The 2013 Federal budget announced on Thursday eliminates import tariffs on baby clothes and various sports equipment, in an attempt to bring down prices that are visibly higher in Canada than in the U.S., giving up $76 million a year in tax revenue. The Government also proposes to withdraw General Preferential Tariff (GPT) eligibility from 72 higher-income and export competitive countries, including all G-20 countries.
Tariff Relief for Canadian Consumers
Economic Action Plan 2013 proposes $76 million of tariff relief on baby clothing and sports and athletic equipment to benefit Canadian families and retailers.
Some products consistently cost more in Canada compared to the exact same products sold in the United States. These price discrepancies persist despite the considerable appreciation of the Canadian dollar relative to the United States dollar over the past several years.
The Government shares Canadians’ concerns about the Canada-U.S. price gap and wants to see lower prices for consumers. At the Government’s request, the Standing Senate Committee on National Finance examined this issue in detail, identifying a number of possible factors including Canada’s tariffs.
In order to lower prices for Canadian families, Economic Action Plan 2013 proposes to eliminate all tariffs on baby clothing and sports and athletic equipment. The latter includes products such as ice skates, hockey equipment, skis and snowboards, golf clubs and other equipment to promote physical fitness and healthy living, consistent with past initiatives such as the Children’s Fitness Tax Credit. Click here to see a complete list of tariff items covered.
Altogether, this represents $76 million in annual tariff relief, and comes with an expectation that wholesalers, distributors and retailers will pass these savings on to consumers.
The Government, in consultation with the Retail Council of Canada and consumer groups, will monitor the impact of these tariff reductions on Canadian retail prices. This initiative will allow the Government to assess whether tariff elimination can help narrow the price gap for consumers in Canada, and will help guide future decisions.
The Government will continue working with Canadians, including consumers, retailers and manufacturers, to identify areas where further tariff liberalization can benefit Canadians.
Modernizing Canada’s General Preferential Tariff Regime for Developing Countries
Budget 2013 proposes changes to Canada’s General Preferential Tariff (GPT) regime under the Customs Tariff to ensure that this form of development assistance is appropriately aligned with the global economic landscape.
These changes also align Canada’s GPT system with other major tariff-preference granting countries, and target the benefits to countries most in need.
The Department of Finance consulted extensively with stakeholders in preparing this measure, including through the publication of a notice in the Canada Gazette on December 22, 2012. As announced in the Canada Gazette notice, the Government will withdraw GPT eligibility from 72 higher-income and export competitive countries, including all G-20 countries.
The economic criteria used to determine country eligibility for the GPT will be applied every two years on a forward basis to determine beneficiary country eligibility, similar to the process that exists in many major industrialized nations.
The Government will also ensure that graduating countries from the GPT regime does not reduce the benefits of the Least Developed County Tariff (LDCT) regime.
The General Preferential Tariff and Least Developed Country Tariff Rules of Origin Regulations will be amended in order to continue allowing the duty-free importation of textiles and apparel from least developed countries that are produced using textile inputs from current GPT beneficiaries. The changes to the GPT, to be given effect by amendments to the Customs Tariff and related regulations, are effective in respect of goods imported into Canada on or after January 1, 2015, and will be extended for ten years, until December 31, 2024.