The federal government has announced plans to narrow the gap between prices in Canada and those charged in the United States, for the same items.
Federal Industry Minister James Moore, today at a Toronto toy store, proposed a new price transparency act he hopes will end the practice of what he called “geographic price discrimination” or “price gouging of Canadian consumers.” Moore said the bill takes aim at the practice called “country pricing,” which prices goods differently depending on the country in which they are sold.
The government acknowledged in the past that there are legitimate reasons for higher prices in Canada, including labour costs, duties and shipping/transportation fees. Moore also acknowledged another obvious contribution to the unfavourable price difference: the declining value of the Canadian dollar vis-à-vis the United States’ currency.
Canadian consumers will likely welcome the industry minister’s announcement, but I remain sceptical that it’ll have much impact. Undoubtedly, there a some goods that are priced higher when destined for Canadian markets. Having an even greater impact on higher prices here, though, are governments themselves.
Canada, for the most part, has higher minimum wages than American states do. The minimum wage in New York State is, for instance, $8.00 an hour and many other states are less.
And, despite PM Stephen Harper’s free trade emphasis, many goods sold in Canada still carry hefty import duties, some of which are protecting non-existing domestic industries, and are a little more than a government cash grab.
Bruce Cran, president of the Consumers Association of Canada cited, to www.thestar.com, the example of woollen mills. “There have been no woolen mills in Canada for 20 years. All of those things have gone to Asian countries. But we still pay a tariff of 20 per cent to protect them,” Cran said. Curious, eh?
As well, Canadians pay higher prices for gasoline, in part, because of higher taxes. It seems to me that Canadians pay about 33 per cent in combined taxes at the pump while Americans pay about 11 per cent, ouch! Higher gasoline prices also make transportation of goods more costly—and we pay higher prices at retail stores as a result.
Bilingual labeling, packaging and displays also have a negative impact on retail prices in Canada. This represents a hidden tax on commercial activity forced on businesses by governments. And, of course, consumers get hit in the pocket book.
And don’t get me started on the shameful price gouging and excessive taxation governments in Canada engage in when it comes to alcoholic beverages.
But perhaps most egregious of all is Canada’s supply management system, which controls how dairy, eggs and chicken are priced and produced in Canada, including onerous tariffs charged on imports to protect domestic dairy producers.
When it comes to supply management, many MPs talk out of both sides of their mouths. They complain privately, but when on the record, the hypocrites voted unanimously to “respect its [the federal government’s] promise” to shield the dairy industry from any fallout from the pending free-trade deal with the EU.
The net result? Higher prices for Canadian consumers, including those with lower incomes. According to Michael Bloom, Vice-President, Industry and Business Strategy for The Conference Board of Canada, “Canadians … pay about $276 per family more for dairy products than consumers in other countries.”
Given that Industry Minister James Moore announced his new legislation at a toy shop, and given that he said nothing of the shamefully high prices of dairy, eggs and chicken, I feel compelled to conclude he sees cheaper toys as more important to Canadian families than cheaper food.
I see gasoline and food as far more important—essential perhaps—to Canadian families who can far easier do without cheaper toys, TVs and sneakers, so forgive me if I’m not cheering for this new legislation.