Canadian Retailer - Store 2016 - 10

RETAIL: AT ISSUE

DE MINIMIS HIKE WOULD STACK THE
DECK AGAINST RETAILERS IN CANADA
BY KARL LITTLER, Vice-President, Public Affairs, Retail Council of Canada

THERE is a big issue brewing for Canada's retailers on the
tax treatment of shipments from outside our borders. At
risk is the continuation of a level playing field between
retailers operating here in Canada, whether in stores or
online, and those who sell online from outside Canada and
ship goods cross-border by post or courier.
U.S.-based online sellers (Amazon and eBay), couriers
(UPS) and mailing houses (Pitney Bowes) are pushing
for an increase in the de minimis level, below which shipments into Canada are exempt from sales taxes and duties. An increase to the de minimis level could be devastating to Canadian retail operations, to our investment plans
and to our industry's two million+ employees.
Under Canada's Postal Imports Remission Order and
Courier Imports Remission Order, the de minimis level is
currently set at $20. The rationale is that the processing
cost does not justify collecting taxes or duties on small
shipments which, at the $20 level, would typically yield less
than $3 in taxes.
The U.S. online merchant and courier lobby is pressing our Government to raise that threshold to $200, which
would mean that any parcel costing under $200 could enter Canada free of federal and provincial sales taxes. Meanwhile, merchants operating here would be required to collect sales taxes on the same or competing products. U.S. and
offshore online merchants would thereby have an average
tax advantage of 12.3% (the average combined rate of federal
and provincial sales taxes, weighted by population), ranging

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CANADIAN RETAILER | STORE 2016

from 5% in Alberta to 15% in Atlantic Canada. In addition,
foreign online sellers would be exempt from the customs
duties that we are required to pay on imported goods.
De minimis at anything like the $200 level would lead to
massive increases in cross-border purchases, with the obvious negative consequences for retailers in Canada and
their employees. This would be particularly true in apparel,
footwear, books, toys, consumer electronics and housewares, most of which are priced below $200 and easily
shipped. Of course, these are the very areas in which many
small and medium-sized Canadian retailers specialize.
The retail community is right to ask why Canadian policymakers would consider giving a tax advantage to foreign online vendors, who employ few if any people here, at the cost
of those who do create jobs and economic activity. Retail
Council of Canada is leading the fight against what could
be a devastating move for our industry. We are conducting
a series of meetings with senior decision-makers both federally and provincially and will be actively engaged on this
file leading up to the next federal budget. But success hinges on whether our whole retail community gets involved
and conveys its views to local Members of Parliament.
Once all the facts are presented, we think the decision will
be a straightforward one and hope that you will add your
voice of support to this fight for fairness. You can quickly
send an electronic letter to your MP by going to the RCC
web page: www.retailcouncil.org/levelplayingfield.

http://www.retailcouncil.org/levelplayingfield

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