If you are like many small businesses, you are making an effort to grow bigger while at the same time keeping a watchful eye on potential competition outside our borders, especially in this age of global e-commerce. That’s why it’s important you be given the benefit of a level playing field here in your own backyard!
As it turns out, the grass IS greener on the other side…and less expensive
Copenhagen Economics, a leading European research firm with a long track record in economic and policy analysis, recently released a study revealing a significant gap in duty and tax collection for goods purchased online and imported into Canada via Canada Post.
Though e-commerce imports into Canada are subject to the same customs duties and sales taxes as domestic purchases, the Copenhagen study found a significant difference in customs compliance depending on whether a shipment is imported via Canada Post or private couriers such as UPS and Fedex:
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Sales tax collected on shipments into Canada
Import duty collected on shipments into Canada
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This puts your business at a price disadvantage of at least 12% when competing with imports from the U.S., Europe and China.
A large share of Canada’s e-commerce market already involves cross-border shopping. Failure to ensure that the law is followed - with imports taxed in the same way as domestic sales - is a big concern. As e-commerce consumption in Canada continues to grow, this is a problem that threatens to get worse.
There should not be a tax incentive to import online goods from China or the United States relative to purchasing an item from a Canadian retailer.
As you are well aware, it’s already challenging enough to grow and remain competitive in Canada without allowing imports a tax advantage that will make it even more difficult for your small business to thrive.
Lend your voice
CFIB is monitoring this very closely. We have raised this issue numerous times with Finance officials and the CBSA, and have been calling on government to ensure Canada Post abides by the same rules as other carriers.
You can help by sharing your experiences and concerns regarding this issue with us. Your stories add much needed context to the debate, and helps amplify the call for change. Call or email us today!