Why do you have to pay more for goods purchased in Canada when those same products cost less in the United States and this, even though currencies in both countries are on parity? In fact, the Senate finance committee has recently deposited a report entitled “The Canada-USA Price Gap” investigating the discrepancies in price tags between the two countries. Their results are pretty interesting and the days where the situation improves may be closer than one may think.
In a previous article entitled “Tip #11 for Finding Cheap Airfare“, we listed some of the reasons that explain the difference in international airfare rates for Canadian and American airports. One of the reasons cited for the average difference of roughly $425 for a round-flight was the existence of a variety of taxes, fees and extra charges that are being billed by the Canadian government.
Fool Me Once, Shame on You; Fool me Twice, Shame on Me
It would appear that we are facing a similar situation in this case considering that most of the witnesses interviewed by the senatorial committee stated that one of the main reasons why Canadians pay an average of 14% more for the same goods is the difference in taxes and duties charged by each country.
While the size of the two markets, transportation costs and security norms are all factors to be considered, these cannot justify such a price gap, according to the report.
The taxes, which are meant to enrich the State, may actually end up hurting our economy as an increasing number of Canadian citizens are opting for cross-border shopping. James Flaherty (Canada’s Finance Minister) has been paying attention to this rising trend and was quoted saying: “in principle, we would like to eliminate these fees in the near future”. In other words, there is hope!