The Canadian government has increased the tax exemption at customs on goods purchased in America by Canadian shoppers, and that could be good for retailers on this side of the border.
Currently, Canadians that are outside the country for 24 hours can return home and claim up to $50 worth of goods tax free.
As of June 1, that goes up to $200.
For visitors staying more than 48 hours, the exemption increases from $400 to $800, bringing it in line with the current level in the United States.
Americans generally seemed pleased with the higher exemption, but Canadian businesses are less pleased.
“New York’s border communities depend on a robust trade relationship with our neighbors to the north,” said Rep. Bill Owens, whose congressional district includes the Canadian border from the Vermont line to the Thousand Islands.
“The Canadian government’s decision to raise the personal exemption level will increase revenues for local small businesses and help them create jobs. This proposal also fits within the goals of the recently announced U.S.-Canada Beyond the Border Agreement, which will play a significant role in helping move goods and travelers more efficiently across the border.”
But some Canadian retailers feel they already face a disadvantage with nearby American businesses because of import duties they pay, according to the Ottawa Citizen.
In an article on March 30, the newspaper in the Canadian capital quoted Diane Brisebois, the president and CEO of the Retail Council, as saying, “We always said that if the government was considering any change to the exemption limits at the border, it had to be done in conjunction with the elimination of import duties that retailers must pay in Canada.” Her organization represents more than 43,000 of Canada's small, medium and large retailers, The Citizen said.
Owens authored legislation in 2010 to increase the tax and customs exemption on goods entering the United States from its current level of $200 to $1,000. Owens authored a letter with New York Senator Kirsten Gillibrand urging the former Canadian Finance Minister James Flaherty and Minister of Public Safety Vic Toews to enact reciprocal measures by raising its personal exemption value. Owens said he has since met with Canadian officials regularly on this issue.