Duties, taxes being routinely waived at border
OTTAWA—Canada’s border guards routinely waive taxes and duties on goods bought by travellers in the U.S., says a briefing note for the prime minister.
The acknowledgment supports the suspicions of retailers that the Canada Border Services Agency is too lenient with cross-border shoppers—costing the economy millions of dollars in domestic sales.
The note said the border agency waives duties and taxes when the value is below a certain threshold—an amount blacked out in the released document.
“This threshold was established in consideration of the cost to CBSA of processing a traveller through the collection process,” said the note, obtained by The Canadian Press under the Access to Information Act.
“Collections . . . may also be waived in cases where the volume in collections would result in unacceptable border processing delays, when interdiction activities are underway, or for reasons determined by local management,” it added.
Canadians made 55 million trips to the U.S. in 2012—33 million of those completed on the same day—as a near-par dollar and newly-raised limits on duty-free goods encouraged stateside bargain-hunting.
Border guards collect about $150 million in taxes and duties from travellers each year.
But the note also said the agency doesn’t track the amounts it waives, so there’s no way to assess how much of a break cross-border shoppers are getting, or how much revenue the government is losing.
“Canadian retailers have raised concerns that CBSA has been too lenient . . . therefore providing an additional incentive to purchase goods in the U.S.,” said the note.
A spokesman for the Retail Council of Canada confirms the group has raised the issue with the Finance Department.
Vice-president Karl Littler said the council has no objection to the agency waiving amounts on goods valued below a $20 threshold long established by the federal government, but is concerned higher-value items are being waived, as well.
“That definitely happens because I’ve experienced it first-hand,” Littler said in an interview from Toronto.
“People wave you through—so there’s no question that it happens and we have raised it as a concern.”
The Harper government in 2012 raised duty-free limits for travellers coming back from a foreign country—to $200 worth of goods for trips of between one and two days and $800 for longer trips.
Same-day trips enjoy no exemptions and the briefing note said those travellers—three out of every five U.S.-bound Canadians—get closer scrutiny at the border.
“CBSA indicates that they are stricter in enforcing the limit on same-day trips, as the potential for abuse is higher,” it noted.
An agency spokesman said border guards have to juggle many responsibilities, and local managers have the authority to adjust priorities.