Cross-border shopping a $20B economic drain

[hugh]

Lawyers, for instance, mostly take a big hit in income to go to Parliament. What kind of MPs do we want?

Not lawyers

[travisc]

This one has me scratching my head. I don't see the connection between the public sector and retailers. If there is one, it's tenuous at best and far less of a factor than some of the other stuff mentioned, like higher mall rents, higher wages and higher duties charged.

[magnet]

The only connection I can see is duties and taxes are higher in Canada.
I believe Hugh is implying they don't need to be so high if all three levels of government were more economically efficient.
They could be more efficient if the number of government employees were less (and/or paid less and/or were given smaller pensions) and those in political positions were paid less and/or had smaller pensions.

[ScaryBob]

Two parts of the puzzle are higher taxes and higher costs due to government red tape. That's evident in things like brokerage fees that increase shipping costs dramatically for individuals and small businesses. Part of the problem is due to regulations for some imported products. In the pet product example, pet foods probably require more testing than many human foods in order to import them from the US. Many other products require extensive safety testing in Canada, even after they have already been tested in the country of origin. Add markup to those extra costs and it's clear why some products are more expensive.

Then add layer upon layer of sales taxes and employee taxes that drive up costs for retailers. That has far reaching effects on both prices and employee working conditions. Governments have added dozens of fees and taxes in order to hide the true cost of government and social programs. That has the double barrelled effect of eliminating full time employment in the retail industry, which lowers employee skill levels and income, while driving up costs and bloating the civil service which must collect the taxes and manage the financing of programs.

OTOH, it is clear that some retailers and distributors are gouging consumers, even after extra costs are included. It's no surprise that many retail prices are set at a level that match the cost of purchasing the product in the US + shipping + brokerage. When the government increases costs for consumers, companies take advantage of the extra margin it allows. Retailers aren't stupid, they know that increased border security and government red tape provides an opportunity for them to pocket some extra cash.

[magnet]

For some items you might also have to consider the costs for Canadian Bilingual packaging. Although I am seeing more and more Walmart type items with trilingual packaging (Eng/Fr/Spanish).

[ScaryBob]

The cost of Canadian bilingual packaging for many items is negligible since it's done at the manufacturing level. Some manufacturers seem to be able to support a dozen languages, for worldwide distribution, with little added cost. With user manual distribution on CD or the internet, the days of large, costly, printed, bilingual user manuals are gone. For imported specialty items, bilingual packaging requirements are just another example of unnecessary government red tape. Just why do Asian candies, imported for sale to Asian speaking immigrants, need French/English labelling anyway?

[PokerChip]

So you blame high prices on the private sector, which has suffered massive job losses and fiscal losses in the last few years, and not on the public sector which keeps getting bigger and more costly every year?

Yes, I do. Last time I checked, my rate of taxation has been virtually unchanged (except at the municipal level) for the past several years, which it should if your statement about the cost, size and weight of the government were true. What I have observed, on the other hand, is our CDN dollar moving above parity levels with the US dollar and the price of goods remaining sky high here.

The economy has been affected by the US and European downturns (to a much, much lesser degree). but again, simple economics say this should have had the effect of pushing consumer good prices down. This hasn't happened.

You want the lavish public sector pension and job security and you applaud a government that runs massive deficits every year but you don't want to pay for it through higher taxes and higher prices.

I work for a school jurisdiction so if you want to call that lavish, be my guest. I'm not complaining about my job and compensation. It has advantages (like job security), but it doesn't have nearly as many perks as private sector jobs do (bonuses, company vehicles, golf tournaments, etc.).

Our taxes are already high enough. We pay through our noses in Canada, and a huge part of if is due to our social safety net (which helps others a heck of a lot more than it helps me). I said I applaud raising the duty free limits. Why would you imply that I'm approving running massive deficits?

[audacity]

Is anyone surprised when Canadians make buying decisions which are aligned with their own economic self interest?

If Canadian dealers want to win the business of Canadian customers, they need to out-compete American businesses, or at least be competitive enough so that the additional inconvenience of cross border shopping isn't worth the minimal amount of potential savings.

In the tech industry we don't see massive differences in prices between Canada and the US. But for other products (Cars and "Big Green Egg" grills are two good examples) where the price difference can be dramatic.

[ScaryBob]

Cars are a classic example of Canadian consumer ripoffs. The Big 3 build them cheaper in Canada but pass the savings on to US consumers. The tech industry is a perfect example of competition in full effect. There are many companies sourcing and selling products at the retail level. Independent retailers with small stores and large mail order operations pass savings on to consumers. At the opposite end of the scale are brand name consumer electronics and automobile dealers that work with highly controlled supply channels that fix prices at high levels in Canada.

[jshel101]

Another example is Bombardier Recreational Products. As far as I know, they are manufactured in Canada, and you can still buy them cheaper in the US. An example of this was my brother-in-law bought a high end sea-doo in the states for quite a few thousand dollars less than what you can purchase them in Canada for, I can't remember the exact amount he saved, but I do know it was significant.

[MarcP]

Originally Posted by jshel101

Another example is Bombardier Recreational Products. As far as I know, they are manufactured in Canada, and you can still buy them cheaper in the US.

And I remember Bombardier a few years ago sending directives to US dealers to NOT sell to Canadians.

I don't care what it does to the economy, I'll go where the cheaper price is.

[Sirius Guy]

The USA has 50 million people with no health insurance -people go bankrupt if they get seriously ill. Even people with insurance get screwed over if they deem it a pre-existing condition.
The middle class is getting squeezed seeing their income shrink while the top 2% get more wealthy.
Crazy tax cuts resulting huge deficits due to unpaid wars while military spending has increased exponentially since 911. Bush went to war and gave everyone a tax cut and told Americans to go shopping.
Banker\s and wall street were bailed out while the average home owner was left on their own, most owing more than their homes are worth.
America is bankrupt and its a fire sale, so take advantage of the deals. We bought a home in Arizona last fall, paid $100k for a home that sold for $340k in 2007.
Their system is broken and we can reapt the rewards.

[BCScott]

I just bought an extended warranty from a dealer in Kansas on my Toyota Venza, which I purchased in the USA in 2010. There was an initial savings of $10,000 when we bought the car and I got an additional 64,000 miles and almost 4 years of "Platinum" Toyota factory warranty (6yr/100,000 miles) for $750. The same warranty would be $2,300 here. Sometimes I just can't afford to shop here.

[jshel101]

Originally Posted by MarcP

And I remember Bombardier a few years ago sending directives to US dealers to NOT sell to Canadians.

I found this out when I called about 10 dealers across the US for a quote on a new Sea-doo. All of them told me they couldn't sell to Canadians. But I think if you went down there with your cash, I don't think there would be many dealers that would refuse to sell you one.