OTTAWA — Canadians who buy online from stores in the United States or Mexico will get a bit of reprieve from taxes and duties next week but only if their packages are delivered by a private courier.
If Canada Post is the one tapped to drop the package in the mailbox or on the doorstep, the old rules will still apply, leaving a two-tiered tax system for the same goods.
“We are just mystified that the government would be setting consumers up for that surprise,” said Andrea Stairs, president of eBay Canada and chief marketing officer for eBay North America.
The change is part of the new Canada-U.S.-Mexico Free Trade Agreement, which comes into effect on Canada Day. Within the trade deal, Canada agreed to lift the very low limit it had applied for duty and tax-free consumer imports, known as the de minimis threshold.
It used to be that any goods purchased and imported by mail or courier would be subject to duty and GST if the total value was anything over $20. On July 1, that threshold is rising to $40 before GST gets applied and $150 before customs duties are added, for all packages delivered by couriers such as FedEx or UPS.
The changes do not include Canada Post, for which all tax and duties will continue to be applied after $20. It means if consumers have a choice in how their package is shipped, they can choose to avoid paying the GST by picking a private courier. But consumers don’t always have that choice, said Stairs.
She also said postal rates are usually the most competitive for shippers, so this change means the modest break on taxes that consumers could expect from the new trade deal might be eliminated, since it costs more to use a private courier.
“It’s really unfair to middle-class Canadians and it’s also very unfair to rural Canadians who just don’t have the option in some cases of having courier service to them,” said Stairs.
She estimates about 80 per cent of the packages delivered across the border from eBay sellers are shipped by the postal services.
“I think consumers fully anticipate that the new thresholds that were negotiated in CUSMA were going to apply to all imports from the U.S. and I think when they realize that actually the majority of those are excluded from the modest increases there is going to be some pretty significant shock at the doorstep,” said Stairs.
Graham Robins, the president of A&A Customs Brokers in Surrey, B.C., said the changes are causing confusion and concern for customs agents who now have more work to try to sort out whether packages need to go through customs or not.
Robins also said shippers will be deciding if it’s more economical to simply avoid the post office.
A spokesperson for Canada Post said the Crown corporation will follow the rules and pay the fees set out by the federal government and had no further comment on the changes.
Stairs said she met early in 2020 with Procurement Minister Anita Anand, who is responsible for Canada Post, and felt Anand understood the issue, but that ultimately the decision was up to Finance Minister Bill Morneau. A spokesperson for Morneau had not yet responded to questions about the matter by Thursday evening.
This report by The Canadian Press was first published June 25, 2020.
— With files from James McCarten in Washington, D.C.
Mia Rabson, The Canadian Press