The noise Canadians are hearing above the horizon right now is the day-after response to the release of the Trudeau government’s first federal budget: equal parts sighs of relief and groans of despair.
Mercifully for the country’s retail crowd, it is mostly the former.
That’s because the feds elected to honour the industry’s fevered insistence that the government keep its hands off any fiddling to the tax rules governing the import of products to be sold in Canada. Going forward, the country will continue to treat imported shipments in the same way as goods sold here.
Specifically, the budget maintains the current de minimis rules, which exempts goods shipped into Canada by post and courier from all sales taxes and duties. If that threshold was hiked, tax revenues for federal and provincial governments would be reduced, and it would mean that goods sold by Canadian merchants, whether in-store or online, would cost an average of 12.3% more after tax than those same goods shipped into Canada by courier or mail. No question: the revised scene would be a huge disincentive to investment in Canadian based e-commerce.
Better still, this maintenance of tax equity has been announced in spite of a vigorous pre-budget lobby from foreign sellers and the US air freight industry.
In an official response, the Retail Council of Canada (RCC) issued a statement gratefully acknowledging the federal government’s decision to continue to treat imported shipments in the same way as goods sold in Canada.
“Why any Canadian policymaker would want to confer a big tax advantage on foreign sellers at the expense of businesses that invest here and employ more than 2.2 million Canadians is a bit of a mystery to me,” RCC president and CEO Diane Brisebois told the media.