It’s government policy – not price gouging on the part of Canadian retailers – that is to blame for the substantial gap in prices between American and Canadian goods, and this needs to be addressed.
These are the findings of a C.D. Howe Institute report issued May 6, which found that government tariffs and policies are increasing wholesale prices in this country, leading to inflation of retail prices.
What should the government be doing about these price discrepancies?
“First, it can reduce costs for consumer goods by lowering or removing tariffs and by relaxing the supply-management restrictions on products such as cheese, chicken, eggs, milk and yogurt,” said the report, which said these tariffs create huge price gaps that only increase when the Canadian dollar appreciates
“Second, it can raise the maximum value of goods that Canadians can bring into the country without paying any duty.”
The report also said that facilitating foreign manufacturer entry into the Canadian market would encourage competition, lowering prices.
The price gap, said the report, has increased substantially over the past decade.
“Canadian prices were generally lower than U.S. prices from the mid-1990s to mid-2000s,” reads the report.
“But, by 2012, the cost for a similar set of goods was 27% in Canadian stores (57% higher for food).”
In 2013, the Canadian Senate issued a report on the price gap and examined a wide range of causes, including market size, the cost of doing business and retail competition. The 2014 Federal Budget addressed this and proposed increasing the powers of the Competition Bureau to look at country-specific price discrimination – the idea that manufacturers would be charging higher prices in Canada that don’t reflect costs that are legitimately higher.
But the C.D. Howe report said this is not where the government should be focusing its attentions.
“If the federal government is serious about reducing costs for Canadians, it should first look at some of its own policies before tasking the Competition Bureau with investigating companies charging higher prices in Canada relative to the U.S.,” the report states.
The full report can be found here.
