February 07, 2013 at 12:00 PM EST
Price gap spurs call for import tax cut
Price gap spurs call for import tax cut Canadian senators who studied why consumers in this country pay more than Americans for many products are calling on the government to review the taxes on imported goods. Consumers may see that happen: Finance Minister Jim Flaherty echoed the senators' concern about tariffs before they even tabled the report. Members of the national finance committee spent more than a year hearing from 53 experts, including consumer groups, manufacturers and Bank of Canada Governor Mark Carney, as they studied why Canadian prices differ from American when the dollar is close to equal. The committee's final report says it "cannot offer an explanation as definitive as it would have liked." The committee says factors influencing price include transportation costs, the relative size of the Canadian market — and tariffs, or taxes on imports. The report recommends: A "comprehensive review of Canadian tariffs … with the objective of reducing the price discrepancies for certain products between Canada and the United States." Looking at increasing value of how much can be shipped in Canada tax- and duty-free. Continuing to integrate safety Canadian standards with those in the U.S. Having Heritage Minister James Moore study the costs and benefits of reducing a 10% markup that Canadian-exclusive distributors can add to U.S. list prices of American books. The report says there are 8,192 tariff categories in Canada and that each category has 18 tariff treatments. The tariffs generated $3.6 billion in tax revenue in 2010-2011, representing 1.5% of the total government revenue collected that fiscal year. That same year, about 60% of tariff revenue was collected on apparel and textile products, autos and auto parts, and footwear. Flaherty, speaking to reporters before the report was released, said the government "would like to eliminate tariffs going forward." The senators took on the study after Flaherty wrote them about the issue of price discrepancies. Senator Joseph Day, the committee's chair, welcomed Flaherty's comments at a press conference in Ottawa Wednesday afternoon with deputy chair Larry Smith and JoAnne Buth, one of the senators on the committee. Another issue the senators touched on is country pricing, a practice where some manufacturers charge Canadian retailers as much as 50% more than they charge American retailers. Retailers say they've been told it's because Canadians are used to paying more, the prices subsidize the cost of operations in Canada, and the prices are necessary to compensate distributors and wholesalers for the higher costs of operating in Canada. Asked whether Canadian consumers are condemned to pay higher prices, Day says they need to be informed of the reasons so they can make better decisions and possibly force change.
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