Credits: QMI AGENCY
No regular Canadian would be surprised to learn that red tape and taxes are making us pay more for U.S. products.
That’s part of what the new Senate finance committee report titled “The Canada-USA Price Gap” tells us.
The opening lines are bang on: “Canadian consumers are feeling ripped off. When the Canadian dollar is at parity with the U.S. dollar, Canadian consumers notice that prices here are typically higher than in the United States.”
We see it when we shop online. When we cross the border. Heck, we see it on the actual prices listed on books and magazines.
Which is why some people grumbled in October when the 25th anniversary of free trade was being fondly remembered by Brian Mulroney and other supporters.
Same for the current trade deal with the EU that Prime Minister Harper is negotiating in an apparently very hands-on fashion. Some are claiming massive benefits. Others tout losses (the left-wing Canadian Centre for Policy Alternatives said Manitoba would lose 3,800 jobs).
But in the end, no matter which industries go up or down as a result of these agreements, the regular consumer is still left asking, “Yeah, but what about my wallet?”
The Senate report makes some recommendations that may level the field.
Taking another look at tariffs is a big one. While only 10% of products entering the country are currently subject to tariffs, this percentage can actually make up a large amount of what’s in certain stores. For example, cotton T-shirts, shorts, linens and more face an 18% tariff.
A Reebok-CCM rep reported that a 15% tariff on a $100 product actually raises the consumer price by $27.30, when all factors are included.
Harmonizing regulations is another. One reason car prices are steeper over here is Transport Canada has regulations over and above the U.S. regulations.
Ambarish Chandra, Rotman School of Management professor at University of Toronto, is quoted in the report: “They like to be able to price products differently in different markets. All the theories suggest that is exactly what is profit maximizing for them.”
So at the very least, government shouldn’t be making “country pricing,” as it’s called, easier to justify.
Granted, some high price reasons are out of government’s control. Like fluctuating currency and fuel prices. Or how, having a smaller population to sell to, our retailers can’t get the same bulk buyer discounts. The worst one: Because that’s the price Canadians are willing to pay.
But for those things it does control? Finance Minister Jim Flaherty better get his team to work on them. After all, he’s the one who requested the price study in the first place.
If government has identified a way to make our life easier by getting out of it, it’s obligated to do so.
The main caveat to all this is protectionism. It should be no surprise that our heavily subsidized and regulated country is also heavily protected. There’s the will to rethinking tariffs and regulations — but with a view to protecting domestic manufacturing. What’s it going to be? It can’t be both. In the past couple years the Conservatives have done a thorough job of stripping away the red tape on the citizenship and immigration file. But when it comes to the fiscal and the regulatory, they’ve clearly got a way to go.
Until then, you’ll still be paying 15% more for hockey pants for your kids.