday, first announced in March's budget.
Canadian shoppers can now bring back up to $200 of duty-free goods after a 24-hour stay in the U.S., and up to $800 after 48 hours. These numbers jumped from $50 and $400, respectively.
The federal government touts the change as "streamlining the processing of Canadian consumers returning to Canada."
Sarnia business owner Grev Martin agrees higher duty-free exemptions will make shopping in the U.S. easier, but says it's going to hurt Canadian retailers.
"If anybody had any reservations going over and buying a big-screen TV because it's going to be a hassle, they don't have to worry about that anymore," Martin said.
The government should be helping Canadian businesses stay competitive, rather than sending shoppers across the border, Martin said.
Every dollar spent in the U.S. represents a dollar not going into the Canadian economy and a taxable dollar that won't go to hospitals, schools and infrastructure, he added.
"It's a vicious circle, I don't know what our government is thinking."
A department of finance official said the decision was driven by requests from consumer groups. There continues to be no duty or tax exemptions for trips under 24 hours.
"As a result, the impact on cross-border shopping is expected to be minimal," the official said.
The Retail Council of Canadians (RCC) blasted Ottawa for the increased duty exemptions, with the group's president Diane Brisebois calling them "salt in the wounds of retailers in border communities."
A recent study by BMO deputy chief economist Doug Porter found cross-border shopping costs the Canadian economy up to $20 billion a year.
Porter's study found there are now 2.7 billion more annual Canadian visits to the U.S. than Americans coming here - a ratio formerly one-to-one.
This discrepancy is attributed to parity between the U.S. and Canadian dollar and the increased hassle crossing the border in a post-9/11 world.
Garry McDonald, president of the Sarnia Lambton Chamber of Commerce, said Canadian retailers are also hurt by tariffs on imported manufactured goods.
"It's important for people to understand that the price our retailers pay for goods is more expensive in Canada," McDonald said. "We need to get a more level playing field."
The decision to raise the duty-free threshold came with no consultation from the Canadian Chamber of Commerce, McDonald said.
A recent survey of local chamber members found that 45% felt they were affected by cross-border shopping, though just 20% felt Friday's changes would affect their business. Of this 20%, most were retailers, McDonald said.
Martin has owned St. Clair Audio Video since 1982. He said he's spoken to other businesses about educating the community on the importance of spending money locally.
"We independent retailers do everything we can," he said. "We can be competitive, just give us an opportunity."