Cross-Border Shopping Costs Canada $20 Billion

Cross-border shopping | BCBusiness
More Canadians are heading south to find deals and could be draining the economy in the process.

A new report indicates the proliferation of Canadians heading south for shopping sprees is hurting the economy more than previously believed.

While many Vancouverites may head across the border this long weekend on the hunt for  some deals, those shopping sprees in the States are draining the Canadian economy.
 
A new report from the Bank of Montreal shows cross-border shopping is on the increase and will only intensify over the summer as the feds boost the previously restrictive duty-free limits.
 
For stays in the States over 24 hours, the limit is boosted from $50 to $200 and 48-hour-plus stays garner a new $800 limit. Even with the raise in spending limits, the report points out limits wouldn’t be an issue if Canadians weren’t compelled by price factors.
 
One BMO expert estimates cross-border spending could account for five per cent of total consumer spending, or around $20 billion a year. That’s billions Canadian retailers and governments are losing annually in sales and tax revenue.
 
Part of the problem is the disparity in prices for the same goods. According to research from BMO deputy chief economist Doug Porter, the gap has decreased from 20 per cent to 14 per cent on average. But for some items, the price gap is still alarmingly high. Canadians pay 37 per cent more for the same sneakers and 32 per cent more for the same model Toro lawnmower.
 
Considering the loonie has consistently been on par with the American greenback since 2007, a price gap that wide is enough to send even the most loyal Canadian shoppers south.