In an effort to stop Canadians from doing so much of their shopping across the U.S. border, the government Thursday scrapped $50 million in annual import duties on consumer goods and stiffened fines for smuggling.
The government of Prime Minister Brian Mulroney also made it more expensive to order goods from U.S. catalogs, slapping a postal fee on mail-order packages sent into the country.Every weekend, border crossings are jammed with Canadians returning from the United States, their cars packed with everything from groceries to major appliances. Most Canadians live within 100 miles of the U.S. border.
Canadian retailers have complained bitterly that high taxes and import duties are driving shoppers south. The package of government initiatives aims to curb about $3 billion in sales lost to U.S. retailers.
Critics of the government move are skeptical, however, believing that Canadian businesses might not pass the savings on to consumers.
They also say it does not go far enough because food and gasoline, which are cheaper across the border, are not included among items no longer subject to tariffs.
Effective midnight Wednesday, import duties were lifted from 25 consumer goods ranging from video recorders to soccer balls.
The crackdown on smuggling includes higher fines. Revenue Minister Otto Jelinek said maximum fines for smuggling tobacco into the country will increase to $170,000 from the current $21,000.
The government says consumers will see $50 million in savings - and possibly more - passed on to them when goods are marked down for retail sale without the import duties.
The government, however, plans to more than make up for the revenue loss with new fees expected to raise up to $233 million.
One measure is a $4.25 processing fee to be imposed by the Canadian post office beginning in July for each mail-order parcel entering the country.
The government will also drop the duty-free limit on mail-order packages to $17 from $34.