The Retail Council of Canada is urging provincial finance ministers to ensure their federal counterparts don’t allow an increase to the de minimis level.
Currently the de minimis level applies to purchases under $20.
Duty and taxes are paid on purchases above that amount, which make up a large section of online sales.
READ MORE: Pressure mounting on Ottawa to let Canadians spend more without paying duty
U.S. retailers want the de minimis level increased ten fold to $200, which the Retail Council warns would be highly detrimental to the economy.
“If you had a huge online retail company based in the U.S. and they no longer had to pay duty, nor would they have to pay the 15 per cent tax in provinces like New Brunswick to ship their product in” explained Jim Cormier, the Retail Council’s Atlantic director.
“It wouldn’t be long before those huge companies would come in and easily dominate the space.
“That would be incredibly devastating for the Canadian retail sector.”
According to the Retail Council approximately $12 billion was spent in New Brunswick’s retail sector in 2015, with $2 of that coming between the $20 and $200 window.
That amounted to $200 million in HST revenue.
The council forecasts that increasing the de minimis level in such a way would likely shift 20 per cent of consumers away from buying local, taking $40 million out of the province’s pocket and placing it in US retailers pockets.
“We’re not asking for special treatment,” Cormier explained. “We’re simply asking that they maintain the status quo.”
Fredericton based Tilleul Clothing Store opened their doors less than six months ago.
As a small business owner Katie Boyce says competing with big box stores is difficult enough as it is.
“It’s a little terrifying for a small business,” said Boyce.
Boyce says increasing the de minimis level could drastically alter the favourable shift to local shopping she’s seen in recent months.
“I have people actually come in the store and say I used to shop in the states,” she said. “And they’ve actually been coming in the store because the dollar isn’t that great.”
“Any change to the minimum value of products which can be shipped into Canada free of taxes or duties would be a decision for the Government of Canada,” New Brunswick’s Finance Minister Cathy Rogers said in a statement.
“New Brunswick is interested in this matter given the potential impacts on the retail sector, consumers, the economy, and provincial revenues. Certainly more and more, Canadians are looking online to do their retail shopping and this is a trend that will, in all likelihood, continue. In the end, we appreciate the concerns raised by the Retail Council of Canada and will relay them to our federal counterparts.”
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