Sault Ste. Marie, Windsor-Essex Regional, Sarnia Lambton, Greater Niagara and Thunder Bay Chambers of Commerce Partner to Urge Government to Keep the De Minimis Threshold Low
Sault Ste. Marie, ON / Windsor, ON – The Sault Ste. Marie, Windsor-Essex Regional, Sarnia Lambton, Greater Niagara and Thunder Bay Chambers of Commerce are calling for the Federal Government to keep the de minimis threshold (DMT) low to ensure retailers in Canada and U.S. have a level playing field.
On December 14th, 2017, PricewaterhouseCoopers LLP released the Retail Council of Canada-commissioned study: Rise in Canada’s de minimis threshold: Economic Impact Assessment, concluding that raising the DMT would drastically impact retailers in Canada, their employees and the overall economy.
The DMT is the maximum value of goods that can be shipped into Canada by post or courier without having to pay sales tax or duties. At the outset of current NAFTA renegotiations, the U.S. stated its position that Canada’s current DMT of $20 should be raised to $800 U.S., allowing big American online vendors to offer Canadian consumers “duty-free and tax-free online shopping” for any product shipped from the U.S. with a value up to $800 U.S.
According to the study, raising the DMT to $800 U.S. would result in a loss of up to 300,000 jobs by 2020 and a loss of labour income of up to $9.2 billion.
According to the economic impact assessment, U.S. online retailers are trying to gain an unfair competitive advantage over their Canadian counterparts – in short, they want the Canadian government to give them a special exemption to ship goods directly to Canadian customers without having to charge the sales taxes and duties that Canadian retailers face.
In May 2017, the Chambers voiced concern by passing a resolution to Protect Canadian Business by Keeping the De Minimis Threshold Low at the Ontario Chamber of Commerce Annual General Meeting in Sarnia.
The five Chambers are urging the Federal Government to maintain the current Canadian DMT level of $20 to prevent granting an unfair advantage to foreign online retail sellers operating in the Canadian marketplace.
“With 80% of Canada’s population within 100 kms of the US border Canadian retailers already face overwhelming challenges with cross boarder shopping. Adding to Ontario’s challenges is the rapidly increasing cost of doing business in the province; costs such as labour, labour regulation, energy, cap and trade and red tape. Raising the De Minimis Threshold is essentially allowing full and open access to online purchases that will significantly impact border communities such as Sault Ste. Marie and their downtowns and shopping districts,” indicates Rory Ring, CEO of the Sault Ste. Marie Chamber of Commerce.
He adds: “Raising the DMT would have a negative economic impact in Canada, leading to major job losses in Canada’s largest private employment sector, billions in foregone government revenues, and losses of tens of billions both in retail sales and Canadian GDP.”
To put the impact of raising the DMT to $800 into perspective, the Sault Ste. Marie Chamber of Commerce points out that through its direct, indirect and induced impacts, the retail trade sector generated and facilitated almost 3.4 million Canadian jobs in 2016. The loss of 300,000 jobs would represent a loss of almost one in every eleven retail and related jobs across the country. Here in Algoma, retail trade is the number two employment sector, with almost 6,400 jobs in 2016.