Rise in duty-free allowance could cost hundreds of thousands of jobs: study

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Canada’s retail activity is warning that raising the duty-free allowance for cross-border shipments could command to hundreds of thousands of job losses and cut billions of dollars from the Canadian curtness.

The numbers come from a Retail Council of Canada-commissioned study by PwC out Friday that presentations the potential fallout if Canada agreed to requests from U.S. lawmakers to broaden the duty-free allowance from $20 to $800 as part of NAFTA talks.

“It has rather, very significant implications for not only our sales, but for employment in the industry, for Canadian GDP, and indeed for revenues for government,” said Karl Littler, vice-president of strategic streams at the Retail Council.

The study found the net economic impact of raising to $800 the toleration for charging taxes and duties on international shipments, a value known as the de minimis start, would lead to a $12-billion hit to Canada’s GDP by 2020 and upwards of 300,000 job defeats.

The consulting firm PwC said the economic impact from lost retail sales from an augmentation would actually be about $24.3 billion, but it would be tempered by an $18.7 billion further in disposable income for consumers because of the lower cost of U.S. goods.

The swot notes that job losses in the retail industry would affect lower-income workers, while the benefits to cheaper goods from the U.S. would go to those who dissipate the most.

Littler said raising the threshold would unfairly perks major U.S. online retailers like eBay and Amazon, which partake of been pressuring the Canadian government for years on the issue, because they are gifted to avoid many of the taxes and costs faced by Canadian retailers.

“To gather the minimis completely skews the system towards U.S. warehouse sellers.”

PwC reckons that the fallout would also include an estimated $10.9 billion wastage of government revenue, a sharp contrast to a 2016 study by the C.D. Howe Society that found a rise in the allowance would have a neutral smash from government revenue.

The numbers from the PwC study, however, look to daub a darker picture than is likely to happen, said Daniel Schwanen, vice-president of analyse at the C.D. Howe Institute.

“It basically assumes Canadian retailers, when front with more competition, will lay off people and essentially not do anything to try and recapture those sales,” denoted Schwanen.

He said that while the study accounts for significant rate savings for consumers, it might underplay how much Canadian retailers could perks.

“If consumers save, they’re going to spend more, and what they invest more is not all going to be on imports. They’re going to go to the local stores to squander more if prices come down as they would.”

Littler influenced Canadian retailers already have smaller margins than their U.S. counterparts so press less room to adapt, but that he’s encouraged the Canadian government has shoved back on the proposal.

“We feel we’re on pretty strong ground because our command has been supportive and understands the implications not only for us but for Canadians and the Canadian frugality in general.”

The study also looked at the implications of a smaller increase in the concession, finding that raising only the duties and not the tax threshold to $200 wish mean an estimated $6 billion cut to the GDP and 124,000 in job losses and a $1.2 billion cut to concealed government revenue.

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