OTTAWA – With its maiden budget just days away, the new Liberal government is facing pressure to expand how much Canadians can spend on products shipped or mailed from abroad without paying duty.
Last week, a U.S. senator urged at least one Trudeau cabinet minister in Washington to bump up Canada’s duty-exemption limit from its current level of $20, a business source told on Wednesday.
The Liberals’ election victory last fall – and next Tuesday’s release of its first budget – have led to a renewed push on the issue by American officials and industry.
U.S. Sen. Jeanne Shaheen raised the subject directly with Economic Development Minister Navdeep Bains while he was in Washington as part of the delegation that accompanied Prime Minister Justin Trudeau during his official visit, said the source who was not authorized to discuss the matter publicly.
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The source added that the subject was brought up again “in a big way” Tuesday in the American capital during a Canada-U.S. interparliamentary meeting.
In addition to the lobbying efforts in Washington, eBay Canada released new numbers on the issue Wednesday to . The figures suggest that increasing the duty-free exemption limit would benefit Canada’s small- and medium-sized businesses, consumers, as well as Ottawa’s bottom line.
For example, on goods valued between $20 and $80, the federal government spends roughly $160 million to collect only about $40 million in revenue, said eBay Canada managing director Andrea Stairs.
The company, which hired law firm Sidley Austin to run the economic models, is hoping Ottawa will raise the limit – also referred to as the de minimis threshold – next week.
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“Certainly, I would love to see it in budget 2016,” Stairs said in an interview Wednesday.
“I think that this government is looking to lean into parts of the economy that are working well and trade by small and medium businesses is certainly a bright spot.”
Stairs said eBay has been working internationally on de minimis issues and helped encourage the U.S. government to raise its threshold. Last month, U.S. President Barack Obama signed a bill that quadrupled the American duty-free exemption limit to US$800 – now more than 40 times the Canadian level.
For Canada, she said the numbers show that lifting the limit would help consumers and businesses save cash on duties, taxes and brokerage fees. The figures, to be released in a full report later this year, also examine the impacts of hiking the threshold to $80, $100 and $200.
“It’s one of a few changes that the government could make that is actually a win-win-win,” Stairs said.
In the lead-up to the budget, the Liberal government is also hearing opposition to any such changes.
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Karl Littler, a vice-president for the Retail Council of Canada, said increasing the limit would put Canadian businesses at a tax disadvantage between five and 15 per cent in favour of foreign competitors, such as American companies.
“That makes it exceedingly difficult for Canadian entities to compete,” said Littler, who noted that retail employs more Canadians than any industry.
“Right now it’s a lobby driven by some fairly large entities that would like to sell more goods from outside into Canada or would like to get paid to be the freight carriers.”
Littler considers the de minimis issue a top concern for the Retail Council and it featured prominently in the group’s pre-budget submission to the government.
He said he hasn’t heard anything that suggests changes to the limit will be included in the budget. Littler added that even musings about an adjustment by the government in the budget would generate a strong reaction from retailers across the country.