Cross-border shopping costs Canada 'over' $20B each year: report
They say 90 per cent of Canada’s population lives within 160 km of the U.S. border, so what’s that mean?
Certainly, cross-border shopping is the timeless affair generations of Canadians enjoy, though perhaps it costs our country much more than a couple runs to the outlets and a stop at Target.
According to new figures from the Bank of Montreal, cross-border shopping costs Canada more than $20 billion each year.
Yes, that’s billion with a “B,” and that’s the estimate of Doug Porter, BMO’s deputy chief economist.
By BMO’s count, the price gap between Canadian and U.S. goods has actually narrowed year-over-year, down to 14 per cent from 20 per cent last spring, but perhaps there’s reason to believe more Canadians than ever could soon be heading to shop in the States.
Already, there are more than 50 million visits to the U.S. each year by Canadians, but come June 1 new tax-exemption rules suggest that number could swell.
Next month, cross-border shoppers staying in the U.S. longer than 24 hours will be able to bring back $200 (up from $50) in goods tax-free, while the limit on visits longer than 48 hours rises to $800 (up from $400 to $750, depending on the length of the stay).
Porter notes that the above $20 billion figure is likely on the low side, in that it’s based on the amount Canadians actually declare at the border. What most shoppers declare, of course, is a fraction of what they’ve truly purchased.
Twenty billion sure sounds like a lot, but what’s a Canadian to do?
As we’ve covered in this space, national pride, in a strained economy, goes only as far as our wallets can bear. If Canada is to keep us shopping here, narrowing the cross-border price gap on goods from 20 per cent to 14 per cent is fine, but when the loonie is running years now near par with the greenback, 14 per cent is still too much.
By Jason Buckland, MSN Money