Personnally, I don't understand why there is any duty to pay at a border for a product a consumer buys. From anywhere in the world. So we don't really have free trade if we can't cross a border and buy what we want and not pay duty on it.
I had a small business a few years ago and the red tape to get products from the US was a holy hassle and a half. That is, expensive, with duties to pay.
Buyer beware when shopping south of the border
By Don Cayo, Vancouver SunDecember 19, 2009
The good news for cross-border shoppers is that prices -- on average, although not necessarily for every single thing you buy -- are quite a bit lower in the U.S. than in Canada.
But a UBC prof who tracks not only international currency fluctuations but also how much each currency can buy at home says there's bad news as well for Canadian cross-border shoppers: A lower sticker price won't always save you money.
You can assume some additional costs when you shop in the U.S., whether in person or online, says Werner Antweiler of the Sauder School of Business. And there may be surprises.
"So it's buyer beware."
The value of Canada's dollar compared to the U.S. greenback is just one factor if you're thinking about heading south to shop. Purchasing power parity (PPP) -- a comparison of what two countries' currencies can actually buy -- is as important as the official exchange rate.
And Antweiler's data shows that, while the exchange rate has been volatile in recent years, PPP has been remarkably stable. It's currently about 85 cents -- just one or two cents more than a few years ago when our dollar was very weak.
Thus when the Canadian dollar dipped to not much more than 60 cents in the early part of this decade, it was sorely under-valued. That meant U.S. prices were high in comparison to ours.
Now the tables have turned. For more than two years our buck has hovered not far short of parity -- on Friday it was almost 94 cents US -- yet price comparisons say it should be just 85 cents. This means it can buy more than the "real" value of goods on U.S. store shelves.
A couple of years ago, this effect was exaggerated on many products with nationwide prices -- things like cars or electronics -- that are set well in advance and heavily advertised. The prices at that time were set when our dollar was low. So when it suddenly caught up to, and even briefly surpassed, the American dollar, these prices were way out of line.
The difference isn't so great today. As the value of the Canadian and U.S. dollars moved much closer together, so did the manufacturer's suggested retail prices on most products.
On the cost side, however, you either must travel to the U.S. or pay shipping charges to buy online. Depending on what you buy and how much, those costs can eat up any savings.
And then there are duties, which can be surprisingly steep, even in this era of free trade.
Canada Border Services Agency notes there is no exemption for same-day shopping trips. And you can bring back only $50 worth of exempt goods after 24 hours, $400 after 48, and $750 after seven days.
When they say 24 or 48 hours, by the way, they mean it. A couple of years ago I spent two days in the New England states. I picked up a bottle of very good, very well-priced scotch. But it turns out I'd spent only 45 hours abroad, and thus it cost more than $40 extra in duty. Suddenly, the bottle wasn't such a bargain.
Antweiler has a couple of similar cautionary tales. When he bought a sweater online, for example, he was unexpectedly dinged with 18-per-cent duty because it turned out to have been manufactured offshore, even though it was sold by a U.S. retailer.
And duty was also an issue when he and his wife had a pricey stroller shipped home from Europe. Despite their exemption for having been away on an extended holiday, they had to pay the duty to take delivery. They are eligible for a refund, to be sure, but several weeks later they're still waiting.
"So there are some cheaper prices," Antweiler says. "But often you have to put a very low value on your time to make it worthwhile."
firstname.lastname@example.org Visit Don Cayo's blogs, one on taxation issues and one on globalization, at www.vancouversun.com/blogs © Copyright (c) The Vancouver Sun