THE HIGH COST OF PAYING DUTY

NORA UNDERWOOD April 29 1991

THE HIGH COST OF PAYING DUTY

NORA UNDERWOOD April 29 1991

THE HIGH COST OF PAYING DUTY

When the Free Trade Agreement between Canada and the United States took effect on Jan. 1, 1989, it immediately increased the list of American-made goods that could be brought into Canada duty-free. At the same time, the FTA established a timetable under which customs duties on all other goods— some of them as high as 25 per cent of an item’s value—will be progressively phased out in both countries by Jan. 1, 1998.

For now, Ottawa stiff imposes duties on more than 75 per cent of all U.S. goods, according to Duncan Smith, a Torontobased spokesman for Canada Customs. The list of American-made items on which Canadians do not have to pay duty includes computers, camcorders, skis, ice skates and roller skates, motorcycles, gas stoves and telephones, as well as a wide range of

raw materials and agricultural goods. Typewriters, books and compact-disc players, no matter what their country of origin, also can be imported into Canada duty-free. But Smith added that the seven-per-cent GST will still be added to the value, in Canadian currency, of items that are subject to that tax. Canadian tax and excise duty will be applied to such imports as liquor, tobacco and jewelry.

Duties on other goods traded between the United States and Canada, including paper and paper products, furniture, most machinery, plywood and chemicals, are being reduced and will disappear after Jan. 1, 1993. By Jan. 1, 1998, both countries will remove all remaining customs duties, which will affect U.S.-made clothing, appliances, bed linen, groceries, toys and most other consumer goods. Customs duties on U.S.-made alcohol, beer and cigarettes will not fully disappear until 1998. Until then, they are being phased out by the same amounts each year. Smith said that American-made cotton sheets—which are at least 50-per-cent cheaper in the United States—are a popular

item among Canadians shopping in the United States. Since the FTA, Canada’s duty on bed linen has dropped to 15.7 per cent this year from 20.2 per cent in 1989.

Under the current tourist exemptions, in addition to importing duty-free items Canadians who spend at least seven days out of the country are allowed to escape taxes and duty—once every calendar year—on up to $300 worth of goods ordinarily subject to duty. As well, after at least 48 hours away any number of times each year, a traveller is entitled to bring back $100 worth of such goods. But with the increasing volume of cross-border traffic, officials have less time to question returning Canadians. During those peak times, according to Smith, border officials use their discretion about charging duty, particularly on small amounts. Often, said Smith, “the time it takes to collect a couple of dollars is not worth the effort.”

NORA UNDERWOOD