Shoppers angry about the higher cost of books in Canada can blame old regulations that were meant to help U.S. publishers cover extra costs when the dollar wasn’t on par, industry representatives told a Senate committee Tuesday.
The regulations originated in 1999, when the Canadian dollar was worth a lot less than the U.S. dollar, in part to offset the cost for U.S. publishers of shipping and distributing books in Canada, where the market is smaller and more spread out.
They allow importers to charge booksellers the price of the book in the country of origin, plus the difference in exchange rates, and an additional 10 or 15 per cent, depending on the country of origin, organizations representing booksellers said. American publishers can charge an additional 10 per cent on books shipped for sale in Canada.
"Our members, who run, own and manage local businesses in communities across our great nation, are tired of being apologists for a policy that none of them have any control over … books are often thrown in the face of booksellers," said Mark Lefebvre, president of the Canadian Booksellers Association, which represents 1,000 trade, campus, chain, used and antiquarian book dealers.
The change could be made with the stroke of a pen, said Chris Tabor, who runs the Queen's University bookstore in Kingston, Ont., and represents campus bookstores.
"Campus Stores Canada considers this to be a private tax established by public policy," he said.
That money leaves Canada, and does nothing to help Canadian creators, Tabor pointed out.
Lefebvre and Tabor were appearing as part of a Senate national finance committee study into the differences in prices for consumer goods between Canada and the U.S.
Duty adds costs for consumers
It's not just the price charged for goods that annoys consumers, but duties and other fees charged for a package to cross the border, said Carol Osmond, vice-president of policy with the Canadian Association of Importers and Exporters.
The government is eliminating tariffs on equipment and other items needed for manufacturing, but not on consumer goods, she said, leaving tariffs of eight per cent on appliances and 16 to 18 per cent on shoes and clothing. Footballs get a seven per cent duty while basketballs don't have a tariff, and skates and athletic shoes are taxed at 18 per cent.
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"The duty rates are left over from an era when we were attempting to protect Canadian manufacturers," Osmond said. "But who are we protecting today? And do they need it?"
Removing an 18 per cent duty wouldn't mean an equal price reduction for consumers because there are many factors, including profit margin, that go into setting a price. But it's "one tool available to government," she said.
The government could also increase the value of goods that can be shipped by courier before Canadians have to pay duties, Osmond said. Americans can order up to $200, referred to as a de minimis threshold, before paying duties and taxes on a shipment by courier, but the threshold in Canada is $20. Couriers often add on an additional charge for having to fill out the paper work, which is why consumers sometimes pay duties and shipping and then have an extra fee to pay when the package arrives. The U.S. is considering raising that threshold even more, she said.
"Often, the cost of duties and taxes is very low, but then if you add on this additional brokerage cost, and that's often what takes consumers by surprise because they get that extra charge that they're not expecting ... that's a fee for a service," Osmond said.