Why Canadians pay more for everything?

April 24, 2012 - All News

Suppliers charge Canadian retailers more for the same products they sell to U.S. retailers and that is why Canadian consumers end up paying more – much more – a Senate committee was told Tuesday morning.
“Suggesting Canadian retailers are to blame for the difference in pricing is not only misleading and misinformed, it only acts to undermine the critically important relationships between Canadian retailers and their customers,” according to a report prepared by the Retail Council of Canada (RCC) and presented to the Senate Committee on National Finance.
The report was presented to by Diane Brisebois, the RCC’s CEO and president.
The Senate committee began its study into the reasons for price discrepancies of consumer products between Canada and the United States in October, following complaints from Canadian consumers tired of paying more in Canada for the same products sold in the U.S.
Retailers in Canada report that they are charged anywhere between 10-50 per cent more for identical products by the same suppliers, according to the RCC report.
The report gave examples of items sold by suppliers at different price points in Canada and the U.S.
Ibuprophen 200 mg, sells to U.S. retailers for $10.76 and to Canadian retailers for $18.29, a difference of 70 per cent. A bottle of Aspirin 81 mg low dose sells to U.S. retailers for $10.16, and to Canadian retailers for $21.78, a difference of 114 per cent.
Canadian retailers say their suppliers tell them they charge more because Canadians are used to paying more for products in Canada; that the higher prices subsidize the costs of maintaining offices and operations in Canada, and that the higher prices are necessary to compensate their Canadian distributors and wholesalers.
Brisebois said that while it is not the case for all suppliers and all products, the different prices charged by suppliers it is the largest contributing factor to the difference in prices between Canada and the United States in situations where it occurs.
The RCC also blamed outdated tariffs on finished goods like some clothes, pantyhose, wooden bedroom furniture, bed linens, towels and pillows.
The report also points out the recent increase in personal exemption limits for Canadians travelling outside the country will hurt Canadian retailers and ultimately, the Canadian economy.
Canadian residents made 5.2 million trips abroad in February, a 3.9 per cent increase from January. The majority of the trips – 4.4 million – were to the United States, a 4.5 per cent increase.
The main factor was an 8 per cent increase in same-day car travel by Canadians to the United States, to 2.6 million trips, the highest monthly level since December 1997.
The RCC also blamed supply management for the high prices for eggs, chicken, butter and milk in Canada, sending residents of border towns to the U.S. for groceries.
“It is the RCC’s position that the government should not favour one industry over another, in this case farmers over retailers, to the detriment of the latter,” according to the RCC report.
The report called books the “poster children” of the price differences in Canada versus the United States. The federal government’s own copyright regulations allow for a 10 per cent markup on U.S. sourced books and the tax has been collected by multinational book distributors since 1999.
The retail sector is the largest employer in Canada, providing jobs for more than 2 million Canadian and generating sales in excess of $300 billion dollars a year. It contributed $74.2 billion to Canada’s gross domestic product (GDP) in 2009.
The RCC represents more than 45,000 stores of all retail formats across Canada.
The report also pointed out that after an unexpectedly soft fall and holiday season in 2011, retailers anticipate sales growth of one to five per cent over the course of 2012. With inflation expected to be in the two-per cent range, the growth in the actual volume of sales would be minimal.
— Torstar News Service