Northerners need lower online taxes.

Author:Cirtwill, Charles
Position::Think Tank

Do you shop online? Are you a Canadian? If you answered yes to both of these questions, then you are likely being shafted. Well, shafted might be too strong a word, but not by much.

In Canada, you can buy online and import, tax- and duty-free, any item costing less than $20. That's right, $20. I know, we are all rushing to right now (P.S. That's $20 Canadian, $15 U.S.).

The $20 is what is known as the "de minimis threshold." This is the price below which no duty or tax is charged and the customs clearance procedures are minimal. According to a recent C.D. Howe report, Canada's threshold is "among the lowest in the world, and the lowest among any industrialized country. It was last updated decades ago and has not been adjusted, even for inflation, since."

Let that sink in. Over the past 25 years, we have seen significant global trade liberalization. We have seen computers become an everyday accessory, the advent of 3-D printing, and an exponential expansion of online shopping. Yet, through all of that, Canada has not even adjusted our $20 minimum to reflect inflation. Your $20 today is likely buying you what $10 would have bought decades ago.

For comparative purposes, Barack Obama just increased the U.S. threshold to $800. Australia's threshold is $756, New Zealand's is $272 (all figures in home currency). Even countries like Chile and Vietnam have higher thresholds than Canada.

This situation is untenable. In areas with large rural and remote populations, or urban centres far removed from larger markets--places like Northern Ontario, for example--it is inexcusable. This out-of-date rule means everything that we buy in the North is needlessly more expensive.

Taxes and duties are intended to raise the price of imported items both to generate government revenues and to protect domestic producers. By design, anything or any part of a thing built or bought outside of the country will have higher prices. The price will also be increased by administrative costs of any tax or duty. The added costs of border delays, for instance, go on top of the already higher transportation costs to get things into Northern Ontario.

Domestically produced items, even those with no foreign content whatsoever, will also cost more. With no import competition, supply will likely be outstripped by demand. People will be prepared to pay more and...

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